Require utility companies to lease space on their rights-of-way to at least four ISPs, at cost.
Call it infrastructure neutrality, or open leasing. This proposal should independently provide most of the benefits in changing the Internet companies’ status to “telecommunications service,” as mere competition between local firms will discourage them from withholding any service or level of service offered by their local competitors. This competition would thus provide the consumer protections that voters are looking for, while allowing Internet companies to remain more lightly regulated (and thus more innovative) “information services.”
This sounds like a terrific idea to me. Competition is not a perfect regulator, but it is a better regulator than the FCC.
This regulation was (and I assume still is) in place with local phone companies. It did not work very well. When DSL was first being rolled out the locals found lots of ways to comply with the regulation while being unhelpful to their competition. Mostly using delaying tactics to make sure competitors service was even worse than theirs. It would take 6 weeks to get an install whereas it would ‘only’ take 2 weeks if you bought from the incumbent. Have a problem with your service? The competitors would always blame the incumbent and the incumbent was in no hurry to fix it.
You’re thinking of local loop unbundling, which the local phone companies had to provide access to their networks. This is a different proposal.
I don’t see why they should be forced to lease it at cost. Infrastructure owners should have some return on their investment, otherwise they won’t build more. Have ’em get like a 10% return over cost.
I think Craig’s point is more of an implementation issue (other implementation issues might include ensuring that the 4 ISPs actually exist and have customers…). Perhaps some sort of principles-based regulation or allow the new entrants to sue if they receive unequal treatment compared to the incumbent.
The distinction is between the “right of way” owner, and the “infrastructure” owner. The local governments that own the rights of way are not for-profit companies. Their costs are associated with public service activities like trimming tree branches and clearing rodes and sewers when they get clogged. There shouldn’t be any need to pay governments a profitable rate, because they don’t operate for the purpose of earning profits.
The actual fiber and wires on the poles however would be privately owned.
Professor Kling, thanks for the link and endorsement! I’ve been a reader of yours for a very long time now, and much enjoy the blog. I guess it shouldn’t be a surprise you like the idea, as you’ve done much to inform my own views over the years. But I’ll take the complement for coming up with it! Cheers.
You cannot require at cost pricing, there is risk to capital. If you do cost plus, you get distortions. As 1994 telecom act demonstrated the concept doesn’t really work.
Isn’t this proposal pretty close to what has pretty much already been law since the 1996 amendments to the Pole Attachments Act?
It seems like, if you set the price at cost or cost-plus, the owner of the infrastructure would select the smallest possible ISP’s. An alternative might be to say that the owner has to auction at least one contract per period of time (so that there are always four of them) with the winner being whoever bid the highest rate (dollars per mega-tera-whatever). That assures some level of access, giving the owner the best available return on its assets, but without the government setting price,