[1st-mile-nm] Susan Crawford on Why U.S. Internet Access is Slow, Costly, and Unfair on Vimeo

Tue Feb 12 06:08:11 PST 2013

It saddens me to see Steve fall into the trap that so many seem to be
falling into these days - suggesting that the cable companies and the
content providers are separate entities.

It is a very gray area.

We all know that Comcast owns many channels now through NBCU and many other
cable operators have ownersship stakes in the channels they carry (that are
supposedly gouging them).  I guess ABC/ESPN/Disney is the exception, but to
suggest that the cable companies are getting raked by the content companies
ignores a complicity that benefits them and restricts competition.

Susan has a good focus on this in her book, particularly the role of sports
networks in protecting monopoly.

I don't live in Manhattan, but from what I have seen, FiOS is far from
widely available yet. It will be eventually, but I think there are some
years yet left in the expansion there.  Susan likes to learn from mistakes,
so I hope Steve will point this out to her - I doubt we'll hear her say it
again if she is presented with evidence that she is wrong.

As for the mobile market, I again think Steve is too charitable to the
phone companies -- I can buy my own handset but I don't get a break on the
bill from Verizon... I pay the same damn cost on my phone that is 3 years
old as I would a new one - that is Verizon's choice and they have made a
sound one when it comes to extracting the most cash from me. Sure, I could
go to a small competitor that has crap coverage (I travel frequently enough
to rural enough spots that it is impractical) but like the vast majority of
Americans, I find my only real options are Verizon and AT&T for wireless.

As for following the money - who wants to loan capital to anyone that is
going to compete on a playing field so dominated by Comcast/Verizon/et al?
 One has to be somewhat crazy, because private sector competition has no
future in these United States.

Christopher Mitchell
Director, Telecommunications as Commons Initiative
Institute for Local Self-Reliance

http://www.muninetworks.org
@communitynets
612-276-3456 x209

On Tue, Feb 12, 2013 at 7:42 AM, Steve Ross <editorsteve at gmail.com> wrote:

