With Google planning to build an urban fibre optic network in Kansas City, all sorts of commentators are looking at ways to achieve similar outcomes for the other 99.9% of North Americans.
Susan Crawford had a piece in Wired on Tuesday that offers a proposal: We Canât All Be in Googleâs Kansas: A Plan for Winning the Bandwidth Race. If you read the article fast enough, it makes for an entertaining read, but its conclusions are predicated on a number of questionable premises and assertions.  Check out this opening:
Even though America is in a âglobal bandwidth raceâ and our ânationâs future economic security is tied to frictionless and speedy access to information,â according to FCC Chairman Julius Genachowskiâs latest speech â we donât have a plan for winning that race.
And our current incumbent providers are not going to help. Theyâre not going to be the ones rolling out the fiber-to-the-home networks that could provide this speedy access to information. Why? They have no incentive to do so. Because they never enter one anotherâs territories, they donât face the competition that might spur such expansion.
Instead, incumbent internet access providers such as Comcast and Time Warner (for wired access) and AT&T and Verizon (for complementary wireless access) are in âharvestingâ mode. Theyâre raising average revenue per user through special pricing for planned âspecialized servicesâ and usage-based billing, which allows the incumbents to constrain demand. The ecosystem these companies have built is never under stress, because consumers do their best to avoid heavy charges for using more data than theyâre supposed to.
The errors abound. Here are just three of the more obvious problems:
- No “plan for winning that race”? I guess if you ignore the FCC’s National Broadband Plan and spectrum auction incentive plans discussed in the same speech referred to in the opening sentence. Canadians would love to be as far along in national policy planning.
- “Our current incumbent providers are not going to help… rolling out the fiber-to-the-home networks”? I guess if you ignore the tens of billions of dollars bet by Verizon on FiOS FTTH. According to the FTTH Council, 9 million North American households now have FTTH connections.
- “The ecosystem these companies have built is never under stress”? Well that is news to any of us who have experienced dropped calls on our mobile phones or slowdowns on wired connections.
I agree with a couple lines in the article:
While the Google Fiber plan provides a valuable model, other communities that want to ensure their residents get fiber to the home shouldnât have to wait.
We need policies that lower the barriers to entry for competitors.
Yes, we do need policies that lower the barriers to entry for competitors. But we also need for these policies to create the right incentives for all competitors to continue to invest.
The policies proposed are simply not supportable, unless, like the author, you conveniently choose to breeze by the facts.  Take a look at how the author tries to build support for heavy government intervention and structural separation:
If youâre in the network services business, you canât also be selling apps. This required âstructural separationâ prevents the countryâs telecom companies from discriminating against competitive services (think AT&T blocking FaceTime).
Whoa! We suddenly jumped from the author talking about FTTH to wireless networks. Let’s pause to parse what would be meant by this leap. AT&T, in this example, is “in the network services business”. The author says that they shouldn’t be selling apps. What app are we talking about that AT&T sells in competition with Facetime? Voice services. Is the author really suggesting that mobile carriers should not be allowed to offer voice? Is this really a business model that any country has tried to impose?
What kinds of policies are needed to help cities attract FTTH and investment in advanced infrastructure?
Let’s take a look the incentives and concessions granted by the cities to Google. According to the Wall Street Journal, these include: free office space, free power, free land for fibre huts and close to a 50% discount on pole attachment rental rates. In addition, there was no obligation imposed on Google to roll-out its services universally, enabling the company to pre-market and pre-sell, with installations taking place after sufficient demand has already been committed. City government workers will be involved in the public education and marketing plan. AT&T and Time-Warner Cable are reported to have asked for similar concessions.
Contrast the approach by Kansas City to entice Google investment in fibre with many other municipalities. We have had a number of cases in Canada where cities erect legal and financial roadblocks to hamper the deployment of advanced communications infrastructure. The level of cooperation between Kansas City and Google should be a model for how municipal governments and carriers can cooperatively plan and incent investment.
Canada’s national digital strategy should be released in the next month or so.
How will we plan for Canadian leadership in the global digital economy? How do we create the right environment to stimulate universal access to advanced infrastructure? How will we encourage universal adoption and digital literacy?