Gigi was on the Kojo Nnamdi show public radio program earlier today, discussing broadband policy with Robert Atkinson of the Information Technology and Innovation Foundation (ITIF) and Scott Wallsten of the Technology Policy Institute.
She used her time to push for policies that would increase broadband competition and choices for consumers, which would lower prices and increase speeds of service. In contrast, Atkinson called telecommunications a “natural monopoly” akin to water and electric power — a view that went out of style decades ago.
Wallsten attacked the international rankings that show the U.S. slipping in broadband penetration. Gigi’s view was that the in-the-weeds details are irrelevant. Regardless of how you slice and dice it, we’re slipping and it’s time to get busy with a new policy.
You can hear the show here.
Here’s the view in the studio with (from left clockwise) Kojo, Atkinson, Gigi and Wallsten.
The big treat came after the show, when one of Gigi’s favorites, comedian Lewis Black, was waiting to go on.
She used her time to push
The confusion between competition and efficiency continues. As a general rule, beyond high density areas, competition for broadband does not lead to efficient outcomes - one or two providers are usually more than enough to soak up the entire demand at prices that cover cost. In this context it’s a market failure via a natural monopoly - there’s only room for one provider in many places in order to achieve the lowest unit cost.
The free market crowd continues to push for full blown “inter-modal” competition in the sense that France was used in the radio program as an example of failure to deploy fiber because of disincentives associated with its expected forced unbundling - compared to the current French model of “intra-modal” unbundled competition considered successful.
It’s Catch-22. Unbundled existing technology may result in effective competition over a given platform in the short run, but going forward, companies have strong “winner-take-all” incentives to capture markets vertically for the platform itself, precisely because of the powerful scale and scope economies associated with bundling, which lead to monopoly profit and undersupply under deregulation. When network providers refuse to build out or upgrade networks under unbundling requirements, this is what they’re protecting unless it’s a high-density area condusive to efficient competition.
Japan et al leap-frogged this trap by specifying desired broadband quantity/quality outcomes while acknowledging that the nature of the technology was not condusive to fully deregulated inter-modal competitition and combined it with offsetting regulation and subsidies designed to achieve efficient outcomes.
For some insights on the “last mile” problem, consider the comments below, from http://www.pbs.org/cringely/pulpit/2006/pulpit20060629000351.html which expand the concept of users owning their “inside wire” of the copper telephone network to owning and controlling the last mile itself …
This is serious unbundling indeed, which pushes upstream the market power typically exploited by providers to convert every conceivable event as a “billable event” - by extending the reach of consumer purchasing power past the last mile into more competitive wholesale areas less susceptible to the natural monopoly problem.
Being a subscriber to the
Being a subscriber to the RSS feed from Kojo’s show I was pleased to see this as I was surfing the Internet earlier today. I have downloaded and will be listening soon. Thanks for this post as well.