Friday, August 05, 2005

Two titans on a level playing field: Who gets crushed?

Ever since June's Brand X decision, in which the Supreme Court ruled that cable companies weren't required to sell access to their lines to competing Internet services, everybody has assumed that the FCC would soon give in to a longstanding demand for a "level playing field" from the Baby Bell phone companies, which usually own the only alternative "last-mile" of wire to people's homes.

Today, the Federal Communications Commission did the deed. The text of its decision isn't out yet, and won't be at least until next week, but the outline is clear from the main news release and the accompanying commissioners' statements. It seems as if the FCC's two Democrats, who concurred in the ruling supported (and presumably written) by the two Republicans, traded their tacit approval of the inevitable with what they hope will be tangible consumer protections.

Their biggest achievement may be this policy statement, titled "New Principles Preserve and Promote Open and Interconnected Nature of Public Internet." In theory, it should prevent companies like Verizon or Comcast from blocking access to Internet sites that sell content or services that compete with what they sell – think VoIP phone services, or movies-on-demand – or intentionally undermining those sites' performance. In practice, it remains to be seen whether that policy can be enforced.

Beyond that, it's hard to see the promotion of a dupoly – a well-entrenched cable franchisee vs. incumbent Baby Bell – as an improvement. The FCC's ruling does include some provisions that may help alternative DSL providers such as Covad survive, but it will be much more plainly at the sufference of Verizon, SBC and the rest of the companies that inherited Ma Bell's old network. (To see how two leading consumer groups reacted, see my previous posting.)

In the short run, duopoly is the best we'll get in most places unless Congress takes steps to counter the laissez-faire legacy of former FCC Chairman Michael Powell, who argued that the only real competition would come from companies that own their own networks.

The picture is cloudier here than almost anywhere else. Philadelphians might enjoy extra competition if the city succeeds with its plan for a municipal wireless-broadband network. But Verizon's plan to invest in a fiber-optic system and go head-to-head with Comcast will be hobbled by another set of arcane rules: the ones that govern access to programming.

The problem is this: Even if Powell's dream comes true – if this kind of big-boys-only competition eventually breeds broadband innovation from fixed-wireless providers or electric utilities or somebody else – there will never be meaningful competition with companies like Comcast if they can control and limit access to content, as Comcast does in Philadelphia by refusing to share Comcast SportsNet with satellite competitors.

At the very least, we need Congress to close the "terrestrial loophole" – the rule that enables Comcast to keep that must-have local programming to itself.

If that issue indeed comes up this fall in Senate hearings, as rumors on Capitol Hill suggest, Philadelphians need to make some noise – just as we're urged to do at those Phillies and Sixers games we can't see on TV without paying Comcast's toll.

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