Lessig on Net Neutrality

Lessig has a nice piece in the Financial Times about network neutrality. (The Financial Times? I love the paper …but it’s not exactly a mainstream American paper. Apparently domestic media don’t care. But I digress.)

His analysis focuses on YouTube’s success. I agree with him 100% until he gets to the bit about broadband competition. Then I disagree because of this:

In the US, at least, broadband competition is dying. There are fewer
competitors offering consumers broadband connectivity today than there
were just six years ago. The median consumer has a choice between just
two broadband providers. Four companies account for a majority of all
consumer broadband; 10 account for 83 per cent of the market.

Lessig overstates the amount of competition in broadband. First, the feds overstate broadband penetration (competition) by using zip codes as the unit of measure. One broadband connection = penetration. Two = competition, even if they don’t compete for the same neighborhoods. [So even the "we’re 16th in the world" figure is overstating our success.]

In addition, his "10 have 83" shows that nationally this sector is an oligopoly. Not a surprise — we’re talking cable and telehone, both regulated monopolies.

But locally, the market is almost always a monopoly. Duopoly is rare and true competition, more rare still. And the fact that telephone companies have to make their lines open to competition (Covad, anyone) but cable doesn’t … puts telephone companies at a disadvantage. No captive market.

Then there are the folks in rural America (like my dad) with no reasonable (the satellite systems aren’t reasonable by any definition of that word) broadband options.

I chafe at the loss-leader pricing I see on billboards around Seattle: $33/mo for cable, Net and phone from Comcast, "for one year." They bundle because they save money on billing … that’s where the real costs lie.

Humbug!

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