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Let Market Decide Internet Access Debate
Technology Op-Ed
1.28.2000
San Francisco Chronicle, January 28, 2000
The deal between America Online (AOL) and Time Warner
should have closed the book on whether government should
enter the business of regulating high-speed Internet
access over cable lines. AOL, which had been lobbying for
access to AT&T’s cable lines, now controls America’s
second-largest cable company. But instead of recognizing
this increased competition in the broadband market, the
government is pushing rules that will result in poorer
service.
This week, San Francisco’s Telecommunications Commission
endorsed the idea of re-considering “open access,” a
policy that requires cable operators to open their
high-speed lines to Internet Service Providers (ISPs) in
2003. The issue will soon be in front of San Francisco’s
Board of Supervisors. But the whole notion of open access
is riddled with contradictions.
For one, if the government is forcing cable companies to
open their lines to competitors, it can hardly be called
“open” access. A better and more precise phrase is
“forced.” Forced competition is unlikely to lead to a
healthy marketplace serving consumers’ needs. That’s
because if rival firms get a free ride on their
competitors’ infrastructure, neither party has an
incentive to upgrade and expand.
Think of it this way: If you were forced to share your
house with a number of government-chosen roommates, would
you be as eager to put in that new carpet? As AT&T’s
director of law and government affairs declared late last
year, “Forced access may be good for our competitors, but
it will be very bad for our customers who want the
cheapest, fastest service possible.”
If new technologies are to develop and grow, companies
must be sure that the gains of their investments will not
be handed over to competitors by well-meaning, but
misguided governments. Even Federal Communications
Commission (FCC) Chairman William Kennard agrees. “The
dark cloud of regulation will slow the deployment of the
broadband pipe” he recently told a _Los Angeles Times_
reporter.
Broadband access is big business. By 2008, Goldman Sachs
estimates that 73 million households will use one of the
potential broadband services. But which will it be? Cable
is clearly not the only option that consumers can or will
choose to get their high-speed kicks.
In San Francisco, there’s already the option of Digital
Subscriber Lines (DSL), with the possibility in the near
future of wireless and electrical web access. With all
this competition present and on the horizon,
government-enforced open access makes about as much sense
as pouring water into the Pacific Ocean. Even limited
competition is already producing cost-savings for
consumers.
The emergence of cable lines as a viable system to
provide high-speed Net access forced local phone
monopolies to slash prices for their own high-speed
service by 50 percent or more. It was only after AtHome
introduced high-speed access at a price of $39.95 that
Pacific Bell slashed the cost of their DSL service from
$89.95 to $39.95. If left alone, these market trends will
continue.
That is why government officials at the local, state, and
federal levels are wise to reject forced-access
regulations for their cable service. Governments should
refrain from forcing political decisions on an industry
in which economics and consumer demand should rule.
Already, government threats have gone too far, pushing
the two leading cable providers into making promises that
the market would not lead them to propose, threatening
companies, consumers, and the entire industry. But there
are encouraging signs.
Last summer, the San Francisco Board of Supervisors
rejected the open access option by a vote of 9-2. They
should issue a repeat performance. And if governments
everywhere want everyone to enjoy lightening-fast access
to the Net, they should follow the Board’s lead and slam
the door on open-access madness.
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Sonia Arrison is director of the Center for Freedom and
Technology at the California-based Pacific Research
Institute. She can be reached via email at
sarrison@pacificresearch.org.
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