June 28, 2005 By Carl Peede
As a provider of municipal wireless broadband services for small cities, I continue to be amazed at the self-serving protectionism demonstrated by the large telecom carriers in their continuing efforts to keep municipalities from providing needed broadband services to their citizens. As the Wall Street Journal pointed out in a front page article June 23, 2005, "Phone Giants Are Lobbying Hard To Block Towns' Wireless Plans." Lobbying efforts by Verizon, SBC and others have succeeded in Pennsylvania, Nebraska and Colorado, but have failed in Illinois, Texas, and Florida. However, the crusades continue.
Why are the carriers demonstrating such relentless opposition to municipalities providing broadcast services? Is it really a concern against "unfair competition" as the carriers claim? Or is it actually a self-centered concern that they will possibly lose future revenues and market share? A quick review of the facts leads me to believe the latter.
First, carriers have been reluctant to aggressively deploy DSL and other broadband services to rural and less densely populated markets due to the associated expense and the perceived low rate of return on the investment. This is understandable, but it was also a choice -- a choice of priorities by the carrier.
Second, carriers have been reluctant to embrace new technologies, such as fixed wireless and Wi-Fi, for delivering high-speed Internet access. This is due in large part to their habitual, plodding momentum and the supposedly prohibitive cost of re-training thousands of personnel for provisioning, installing, and supporting the new technologies. Also, it is due to a concern for creating competition within its own subscriber base. Many customers might demand "wireless," for example, even if DSL were available.
Third, and most significantly in my opinion, is that the carriers realized prospective subscribers within the carriers' service areas had few alternatives -- mainly obtaining services from the carrier or the local cable service provider. This allowed the carriers to simply wait. And wait. And wait. And that's exactly what they have done.
Daniel Aghion, executive director of The Wireless Internet Institute -- an organization founded several years ago to promote broadband access for developing countries -- has stated, "In 2003, findings by the United Nations showed that the United States was 13th in the world in the percentage of households having high-speed access to the Internet. Now, we are 23rd and losing ground."
The carriers have had almost a decade to provide high-speed access, but due to this market failure by the carriers to provide ubiquitous broadband services, many municipalities now feel it is incumbent upon them to meet constituent demands by providing high-speed broadband themselves. Since broadband is an essential element for both large and small businesses, it is critical for small cities to have readily-available access to broadband in order to competitively attract new businesses and new jobs to their cities, and most importantly, to improve the overall quality of life for their citizenry.
The carriers realize that should a wave of municipalities begin offering broadband services, it could lead to significant revenue erosion over time -- not just for Internet access, but for Voice over IP (VoIP) and other enhanced services as well. The carriers depend on these services as significant future sources of revenue.
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