> High prices come about for two reasons: The real costs of providing
> service and of course monopolistic rents. As much as I have railed against
> USA pricing practices, most of the price really has to be due to costs, not
> monopolistic practices, as far as landlines are concerned. Mobile is more
> complicated -- Wall Street has provided a lot of money for mobile expansion
> but has extracted a high rent of its own. Just look at how telecom/cable
> stocks have trended -- middle-of-pack for past decade.
>
> 1. Two suppliers are not effective competition, but Crawford says there is
> only one in Manhattan. That is a lie. She says TWC monthly bill is $200.
> That would mean for someone getting the most expensive video tiers.
>
> 2. Sorry, cost of good cell phone to carriers has been $500-600 and when
> they charge $100 the balance must be built into the price over the next two
> years. I have a "no contract" unlimited-everything 2-line family plan with
> T-Mobile for $99. I just bought my wife a Galaxy SIII unlocked for $550.
> That's the way it works. Crawford claims cell costs in Europe are $30 a
> month. They are not that low and there are a lot of hidden fees and roaming
> charges as well. They are lower than in the US, but totally explained by
> phone subsidies, really. Apple is the monopolist.
>
> 3. Content providers (there are seven major networks, not the four
> Crawford claims) are also the monopolists.That's where your fees mainly go.
> I have argued that the duopoly's pricing power allows the pass-through of
> content costs, but that pricing power has clearly been declining. The
> content providers "bundle" their services. You want ESPN 1 and 2? Sorry,
> you have to carry the other 9 ESPN channels as well! But as with audio, the
> bundling will eventually collapse. The American Cable association
> (seemingly a monopolist tool) wants FCC to allow a la carte content over
> the top (on internet broadband). Doesn't sound monopolistic to me.
>
> 4. On phones, there is not a duopoly -- plenty of low-cost carriers in the
> business but not in rural areas. Ugh. Mobile providers also want to cut
> their costs by pushing you onto your own wifi and not compensating the
> landline provider -- unless of course they ARE the landline provider.
>
> 5. I carefully model fiber network building and operating costs, and the
> models are downloadable, free, at www.bbcmag.com or the quick link,
> www.FTTHAnalyzer.com. Basically, if a network provider can make a gross
> profit (before overhead) of $50 per customer per month, it can get by with
> 8 customers a mile. That typically means 12-16 homes per mile. Any change
> in this picture requires government subsidy (which I and Crawford support,
> but which is a pipe dream these days) or much lower interest rates (tier 3
> LECs these days are paying 10%... ugh).
>
> 6. Because of lack of access to reasonably priced capital, hardly any new
> networks are being built right now. Our advertising base has been cut in
> half as vendors collapse into one another. I always teach my journalism
> students to "follow the money." The money goes to handset suppliers and
> content providers, not to network providers.
>
> 7. Qwest/CenturyLink is indeed screwing folks out west, but they are also
> low on cash. A better business model for them would be to partner with
> munis, to tap assets that munis can mortgage for cheap capital. That's
> where I would fault them.
>
> Steve
>
>
> On Tue, Feb 12, 2013 at 8:08 AM, Gary Gomes <ggomes at soundviewnet.com>wrote:
>
>> Steve,****
>>
>> ** **
>>
>> I read your magazine and appreciate your efforts in promoting broadband
>> and recognize that video content providers are a huge problem, but  I hope
>> that you do not mean to suggest that two suppliers equals effective
>> competition.****
>>
>> ** **
>>
>> There are countless studies that document the fact that oligopolists act
>> just  like monopolists – even absent overt collusion.  It is just the
>> nature of the beast.****
>>
>> ** **
>>
>> The problem in the US is that we have virtually unregulated
>> monopoly/duopoly for-profit companies running a public utility service
>> (cable and fiber plant), another oligopoly running the content creation
>> (networks origin) as well as over-the-air waves, and a third duopoly
>> running cellular.  Is it any wonder they do not compete on price?****
>>
>> ** **
>>
>> Do you really believe that cost of the subsidized phones is the reason
>> for the high US cellular rates?     The numbers suggest otherwise.****
>>
>> ** **
>>
>> The fact is that unfettered  market competition does not work for the
>> consumer (in the long term) in the absence of a large number of potential
>> providers.****
>>
>> ** **
>>
>> Gary****
>>
>> ** **
>>
>> *From:* 1st-mile-nm-bounces at mailman.dcn.org [mailto:
>> 1st-mile-nm-bounces at mailman.dcn.org] *On Behalf Of *Steve Ross
>> *Sent:* Monday, February 11, 2013 10:20 PM
>> *To:* Tom Johnson
>> *Cc:* Friam at redfish. com; 1st-Mile-NM
>> *Subject:* Re: [1st-mile-nm] Susan Crawford on Why U.S. Internet Access
>> is Slow, Costly, and Unfair on Vimeo****
>>
>> ** **
>>
>> I'm a reluctant fan of Crawford and Moyers, but her book and this
>> interview miss the mark. There are major inaccuracies in the interview
>> itself. For instance, Crawford says Manhattan suffers from a Time Warner
>> Cable monopoly, although Verizon is bringing FiOS to every household in
>> NYC. I have a small apartment in Manhattan and I have a choice! So does
>> Crawford, I suspect.****
>>
>> ** **
>>
>> But the biggest problem is with the content providers, not the broadband
>> providers. Thanks to predatory practices among the content providers there
>> is almost no profit in video -- but they have to provide it. SOMEONE has to
>> pay for building the network, and that someone is the consumer of pure
>> Internet broadband. The providers need to get $20-30 profit per month per
>> subscriber to pay for the network, and they only get $5-10 from video, zero
>> from voice.****
>>
>> ** **
>>
>> BTW, data we're publishing this month shows that fiber customers pay the
>> highest monthly fee for pure broadband access but they pay the least per
>> Mbps.****
>>
>> ** **
>>
>> My magazine (www.bbcmag.com) calls for anyone to be able to build
>> networks and we have editorialized for public broadband. But between higher
>> content costs and less population density, and  oddities in pricing
>>  (Europeans pay low phone bills but pay $500+ for the phone!) most of what
>> Crawford is complaining about is not caused by the companies she faults. In
>> this interview, she comes across as either an idiot or a liar. She's better
>> than that.****
>>
>> ** **
>>
>> On Mon, Feb 11, 2013 at 10:39 PM, Tom Johnson <tom at jtjohnson.com> wrote:*
>> ***
>>
>> http://vimeo.com/59236702
>>
>> Susan Crawford on Why U.S. Internet Access is Slow, Costly, and Unfair
>>
>> -tj
>>
>> _______________________________________________
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>>
>>
>>
>> ****
>>
>> ** **
>>
>> --
>> Steve Ross****
>>
>> Corporate Editor, Broadband Communities Magazine (www.bbcmag.com)
>> 201-456-5933 mobile, 781-284-8810 landline
>> 707-WOW-SSR3 (707-969-7773) Google Voice
>> editorsteve (Facebook, LinkedIn)
>> editorsteve1 (Twitter)
>> editorsteve at gmail.com****
>> ------------------------------
>>
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>> ****
>>
>
>
>
> --
> Steve Ross
> Corporate Editor, Broadband Communities Magazine (www.bbcmag.com)
> 201-456-5933 mobile, 781-284-8810 landline
> 707-WOW-SSR3 (707-969-7773) Google Voice
> editorsteve (Facebook, LinkedIn)
> editorsteve1 (Twitter)
> editorsteve at gmail.com
>
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