Astroturf Is In Season When It Comes To Telco Lobbying

France Demonstrates Benefit Of Broadband Laissez-Faire

from the le-broadband dept

Tue, Mar 28th 2006 11:39am — Joseph Weisenthal

Last year, The FCC effectively shut the door on any hopes that the internet operators might have to share their lines with independent ISPs. Because the telcos own so much of the backbone, the last mile, and the legal right of way -- a full combination, not really possible, or reasonable, for anyone else to emulate -- they essentially have a natural monopoly; opening up the lines, so that companies can build services on top of them, is the only way to ensure a competitive market. So next time you get stuck with some outrageous bill for a triple-play offering you thought was supposed to save you money, you can look to France to see how the market might have developed were we to have a competitive system. In 2000, government regulators decided to break up France Telecom's monopoly. However, instead of the Ma Bell breakup, which just produced several regional monopolies, the government forced the company to open up access to independent data providers -- a trust-busting solution well suited for the internet age. Since then, prices have dropped dramatically for the "triple play" ($36/month from one company), speeds have shot up, and providers have introduced unique products into the marketplace. Importantly, France has young entrepreneurs trying to improve the internet marketplace, something you'd hope to see in such an important and evolving area. It's quite embarrassing that while the FCC is protecting low-quality, expensive monopolies, France, of all countries, has gotten it right in fostering competition, and demonstrating that free markets do benefit the consumer. Now they just have to get their labor situation sorted out.

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39 Comments

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AJ, 28 Mar 2006 @ 11:46am

First Post!
Good Job France!
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bobli, 28 Mar 2006 @ 11:56am

VIVA LA FRANCE!!!
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Anonymous Coward, 28 Mar 2006 @ 12:09pm

Every FROG has his day.
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jv, 28 Mar 2006 @ 12:11pm

3 cheers for France!
What country do I live in? I used to live in a great country. I don't recognize the country I live in now. We're so behind the curve in very key, critical ways.

France now looks more American than we do. Well, at least someone is doing it! At least the massive corporations don't completely own the government in THEIR country.
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TriZz, 28 Mar 2006 @ 12:14pm

...we're too stubborn
To ever emulate France. We think we're better than, and unfortunately - as long as we're paying for the outrageous "triple play" prices - we're going to get the same service.
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Jean-Marc, 28 Mar 2006 @ 12:22pm

so true
Lobbyism is so powerful in the US...

I am bummed to see my basic cable Internet connection cost $45 here. Add another $45 for 40 channels (half of them in a foreign language and another half of that boring as hell).
In France, my mom has that triple play offer for $36 a month, she gets 8 Mbits/s , unlimited calls on land lines (countrywide), extra-low rates for international, digital tv with more than 60 channels + another 100 a-la-carte channels..

/cry
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Andrew Schmitt, 28 Mar 2006 @ 12:25pm

Fantastic
All this looks great until you realize that France Telecom isn't deploying any new advanced infrastructure because they don't want to be forced to hand it over to a CLEC.
The reality is that these CLECs are only as good as the infrastructure they can free ride on.

DT, FT, Telefonica are all refusing to build new infrastructure until the obligation to allow another to free-ride on top of it is removed.

http://www.nyquistcapital.com/2006/03/27/ich-bin-ein-broadbander/

The fact is broadband penetration in France and Germany is less than the USA, and real deployment of advanced FTTH infrastructure is nil in Europe with the exception of muni fiber in Amsterdam.

The figures you see are from a subset of users that happen to be close to CO's that the CLEC decides to come in and cherry pick the best copper loops and the best customers. The French CLECs get to stack their own deck.

The only solution is to create an environment where multiple providers build competitive access infrastructures. If it happens to be a local government like Amsterdam, fine. But don't fall into the trap that forcing someone to give up their asset to someone else is competition.
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Jay, 28 Mar 2006 @ 12:52pm

Re: Fantastic
Andrew has some good points. But a problem is when municipalites try to offer Data/Voice/Video service and they are legislated out of doing it by the telcos. See New Orleans. Me, I am very happy with the
http://www.iprovo.net/ and http://www.utopianet.org/corporate.htm http://www.sfcn.org that my State's municipalities have started. But you know who hates them? Qwest. The local telco, and they do everything in their power to make it illegal for the cities to offer this to their residents.
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Andrew Schmitt, 28 Mar 2006 @ 12:56pm

It's not right
I agree it is unfair that municipalities can't build their own infrastructure. They should always be competitors of last resort.
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Mike (profile), 28 Mar 2006 @ 1:03pm

Re: Fantastic
All this looks great until you realize that France Telecom isn't deploying any new advanced infrastructure because they don't want to be forced to hand it over to a CLEC.

