Consumer Federation of America – Texas Office Public Utility Council (2002). The Importance of ISPs in the Growth of the Commercial Internet: Why Reliance on Facility-Based Competition Will Not Preserve Vibrant Competition and Dynamic Innovation on the High-Speed Internet. July 1, 2002. http://www.consumerfed.org/releases2.cfm?filename=070102_broadband_relea...
This is a well-researched, detailed report on the importance of competition (or the lack of it) between Internet service providers (ISPs) for the structure of the US broadband market. It sets its argument that public policy that supports open broadband networks is essential for continued innovation and good service in a historical context – it is a good resource for understanding how the US ISP market evolved.
The report focuses first on the role of public policy in creating open communication platforms, then on why the FCC’s faith in intermodal competition (competition between a small number of facility owners) is misplaced, and, finally, on the effects of closed networks. A discussion is included of how, in addition to explicit exclusion, cable and telephone companies engage in a range of other practices that undermine competition. While this report was written before municipal Wi-Fi projects emerged, it is relevant to their development. In particular, why open Wi-Fi/broadband networks are important, and the roles that communities and municipalities may play in the creation of open networks, and broadband competition.
Notable quotes:
"Cable and telephone companies have only about 5 percent of the narrowband market, where they have to compete. While they have captured about 95 percent of the broadband market, where they leverage control of their wires."
“The correct public policy is to stimulate small numbers competition in physical facilities and preserve large numbers competition in applications and content. Congress clearly intended this outcome and gave the FCC the tools to accomplish it. The FCC’s shift to a reliance on intermodal competition at the expense of intramodal competition would contradict Congressional intent and subject consumers to great risk of the abuse of market power, slowing innovation and strangling competition.”
“The Federal Communications Commission has issued a series of orders and rulemakings that would essentially allow owners of network facilities to control the deployment of services and access to facilities for ISPs and consumers.”
“There must be no mistake about the critical role that government policy played in the process of creating this new information environment. The flexibility and fluidity we have achieved in the information age is in part a result of severing the link between the physical layer and the code and content layers.”
