Daniel Berninger on Net Neutrality

by Bruce Stewart

Daniel Berninger has an interesting guest editorial on Om Malik's GigaOM site today about Net Neutrality, titled Why Even Bells Need Net Neutrality. While net neutrality advocates (which I consider myself one of) tend to paint the issue in very broad brush strokes and often try and boil the argument down to "no net neutrality law means the end of the internet as we know it", there really are a lot of complex wrinkles to these issues, and Berninger illuminates some of them in this article:

The FCC's decision to relieve AT&T and Verizon of net neutrality requirements in August 2005 definitively broke the chain of events the companies use to assert right-of-way privileges. The Bells claim privileges based on over 100 years of practice that may or may not coincide with the intent and limits of the original deals, but the resulting laws explicitly require a public purpose in exchange for the right-of-way concessions.

The obligations established on a state by state basis sometimes include build-out requirements or other compensation, but they all specify that access to state right-of-way at largely no cost or limit requires common carrier status (aka net neutrality.) The loss of common carrier status invalidates the contracts. The Bell companies have no access to state right-of-way for deployment of private, closed, non-neutral, non-common carrier network deployments.

...

The Bells want Congress to believe ignoring net neutrality requirements will incent investment in broadband networks, but their idea of return on investment means monopoly rents. The Bells only invest in more monoply which usually means buying each other. The track record shows steadily lower spending on networks to increase free cash flow for acquisitions. The $140 billion SBC spent acquiring Ameritech, PacBell, SNET, AT&T Wireless, and AT&T lifted the company's market cap by only $40 billion. The fact that $100 billion disappeared might suggest the need for a different strategy, but the new AT&T seeks government approval to spend $67 billion to acquire BellSouth. SBC missed an opportunity as $140 billion happens to be about what it would cost to run fiber to every home in America.


1 Comments

Stevens33
2006-05-17 16:48:56
What I don't like are unnecessary government regulation, and that's exactly what people are trying to get with net neutrality laws. The government doesn't need to get invovled when the free market is just as capable of solving this supposed problem.