Yes, there is an issue with new infrastructure development, but there are ways to deal with that.

You could make the same argument about any natural monopoly, such as the highway system.

The reality is that these CLECs are only as good as the infrastructure they can free ride on.

Oh come on. Please explain how it's a "free ride." The CLECs are paying for it -- often much more than the *real* cost to France Telecom.

The fact that telcos are saying they won't build new infrastructure isn't *proof* of a problem. It's proof of them wanting a monopoly and recognzing they may have the power to demand it -- even if the *net* result is much worse.

The only solution is to create an environment where multiple providers build competitive access infrastructures. If it happens to be a local government like Amsterdam, fine. But don't fall into the trap that forcing someone to give up their asset to someone else is competition.

I agree that's *one* solution -- but not necessarily the "only" solution. However, your claim about forcing someone to give up their assets ignores the fact that most of these assets were built by gov't owned or gov't backed monopolies...
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Arnold Mehau, 28 Mar 2006 @ 1:11pm

Divest Application From Network Services
The clear answer is to force the last mile network owners (Telco and Cable) to fully divest themselves of all applications. They should only be allowed to offer transport. This should extend to Wireless under WIMAX and licensed spectrum.
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Andrew Schmitt, 28 Mar 2006 @ 1:34pm

Re: Re: Fantastic
Oh come on. Please explain how it's a "free ride." The CLECs are paying for it -- often much more than the *real* cost to France Telecom.

It's easy to come in after a risk capital investment has been made, success has been acheived, and tell the investor that he needs to sell at cost plus. The infrastructure wouldn't be there in the first place if this was the logical outcome. Who is going to stick their *ss out in the wind if 5 years later they aren't rewarded for the risk?

I agree that's *one* solution -- but not necessarily the "only" solution. However, your claim about forcing someone to give up their assets ignores the fact that most of these assets were built by gov't owned or gov't backed monopolies...

France Telecom was privatized. The government was paid for those assets by shareholders. I believe the shareholders were aware of UNE when they bought in.

Thanks for the healthy debate and the great site.
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Whateva, 28 Mar 2006 @ 2:19pm

write right
"Because the telcos own so much of the backbone, the last mile, and the legal right of way -- a full combination, not really possible, or reasonable, for anyone else to emulate -- they essentially have a is a natural monopoly; opening up the lines, so that companies can build services on top of them, is the only way to ensure a competitive market."

Dude, two words: sentence structure. For God's sake.
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Brandon, 28 Mar 2006 @ 2:44pm

Laissez-faire
If I remember my economics class correctly (and I may not, but who knows?), doesn't laissez-faire translate to "hands-off"? If this was laissez-faire, the French government would not have broken up that monopoly. Of course, I'm not saying that overcharging monopolies shouldn't be broken up, but hands-off implies that the government should not break up a monopoly, right? There's a difference between a system where the government actively fosters competition and a purely capitalist system, as laissez-faire implies. Now, if my memory's off, just say so, because it's been a long f'in time since high school.
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Jim Earl, 28 Mar 2006 @ 4:21pm

Not an accident...
I led Covad's international regulatory effort circa 2000. I recall filing a complaint with the French Competition Councill after Covad's chief engineer managed to convince regulators that FT's claim that DSL would cause massive spectral interference was bunk -- with the FT techncial team in the room and participating in the discussion.

Copper infrastructure varies in different European countries and from that in the US. Generally, loop lengths are shorter and there are more remote terminals.

Some of us had the following migratory path in mind: enter the market with SDSL/ADSL, then, with colocation at remote terminals, run fiber to the remote using a third-party's metro network to backhaul from the remote, then install our own VDSL (and eventually fiber) from the remote to the end user based on bandwith demands and content service offerings. I still think that would have worked in the US had the FCC taken the 1996 Act seriously.

I worked in the GC's office at the FCC before Covad. What the US needed in terms of enforcement was Eliot Ness. What the US got was Barney Frank.

