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Publicly Owned Infrastructure Beats Regulated Net Neutrality

| Written by Becca | No Comments | Updated on Mar 14, 2006 The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/publicly-owned-infrastructure-beats-regulated-net-neutrality/

The media are abuzz with a new high-tech phrase:  “net neutrality”. It may sound complicated, but the concept is quite simple. Right now, the Internet treats all traffic equally. Companies that own the connections from your home and business to the Internet now want to start giving some traffic priority over others, for a fee.

Somecompare this proposal to an express toll road. Users pay extra for faster service. But Internet service subscribers already pay a monthly toll based on the speed of service.  You pay more for speeds of 3 Mbps than 750 Kbps.

No, this proposal is more like a road network that charges one toll rate for Fords, and a higher rate for Chryslers. For example, a digital book purchased from Amazon.com might download faster than the same book from your local bookstore, just because the larger company can afford to pay for priority for its traffic.

Verizon and AT&T have vowed to stymie any attempt to require net neutrality. Should legislation pass, these companies vow to sue. The United States will fall even farther behind other countries as telecommunications companies await the outcome of the legal battles before investing in their networks.

Thishas happened before. The 1996 Telecommunications Act required incumbent telephone companies to lease network access to competing Internet service providers at regulated prices. Incumbents filed lawsuits to block competition. Last year, federal regulators finally conceded the battle and abolished open access requirements.

Japanadopted, and strictly enforced, the same open access model contained in our 1996 law.  The result?  Robust competition.  In Japan, almost 100 percent of residential customers have interconnection speeds that exceed 26 Mbps, and 80 percent can get 100 Mbps for the price U.S. customers pay for one-thirtieth the speed.

Privatenetwork owners argue that the market should decide how and how much they charge for the use of their networks. Customers who aren’t happy can go to a competitor.

But incumbent cable and telephone companies control 98 percent of Internet connections in the United States. Since both the members of this cozy duopoly are planning to charge content providers, most customers will not have a choice. Moreover, Congress is considering legislation that would allow your phone company to buy your cable company, turning a duopoly into a monopoly.

Recently, WiMAX has been hyped as the incumbents’ “nightmare.” The Wall Street Journal said that for a relatively modest investment of $3 billion, 90 percent of U.S. households could have a third broadband pipe into the home. But WiMAX can only provide about 1.5 Mbps per user – the equivalent of most DSL connections in the U.S., and much slower than most cable modems. In short, WiMAX will not be a competitive influence in the foreseeable future.

If Congress can’t intervene to preserve net neutrality, local governments need to do so.  Happily, hundreds of cities and counties are currently making decisions about the structure and ownership of their future-high speed information networks. A growing number are choosing some form of public ownership. Public ownership of the physical infrastructure of the network can facilitate real competition.

There are precedents for this model. The government owns and maintains the roads, but it does not operate trucking companies. A mom-and-pop trucking company with a single truck and an international freight operation with a fleet of thousands have equal access to our roads. The government owns and maintains airports, but it does not operate airlines. No one expects Jet Blue to build its own airports in order to compete with American.

Bandwidthon a publicly owned network would be available to all service providers at the same rate. Open access creates competition among Internet service providers, eliminating the need for network neutrality regulation.

A publicly owned, open access network could offer wholesale, not retail services. It would not be a monopoly. Customers could still choose to use the incumbent phone or cable company’s pipes.

This has become a partisan issue, with Democrats tending to support municipal broadband and net neutrality and Republicans oppose them. But Republican voters have demonstrated that they want competition and innovation as much as Democratic voters.

In fact, voters in Utah, a largely Republican state, have voiced their support for publicly owned, open access infrastructure. Provo and the 14 cities of the Utah Telecommunications Open Infrastructure Agency (UTOPIA) are installing publicly owned fiber to the home networks that will deliver 100 Mbps service to every business and residence. Already four private service providers offer internet connections through the network at prices below the national average. And if one of those providers starts prioritizing some information bits over others, customers really can take their business elsewhere.

About Becca

Becca joined ILSR to work on American Voice 2004, then stayed on to develop the telecommunications initiative. She is presently focused on the financial and economic considerations behind municipal broadband efforts.

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