<div dir="ltr"><div style>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.</div>
<div><br></div>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. <div>
<br></div><div style>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. </div>
<div style><br></div><div style>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.</div>
<div style><br></div><div style>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.</div>
<div style><br></div><div style>5. I carefully model fiber network building and operating costs, and the models are downloadable, free, at <a href="http://www.bbcmag.com">www.bbcmag.com</a> or the quick link, <a href="http://www.FTTHAnalyzer.com">www.FTTHAnalyzer.com</a>. 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). </div>
<div style><br></div><div style>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.</div>
<div style><br></div><div style>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.</div>
<div style><br></div><div style>Steve</div><div class="gmail_extra"><br><br><div class="gmail_quote">On Tue, Feb 12, 2013 at 8:08 AM, Gary Gomes <span dir="ltr"><<a href="mailto:ggomes@soundviewnet.com" target="_blank">ggomes@soundviewnet.com</a>></span> wrote:<br>
<blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex"><div lang="EN-US" link="blue" vlink="purple"><div><p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d">Steve,<u></u><u></u></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d"><u></u> <u></u></span></p><p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d">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.<u></u><u></u></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d"><u></u> <u></u></span></p><p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d">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.<u></u><u></u></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d"><u></u> <u></u></span></p><p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d">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?<u></u><u></u></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d"><u></u> <u></u></span></p><p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d">Do you really believe that cost of the subsidized phones is the reason for the high US cellular rates? The numbers suggest otherwise.<u></u><u></u></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d"><u></u> <u></u></span></p><p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d">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.<u></u><u></u></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d"><u></u> <u></u></span></p><p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d">Gary<u></u><u></u></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d"><u></u> <u></u></span></p><div style="border:none;border-top:solid #b5c4df 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif""> <a href="mailto:1st-mile-nm-bounces@mailman.dcn.org" target="_blank">1st-mile-nm-bounces@mailman.dcn.org</a> [mailto:<a href="mailto:1st-mile-nm-bounces@mailman.dcn.org" target="_blank">1st-mile-nm-bounces@mailman.dcn.org</a>] <b>On Behalf Of </b>Steve Ross<br>
<b>Sent:</b> Monday, February 11, 2013 10:20 PM<br><b>To:</b> Tom Johnson<br><b>Cc:</b> Friam@redfish. com; 1st-Mile-NM<br><b>Subject:</b> Re: [1st-mile-nm] Susan Crawford on Why U.S. Internet Access is Slow, Costly, and Unfair on Vimeo<u></u><u></u></span></p>
</div><div><div class="h5"><p class="MsoNormal"><u></u> <u></u></p><div><p class="MsoNormal">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.<u></u><u></u></p>
<div><p class="MsoNormal"><u></u> <u></u></p></div><div><p class="MsoNormal">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.<u></u><u></u></p>
</div><div><p class="MsoNormal"><u></u> <u></u></p></div><div><p class="MsoNormal">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.<u></u><u></u></p>
</div><div><p class="MsoNormal"><u></u> <u></u></p></div><div><p class="MsoNormal">My magazine (<a href="http://www.bbcmag.com" target="_blank">www.bbcmag.com</a>) 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.<u></u><u></u></p>
</div></div><div><p class="MsoNormal" style="margin-bottom:12.0pt"><u></u> <u></u></p><div><p class="MsoNormal">On Mon, Feb 11, 2013 at 10:39 PM, Tom Johnson <<a href="mailto:tom@jtjohnson.com" target="_blank">tom@jtjohnson.com</a>> wrote:<u></u><u></u></p>
<p class="MsoNormal" style="margin-bottom:12.0pt"><a href="http://vimeo.com/59236702" target="_blank">http://vimeo.com/59236702</a><br><br>Susan Crawford on Why U.S. Internet Access is Slow, Costly, and Unfair<span style="color:#888888"><br>
<br><span>-tj</span><br></span><br>_______________________________________________<br>1st-mile-nm mailing list<br><a href="mailto:1st-mile-nm@mailman.dcn.org" target="_blank">1st-mile-nm@mailman.dcn.org</a><br><a href="http://www2.dcn.org/mailman/listinfo/1st-mile-nm" target="_blank">http://www2.dcn.org/mailman/listinfo/1st-mile-nm</a><u></u><u></u></p>
</div><p class="MsoNormal"><br><br clear="all"><u></u><u></u></p><div><p class="MsoNormal"><u></u> <u></u></p></div><p class="MsoNormal">-- <br>Steve Ross<u></u><u></u></p><div><p class="MsoNormal">Corporate Editor, Broadband Communities Magazine (<a href="http://www.bbcmag.com" target="_blank">www.bbcmag.com</a>)<br>
<a href="tel:201-456-5933" value="+12014565933" target="_blank">201-456-5933</a> mobile, <a href="tel:781-284-8810" value="+17812848810" target="_blank">781-284-8810</a> landline<br>707-WOW-SSR3 <a href="tel:%28707-969-7773" value="+17079697773" target="_blank">(707-969-7773</a>) Google Voice<br>
editorsteve (Facebook, LinkedIn)<br>editorsteve1 (Twitter)<br><a href="mailto:editorsteve@gmail.com" target="_blank">editorsteve@gmail.com</a><u></u><u></u></p></div></div></div></div><div class="MsoNormal" align="center" style="text-align:center">
<hr size="1" width="100%" noshade style="color:#a0a0a0" align="center"></div><p class="MsoNormal">No virus found in this message.<br>Checked by AVG - <a href="http://www.avg.com" target="_blank">www.avg.com</a><br>Version: 2013.0.2897 / Virus Database: 2639/6098 - Release Date: 02/11/13<u></u><u></u></p>
</div></div></blockquote></div><br><br clear="all"><div><br></div>-- <br>Steve Ross<div>Corporate Editor, Broadband Communities Magazine (<a href="http://www.bbcmag.com" target="_blank">www.bbcmag.com</a>)<br>201-456-5933 mobile, 781-284-8810 landline<br>
707-WOW-SSR3 (707-969-7773) Google Voice<br>editorsteve (Facebook, LinkedIn)<br>editorsteve1 (Twitter)<br><a href="mailto:editorsteve@gmail.com" target="_blank">editorsteve@gmail.com</a></div>
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