BTW, the US DOJ considered an alternative break-up plan in 1984. Instead of creating regional monopolies and hoping they would compete in one another's territory, a group of economists proposed a facilities - service distinction. AT&T (old) would be broken into a company that owned the infrastructure (recognizing a potential natural monopoly of FTTX) and a competitive services company that would contract to use facilities just like any other new service entrant. The infrastructure company would thereby have the incentive to respond to end-user demand for bandwidth as expressed through the orders placed with it by competitive service providers. No one will know for sure if it would have worked. I continue to believe it never had a chance because in 1984 no one understood the proposal at DOJ or political level.
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eric von anrep, 28 Mar 2006 @ 5:16pm

broadband
The USA are becoming a third world country, step by step,
thanks to the lobbyists. The time when one will have to pay to be able to use the internet is coming. To think that France has had HDTV with 16/9 wide TV screen for 20 years! Pathetic. Broadband, forget it, you are offered download speeds up to 24mbs in France, you are lucky if you get 1.5mbs here in the US, and, for 1/3 of what you are charged here! Do you really think you are Numero Uno on this Planet?
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Coward, 28 Mar 2006 @ 6:49pm

mistake
btw you made a spelling mistake in "they essentially have a is a natural monopoly;"
with two a's
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Pierre Bourgeois, 28 Mar 2006 @ 9:39pm

Poster who mentioned F****
Such a comment is not appropriate - essentially like using the "N" word ...

Need to get over the fact that France was right with respect to WMD ...
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Johnson, 28 Mar 2006 @ 10:49pm

This article would make more sense for cheering on France, if instead of advocating government force, it ackowldged the fact that the government created the telco monopolies in the first place.. now you expect them to fix it? Seems delusional. Other forms of competition will arise. Let's leave the silliness of socialism to folks like Michael Moore who think the government wil fix all our problems with magic and pixie dust. http://www.ruwart.com/Healing/chap7.html
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Florian Prud'homme, 29 Mar 2006 @ 12:31am

some corrections needed
Bonjour !

Perhaps we have 16/9 screen since early '90, but it is not at all HDTV !! I will add that if we have cheap broadband connection, nevertheless we have to pay the phone for connections related problems. And it is very expensive. My sister paid for 6 month without to get triple play. She had to cancel her subscription by her own.

Au revoir et à bientot
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Cory Sutliff, 29 Mar 2006 @ 1:17am

Re: Re: Fantastic
I have worked for both Cox Cable and now Verizon Online DSL, and have seen both sides of all these arguments. What it boils down to is no one is willing to cooperate to make the best solution possible. The LECs want to have the CLECs basically pay for any infrastructure upgrades, even if the LEC benefits from it, and the cost of running a competitive infrastructure is insane considering the actual bandwidth usage of currently deployed equipment.
In reality I don't see this actually happening, but perhaps there should be committee-based municipal ownership of a resource constituting a natural monopoly, with a fair and equitable "usage tax" for everyone using it. Let the committee be formed of local service provider representatives and community advocates who decide the best cost based on real expenses.
But I'm probably a bit to Utopian for America at this point.
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Joe, 29 Mar 2006 @ 3:17am

Used both...some comparisons
I've used DSL, Cablemodem and dialup in the US and France. I will say that having ADSL+ is excellent. Speeds of 24Mbit/s digital TV (TNT) and VOIP based telephone. While France is making some major progress with the CLECs FT still holds the marbles. If you have a problem with the line you have to pay for the repair. There are disconnection and connection fees depending on your LEC.

Service is restricted to the big metro areas. if you live in the countryside (American/British expats seem to like) you're out of luck.

And there is no HDTV standard here yet. I hear of lots of research and they have HDTV-ready sets but I got nothing on DVB-T thats HDTV, maybe satellite (DVB-S) is different, but the only HD coming this way is BlueRay HD-DVD
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Aaron Friel, 29 Mar 2006 @ 4:46am

Sentence structure, &c.
"Because the telcos own so much of the backbone, the last mile, and the legal right of way -- a full combination, not really possible, or reasonable, for anyone else to emulate -- they essentially have a natural monopoly; opening up the lines, so that companies can build services on top of them, is the only way to ensure a competitive market."
Please, no more of this sort of sentence. It's killing me Mike. And just to top it off, a semicolon and another independent clause with a massive quasi-appositive nightmare? *clutches chest* Ok... to the rest of the post.

