Harvard Professor: Lack of Broadband Competition Harms Consumers
The American broadband industry is dominated by large cable providers who, having geographically divided the country and facing no real competition or government oversight, dictate the terms of access -- to the detriment of “basic quality of life in America,” said Harvard Law Visiting Professor Susan Crawford. But participants in a BroadbandUS.TV panel Tuesday disagreed, and said the future of high-speed access will be an infrastructure that blends wireline and wireless access and makes use of freed-up spectrum. Crawford was formerly an Obama White House official.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
Crawford discussed the arguments she had made in a 2011 article in the Harvard Law & Policy Review (http://xrl.us/bmwczm). “We've been convinced that competition is going to protect consumers from abuses,” she said. “What we've got now is this terrible situation where we don’t have competition, and there is no federal oversight of this basic infrastructure.” Without competition, the only thing that can protect consumers and keep America competitive in a global marketplace is regulatory oversight, she said. “We can’t rely on market forces to protect our citizens."
Crawford cited the National Broadband Plan’s prediction that within a few years, 75 percent of American consumers will have only one choice for broadband Internet access: a cable provider. A perfect storm of exclusive franchises, technical advantages of cable systems that can use DOCSIS 3.0 to send high-speed data through existing cable systems “without digging up the streets,” and the high cost of entry for competitors have given cable systems an incredible advantage, she said. Now, the large cable providers generally have the market to themselves, and -- with the exception of areas where Verizon FiOS operates -- she doesn’t anticipate any facilities-based competition for cable.
"This is like a frog being boiled in water” that starts as cold water, Crawford said. “You won’t be aware of all the charges that are being imposed on you for differential uses of this network,” and all the mild discrimination in services, because they occur gradually. For Crawford, that leads to a “pretty grim future.” To fix things, the government should treat broadband like a commodity, she said, imposing interconnection mandates and structural separation between transport and content. “In the long run, this cable system is a midpoint. It’s not the final network we need to get to. America needs to have symmetrical fiber across the country in order to be part of the global communications network."
Crawford doesn’t know what competition is, said economist Everett Ehrlick, CEO of ESC Company. “There’s blistering competition in the broadband space, which is why it has improved so well,” and prices have dropped dramatically, he said. “There’s a cage match going on” between signal providers and application and service providers to see who will get consumer allegiance. Trying to commoditize and unbundle the network “will limit, if not end, the expansion and improvement of the network as we know it, and will not lead us to the kind of market and consumer driven mixed wired and wireless system,” he said.
Larry Krevor, a Sprint Nextel vice president, agreed about the need to create a marketplace that supports competition; a monopolistic approach does not produce innovation or lower prices, he said: Given the barriers to entry and the limits of spectrum, “there is a regulatory role to ensure that spectrum is used as efficiently as possible, and the conditions that promote competition are created.” But today’s 4G networks are very fast, he said, and wireless networks will continue to be a viable competitor in areas with only one high-speed wireline provider.
Lev Gonick, chief information officer at Case Western Reserve University, said a hybrid model of wired-wireless is “obviously the way forward” and we need a policy framework to make a run at it. The cable industry has won the battle for the next ten years, he said, but what will happen in the longer term is anyone’s guess. “There are some fundamental laws of physics that aren’t easy to supersede, and that means indeed that there are some limits to broadband capabilities that cable is up against,” he said. We're in the “early nascent stages” into the role of new inputs in baseline infrastructure, and the market will continue to evolve, he said.
"Crawford’s declaration that broadband is a utility is an exercise in wishful thinking,” said Richard Bennett, senior research fellow at the Information Technology and Innovation Foundation. “DOCSIS 3 is only five years old, and LTE is only two. Placing these systems under a ’structural separation’ regime is only one step from government ownership of the networks, as we've seen in other countries that have gone down this path such as Sweden, Singapore, and Australia. Innovators are better served by constantly improving networks than by the technology stagnation that typifies public utilities."
"We disagree with Professor Crawford’s conclusions and her widely discredited view that rate regulation and price controls will promote innovation and investment in broadband networks,” said Brian Dietz, NCTA spokesman. Comcast declined to comment on Crawford’s allegations; Time Warner Cable did not respond by our deadline.