Same Broadband Numbers, Different Conclusions

Advocates of government-subsidized competitor access to the big broadband pipelines of cable companies and incumbent telephone carriers are turning their increasingly lonely eyes to Congress to rectify what they see as misguided public policy.

After all, there’s no place left for them to go.

In a crushing blow to consumer and media access advocates of open networks, the Supreme Court ruled in June that cable operations such as Comcast and Time Warner are not obligated to make their broadband lines available to competing Internet service providers.

Six weeks later, in the name of competition and a fair playing field, the Federal Communications Commission (FCC) stripped away line sharing mandates for the Bay Bells’ broadband DSL offering.

Undaunted by finding themselves on the wrong side of the law, a new combination of weary, battle-scarred consumer advocates and a new player in the emerging digital access lobbying market are turning up the heat and the rhetoric for open access mandates in the stalled telecom reform movement in Congress.

They came out barking earlier this month, stopping just short of calling Federal Communications Commission (FCC) Chairman Kevin J. Martin a liar but not hesitating to accuse SBC of running a bait-and-switch DSL pricing plan.

Using FCC data as his proof, Martin declared in a July Wall Street Journal op-ed piece that the deregulated market approach of his agency “proves that we are well on our way to accomplishing the president’s goal of universal, affordable access to broadband by 2007.”

Using the same data, the Consumers Union, the Consumer Federation of America and media access watchdog Free Press issued a report reaching an entirely different conclusion.

“Martin . . . is either wildly optimistic or intentionally misleading,” the report states. “Universal, affordable broadband remains a distant prospect in the United States, largely because of policies that stifle competition in the name of deregulation.”

According to the report, the FCC is overstating U.S. broadband penetration rates, service quality and the competitive conditions of the marketplace, particularly in respect to satellite and wireless broadband competition to cable and DSL.


“By overstating broadband availability and portraying anti-competitive policies as good for consumers, the FCC is trying to erect a facade of success,” said Ben Scott, policy director for Free Press.

What Scott and his consumer allies see behind that facade is bad public policy based on closing competitor access to the high-speed lines of both cable providers and incumbent Bells.

Martin, for instance, points to satellite and wireless Internet connections increasing by 50 percent in 2004 as proof the FCC’s policies are working.

“The number of subscribers to these non-traditional broadband services has increased, but the percentage of the market these technologies control has diminished dramatically over the past five years,” the report states.

According to FCC data, wireless and satellite broadband held 2.8 percent of the market in 1999. In the subsequent five years, the market share rate has steadily declined to 1.2 percent in 2004. Cable modems and DSL control 98 percent of the U.S. broadband market.

And, they want an even larger share of the market.

“Meanwhile, dominant incumbent providers are seeking legislation at the state and federal level that would preempt municipalities from offering fiber, BPL [broadband over power lines] or wireless broadband, further reducing competition in the market,” the report concludes.

As for the “aggressive” broadband price wars touted by Martin, the consumer groups say it is nothing more than a shell game.

“Analysis of ‘low-priced’ introductory offers by companies like SBC and Comcast reveal these are little more than bait-and-switch gimmicks,” the report alleges. “When amortized over three years, SBC’s $14.95 per month introductory offer will cost consumers $47.17 per month, plus the cost of phone service.”

SBC questioned both the numbers and the scam characterization, supplying with a lengthy definition of what a true bait-and-switch constitutes.

SBC spokesman Andy Shaw quibbled with the report’s math, pointing out that subscribers who re-up for another one-year contract pay $29.95 a month. Only customers who chose to pay month-to-month are charged the $47.17 rate.

The Free Press’ Scott said he thought Congress would ultimately reverse the FCC regulatory position on closed access to high-speed lines.

“There are way too many senators and representatives from rural areas without [broadband] availability, much less affordable broadband,” he said. “If the president’s goal of universal, affordable high-speed Internet access by 2007 is to be achieved, policymakers in Washington must change course.”

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