It would be nice, were the US to institute such effects in the United States telecom/internet economy... But how is this an example of laissez-faire? Isn't gov't intervention for the good of the people, despite all its good reasons, ultimately an example of, well, socialism? I'm not calling the French socialists by any means, but if you're going to call it like it is, this sort of intervention is more likely to occur in more socialized systems, not in a laissez-faire system.
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Tony, 29 Mar 2006 @ 5:10am

France...
Even a blind frog catches a fly every once in a while...
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Andy Landen, 29 Mar 2006 @ 5:41am

So why aren't we all laissez faire?
So why isn't the USA laying a highspeed communication infrastructure of optical cables for use by all companies from telecommunications to TV to the internet? The government could even charge a small fee to all companies desiring to offer services on it by locality or region. Who isn't up for some good competition? Of course, nationalizing existing cabling infrastructure is theft, and monitoring cable traffic is an invasion of privacy risk to be defended from the beginning. Laissez faire all the way, and good work France!
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Searcher, 29 Mar 2006 @ 6:56am

Where are the people demanding change here in the
It's all fine and dandy. We can do this or we can do that. It's all for nothing if the people keep sitting on their widening arses and paying the outragious fees of these companies for the privileg of broadband, digital TV, and VoIP. The people bitch and complain about high prices and getting ripped off but rarely get motivated to do anything about it. And why aren't the people upset over the lobbyists? The priorities of the american people are confused. We should be trying to clean house and get rid of the buying of politicians. We need to be serious about punishing those we find that have been bought. We elected these people to represent us and do what is best for us not to act out of their own selfinterest. It makes me sick the more I think about it. Like another poster said France appears to be more american than america. I hope things get better here. Hoping for the best.
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Searcher, 29 Mar 2006 @ 6:56am

Where are the people demanding change here in the
It's all fine and dandy. We can do this or we can do that. It's all for nothing if the people keep sitting on their widening arses and paying the outragious fees of these companies for the privileg of broadband, digital TV, and VoIP. The people bitch and complain about high prices and getting ripped off but rarely get motivated to do anything about it. And why aren't the people upset over the lobbyists? The priorities of the american people are confused. We should be trying to clean house and get rid of the buying of politicians. We need to be serious about punishing those we find that have been bought. We elected these people to represent us and do what is best for us not to act out of their own selfinterest. It makes me sick the more I think about it. Like another poster said France appears to be more american than america. I hope things get better here. Hoping for the best.
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Alpharocker, 29 Mar 2006 @ 7:14am

Amazed
Sorry to go slightly off topic, but I just wanted to ask how the HELL it is possible to have as much freaking information as some of you people have on a topic like this, Andrew Schmitt, for example.
I have a gut feeling of disagreeing with this guy, but logically, I can't bring myself to post an argument, based on the fact that after reading what he wrote I know need to go back to high school and college.
Also, Whateva, there was nothing wrong with that sentence structure.
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Anonymous Coward, 29 Mar 2006 @ 7:54am

So, we are praising France, a socialist country who'se people RIOT when they employers are given the right to terminate them at some point early in their careers?

Put yourself in the shoes of a small business owner, with the system in France if you hire someone, you are stuck with him. And people say that American is a 3rd world country?

Excuse me. I think America is a great place. There are problems, issues, and corruption in the government, but the main way to slow that down (with government anywhere, that we will never be completely free of that) is to REDUCE the size of the government and its responsabilities. We require a government to do certain things, but why should we increase the size (like France, where your retirement, healthcare, and lots of other services are provided gratis by the government) and and expect things to get better?

Don't get me wrong - I think France is a wonderful place, rich in culture and history. But the structure of society today is so NOT Laissez-Faire - business is totally regulated by government. It is ILLEGAL for an employer to make an employee work more then 35 hours in a week. Can you imagine running that small business? I can see the classified ad: Worker required, lots of work to do, but you don't have to do it because I can't fire you and can't make you work the hours required to get it done, so come and take my money until I go out of business!
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C-Anonymous, 29 Mar 2006 @ 8:05am

France, O France, how I adore thee
You know, for everything that capitalism is worth, it's true potential seems to be restricted by several things including the three things I love-to-hate, the FCC, bureaucracy and lobbyists. With a trifecta like that, you're bound to have people get away with such things like having "natural monopolies" and I write that term with disgust. I may not have numbers and that to go by, but the general concept of this is just mind-boggling. Plain and simple just like this text, a monopoly is a monopoly. Someone needs the guts in any administration to stand up to the plate and just do what needs to be done in order to preserve some sort of stability - and I use that term very vaguely, pick your own definition on this. I'm heavily reliant on the Internet for a lot of things and I know people tell me that there's other resources that I can use, but something like the 'Net is more extensive than anything else I can probably come across in my lifetime apart from the 'Net. Anyhow, thumbs up for France for being intelligent - all the more reason to love Europe more even though they do have some huge quirks about themselves to work out.
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C-Anonymous, 29 Mar 2006 @ 8:06am

