Different fibers
Let me be very direct: except where the structure of the market has nondiscrimination built into it such as in a well designed system of functional or structural separation the incentive of the telecom company is to design new infrastructures in a way that controls or chokes off competition.
European Commissioner Viviane Reding, in a speech released today (thanks to Lars Hedberg for the pointer).
So what “new infrastructures” does the telecom company have in mind? Benoit Felten had a post last April about the different qualities of fiber technologies that I found compelling, and Reding’s speech follows his line.
Even though passive optical networks and point-to-point fiber (or direct fiber - one line per customer) cost about the same to install (according to Benoit), PON is said to be much harder to open to competition. Here is Reding again:
It is unclear that passive optical networks can be unbundled in the way that we see today on copper networks.
And so passive optical networks are the favored choice of telecom companies, including Verizon in the US. Less risk of regulatory intervention.
Meanwhile, municipalities forwarding open access plans are using direct fiber. Reding praises this approach for its forward-thinking quality:
Clearly by [installing direct fiber] these cities have created for their business and citizens a future proof network infrastructure and for the investors in the networks a very long term stable return on their investment given that ducts and dark fibre have a potential operating life of several decades.
Guaranteed open access. Not “inter-modal” competition, but a single way of getting online, provided by a municipality, that is oriented towards the future.
Reding’s speech is clear and worth reading. She’s saying that it’s reasonable to allow access providers a return on their investment (which they can get by bundling attractive content and services), in exchange for promises of nondiscrimination against other providers of bundles. So that argument starts with open access, and can’t work without a fiber technology that allows for open access.
But she’s also saying that cities may want to do this for themselves if they can’t get the network providers to cooperate.
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When a city or group of cities installs fiber (utopianet.org) and then opens it up to competition (4 providers so far) they can provide a service that is better, cheaper and faster (50 mbps for $50 per month) than the local phone or cable company provides. They also cover all business and residential customers. Business customers can buy 100 mbps service.
I don’t know if the telco’s and cable companies are trying to match prices as I don’t live in Utah anymore.
Yes, the technology does allow discrimination . . . but in the U.S., at least, the FCC had already handed this issue to the telcos
http://www.isp-planet.com/politics/2003/triennial_2.html
At the press conference for the TRO, IIRC, Dave Burstein asked whether a telco could refuse to share a connection that had “even a foot of fiber” in it, and the comission said that technically they could but that of course a free market wold encourage them to behave well.
As always, the FCC assumed the best of the monopolies and the worst of the competition.