more on why should we ever trust corporation -- BP Named in Inquiry on Pricing - New York Times

[David Farber <dave () farber net>]

Begin forwarded message:

From: "Faulhaber, Gerald" <faulhabe () wharton upenn edu>
Date: July 2, 2006 2:19:28 PM EDT
To: "Robert J. Berger" <rberger () ibd com>
Cc: Dewayne Hendricks <dewayne () warpspeed com>, David Farber  
<dave () farber net>
Subject: RE: [IP] more on why should we ever trust corporation -- BP  
Named in Inquiry on Pricing - New York Times

Well, I'm a little agnostic about muni wifi; for several reasons, I  
think it is an idea with very limited application, and it could well  
get us into trouble as a technology that could block new and better  
technologies as they come onstream later (including fiber).  Where it  
makes sense (small towns without BB coverage, for example) it's a  
great idea.  But in other areas (such as Philadelphia) I am much more  
dubious.  In Philly, I am expecting the SEPTA of broadband;-)  I  
haven't cancelled Comcast, and I don't think I ever will.

I believe your comments about the viability of BB entry are likely  
correct.  But the message here is that the BB market is much more a  
niche market than us geeks would like to acknowledge.  In fact, less  
than a third of HH actually have BB, and less than 3/4 even have  
computers.  If BB were as popular as, say, cable TV, the economics  
would be far different.  If we only have two providers (and it is not  
clear they are making money on this product at this time; certainly  
Wall Street is not rewarding them), maybe that's because the market  
is really pretty small.

Should the state provide BB nationwide as pure infrastructure?   
Probably our very best infrastructure project in the US has been the  
Interstate Highway System; if we could do that well with BB, I'd be  
for it.  But I am deeply suspicious of gov't providing anything  
competently these days; even hurricane relief and overseas  
intelligence seems to be beyond our capabilities.  Perhaps in some  
universe, this would be a good idea.  But in the US we live in today,  
I am very skeptical that the Feds wouldn't screw it up royally.

Professor Gerald Faulhaber
Business and Public Policy Dept.
Wharton School, University of Pennsylvania
Philadelphia, PA 19104
Professor of Law
University of Pennsylvania


From: Robert J. Berger [mailto:rberger () ibd com]
Sent: Sunday, July 02, 2006 2:06 AM
To: Faulhaber, Gerald
Cc: Dewayne Hendricks; David Farber
Subject: Re: [IP] more on why should we ever trust corporation -- BP  
Named in Inquiry on Pricing - New York Times

So we should make sure that if there is any telecom regulation bills  
passed soon, that at a minimum it should include provisions that make  
sure that no laws can be passed and any laws in existence can not bar  
municipal or other competitors to the incumbents.

Right now 15 states have laws that bar Municipalities from offering  
telecom, fiber or Internet services.

Also it should be noted that current (or anything on the drawing  
board that can fit anywhere in our current spectrum regulatory  
environment) wireless can not compete with fiber to deliver true  
broadband (10 Mbps or greater dedicated per household ) to dense  
urban or suburban environments.

There are no technologies around right now that allow real  
competition to the oligopoly of Cable and Telco that can be deployed  
by stockholder funded corporations. The up front cost is too high and  
the time to Return on Investment of capital is nearly infinite based  
on the revenues that can be collected. The only business plan that  
can overcome its is one that comes up with a MAJOR physics  
breakthrough like  quantum communications.

In the meantime, the common good of fiber deployment to or near the  
home is high. Thus municipal deployment of dark fiber plant or a  
regulated layer 1 (dark fiber) only monopoly with cost+ open access  
to fiber is the sane way to do this. Then you can have  vibrant,  
competitive layers 2 - 7 marketplaces on top of the "public roadways"  
of dark fiber joined together by the commonality of the  end-to-end  
IP protocol.

On Jun 29, 2006, at 1:24 PM, Gerald Faulhaber wrote:

> Begin forwarded message:
>
> From: "Faulhaber, Gerald" <faulhabe () wharton upenn edu>
> Date: June 29, 2006 3:55:14 PM EDT
> To: David Farber <dave () farber net>
> Subject: RE: [IP] more on why should we ever trust corporation --  
> BP Named in Inquiry on Pricing - New York Times
>
> Migod, a virtual lovefest between Dana and me; I'm deeply disturbed by
> this;-)
>
> Of course I agree; let's do everything we can to increase the  
> supply of
> broadband and the "cartel" (actually, a duopoly; no evidence of price
> fixing, I believe) will fall on its own.  That has always been the
> objective of those (such as myself) arguing for platform competition.
> Abundant supply is the killer of market power; always has been, always
> will be.
>
> In recent IP correspondence, I suggested that the primary  
> responsibility
> for increasing the supply of last-mile broadband lay with the IP
> readership!!  New entry in broadband will come when smart  
> entrepreneurs
> (i.e., IP readers) figure out how to bring BB to households
> competitively: Craig McCaw's Clearwire, BPL, WiMax (forever the  
> next big
> thing),... The technologies are out there; what we need are guys with
> business plans.  Some have argued the "guys with business plans"  
> should
> be municipal gov'ts and/or communities, and I say fine, bring 'em  
> on (to
> paraphrase Dubya).  But sitting around on our duffs whining about
> duopolies and complaining to Congress is not going to increase the
> supply of BB.  It's only going to increase the supply of whining and I
> think we have quite enough of that already.
>
>
> Professor Gerald Faulhaber
> Business and Public Policy Dept.
> Wharton School, University of Pennsylvania
> Philadelphia, PA 19104
> Professor of Law
> University of Pennsylvania

––––––––––––––––––––––––––––––
Robert J. Berger - Internet Bandwidth Development, LLC.
Voice: 408-882-4755 eFax: +1-408-490-2868
http://www.ibd.com




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