France, O France, how I adore thee
You know, for everything that capitalism is worth, it's true potential seems to be restricted by several things including the three things I love-to-hate, the FCC, bureaucracy and lobbyists. With a trifecta like that, you're bound to have people get away with such things like having "natural monopolies" and I write that term with disgust. I may not have numbers and that to go by, but the general concept of this is just mind-boggling. Plain and simple just like this text, a monopoly is a monopoly. Someone needs the guts in any administration to stand up to the plate and just do what needs to be done in order to preserve some sort of stability - and I use that term very vaguely, pick your own definition on this. I'm heavily reliant on the Internet for a lot of things and I know people tell me that there's other resources that I can use, but something like the 'Net is more extensive than anything else I can probably come across in my lifetime apart from the 'Net. Anyhow, thumbs up for France for being intelligent - all the more reason to love Europe more even though they do have some huge quirks about themselves to work out.
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Anonymous Coward, 29 Mar 2006 @ 10:00am

I like how people mention a hands off approach .. but this was to only work in a fair competitive market. Monopolies duopolies, etc.... are neither fair or competitive. Also Why do we say they are the telcos pipes.. they were mostly funded by tax dollars... they are our pipes. Internet should be a public utility and not just for the people that can afford it. There is no simple solution. The government does need to step in. After AT&T was broken up, the consumers did benefit, there is no doubt about that. I think its definitely time for the government to step in again..(but definitely wont happen with the people in govt now )
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spaceguy, 29 Mar 2006 @ 10:36am

Interesting discussion ....
Like someone else said, it's like I need to go back to school to join this one.

I've worked in France a bit and the network infrastructure is impressive when it's available. Like someone else said, when it is not avaliable, the joining cost is high. France is a socilaist country and benefits should be universal when they are offered.

Regarding the US doing anything similar, we would pay for it many, many times. Lobby groups would ensure that the work was granted to those who gave the best bribes. Probably give the contract to Haliburton. Only certainties are that it would take forever and would be done poorly.

Don't know the best technologies, whether cable, dsl, electric wires, satellites or other wireless methods, but it is interesting to note the alternatives are there. Someone recently said that the AT&T break up was very destructive, but things like TCP/IP would probably not have evolved otherwise. This paragraph meant to say that competition is important and works well.

I think Americans do understand that we are not leading the world in broadband capacity; we are low on the list. Partially because we have the original infrastructure, partially because of the continuous research and new development. I don't mind paying $45/month for RR; I just wish it worked better.. It is a shame that the various players don't agree to play nicely and put the customer first, but when did that ever happen?
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Some French, 29 Mar 2006 @ 11:23am

Something to be proud of (endly!)
Dsl came up in france in 2000 .... it was like $50 for 512k/128k ...
2002 : bid opening -> rise to 1meg(dl)

Now we get between 8 and 20 Mbps (dl) and almost 1Mbps(ul) + TV + Phone -> 30€!
Even cable offers can't compete. The main issue is "hotline" service whih you have to pay like $0.40/minute ... with paying wait time and often long minutes waiting ...

Even smaller town get outrageous DSL speed ...
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Move further ?, 29 Mar 2006 @ 11:26am

While we get stucked in our " roadrunner" we stare at French get Triple play for 30€ .... and they stare at Japanese " Fiber to the home" :-)

France gov is trying to make a shift on Fiber... but the bill is hurting so only Paris gets it for the moment ....
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Jimi Spier, 29 Mar 2006 @ 12:01pm

France did something better than the USA
In unrelated news, there have been numerous reports of snow showers in hell..
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luiza, 18 Apr 2006 @ 1:55am

Re: write right
Dude, For G-d's Sake &Sentence Structure:
"A critic is someone who comes down from the mountain top after the battle and shoots the wounded." -Honoré Balzac

Not all of us are blessed with the formal education we might like.
Me, for example. I struggle with sentence structure all the time.
Judge a post on it's content and it's characterizations and not the color or structure of it's sentences. Let the market decide if sentence structure makes post
nonsense. Your critical remark seemed like the rude, cold, splash of a nonsequitor. It was off topic, critical, and not constructive at all, since you did never respond to the poster's ideas or points, which we all realize might be better served in a sentence of better structure. But, Dudette, he wasn't that oblique. Stop showing off and memorize that quote. I bet you're not perfect either!!!
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Paulo Fermi, 18 Apr 2006 @ 2:10am

Re: Re: write right
Atta girl !!!
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Paulo Fermi, 18 Apr 2006 @ 3:52am

Re: Re: write right
Atta girl !!!
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