Government Accountability Office Slams FCC Over Broadband Competition Data... Again

from the bureaucratically-defined-competition dept

Thu, Nov 30th 2006 3:11pm — Mike Masnick

Last year, the GAO put out a report slamming the FCC's data on broadband competitiveness. The FCC used a system whereby if a single household in a zipcode could receive broadband, they assumed that entire zip code could. Thus, if two broadband providers existed within the same zip code, no matter how non-competitive they were, the FCC considered that entire region perfectly competitive. The GAO has now done a more complete study of the FCC's competitiveness data, and it only gets worse. Someone who prefers to remain anonymous points us to the report which rips apart the FCC's methodology (warning: annoying pdf file). As if to be clear, the report's title is: "FCC Needs to Improve Its Ability to Monitor and Determine the Extent of Competition in Dedicated Access Services." They're not shy about their findings either. The report looks at services for businesses, rather than consumers, but the findings are pretty stark. In various metropolitan areas, they only found competition in 6% of buildings. In certain areas that are considered to have "high demand" the number only goes up to 10 to 25%. Furthermore, the report found that while overall prices have decreased, it only was due to regulatory pressure to push down prices. In the areas where the FCC claimed there was competition and removed regulatory control of pricing, pricing tended to rise. The report also criticizes the FCC for its data collection methods, noting they never revisit an area to determine if competitiveness changes -- despite companies going out of business or being bought up by others. Finally, some of the data collected comes from third parties who have no obligation to provide the data or be truthful about it -- and the FCC has no process for verifying the data. Perhaps that's why they turn down requests to see the underlying data. All in all, it's pretty damning, but so was the report this past summer about their practices, and what's happened since then? Absolutely nothing. Don't expect this to change any time soon, either.

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Derek Kerton (profile), 30 Nov 2006 @ 3:11pm

This Data Is Used To Form Policy
It's not just a matter of the FCC having accurate information. The Data and results need to be accurate, or at least approximations of the truth because serious policy discussions are being made based on the results. In the case of this data, if the FCC concludes that there IS competition, despite the fact that there actually is not, there will be a greater permissiveness in government, the FTC, and courts for mergers, consolidations, etc, which further reduce competition. Any efforts the government may have undertaken to stimulate competition would cease, since, apparently, we would already have competition. The obvious example of this is the fact that telco lobbies, astroturf groups funded by telco, and corrupt politicians often trot out the FCC data as if it's fact. They then argue that things like Network Neutrality are ridiculous interferences in a competitive market. Many people accept the FCC conclusions at face value. That is wrong. Whatever you think of Net Neutrality, you need to have accurate facts. This data is so flawed that we would be better off spending $0 on research and having no data at all. And any researcher worth his salt can come up with a better, scientific, research method than the faulted zip code clustering. For example, a research firm could run a telephone survey, ask 10,000 random Americans how many broadband options they have at their home. This would have inaccuracies, too, of course, but would provide better-quality results than the piss-poor FCC research. We're not conspiracy theorists here at Techdirt, but we will say it stinks a little that the FCC data seems to play so well into the hands of the "There is broadband competition in the US" side of the debate. It's possible that the bias is deliberate. That is a more nefarious possibility, because it's one thing to say that the FCC is incompetent in their research, but more frightening to think our government is trying to fool us in order to benefit some special interest. But that would never happen...
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steveH, 30 Nov 2006 @ 3:40pm

PDF alternative
Good article on a subject that has continually had me scratching my head in bafflement. PDF files open almost as quickly as a webpage with Foxit Reader: http://www.foxitsoftware.com/pdf/rd_intro.php I've been using it for years and have lost my trepidation about clicking on a .pdf link. Oh yeah...it is absolutely free.
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Stu, 30 Nov 2006 @ 4:29pm

GAO is an agency that actually has the guts to call things the way they see them, and not cave in to the "bought and paid for" politicians.

Bravo for them!!

Wouldn't it be nice if the entire government operated that way?
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Chris Lindgren, 30 Nov 2006 @ 4:51pm

Then start an ISP
If its so damning then go start an ISP. Since there are so many spots without service you should be able to really make some good money by undercutting all the overcharging ISPs.

I just wish we did not have to pay for these completely worthless reports from both FCC and GAO thats the problem you should focus on.
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Paul, 30 Nov 2006 @ 5:59pm

What this means.
Ok so

Lets say Comcast (cable internet) can deliver internet to an entire zip code area.
SBC (DSL internet) can only deliver internet to 5% of the zip code because DSL can only go so far from the telco station.

FCC stamps that zip code as competitive even though 95% of the people in the zip code have no choice but to go with Comcast for internet.

Why is this, or their report, important?
Misleading? Sure, but is that is?
Is there some underlying consequence to marking a territory as competitive when it is not?
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Charles Griswold, 30 Nov 2006 @ 7:28pm

Re: What this means.
Why is this, or their report, important?
Misleading? Sure, but is that is?
Is there some underlying consequence to marking a territory as competitive when it is not?

Yes, it is important and yes there is a consequence. When the government lies to us they need to be called on it. We cannot let them get away with what amounts to a bald-faced lie, regardless of what it is that they're lying about.

And no, don't trot out the "national security" argument. These kind of lies have nothing to do with national security.
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Bri, 30 Nov 2006 @ 9:14pm

No matter what...
No matter what methodology you use, someone is going to savage you whether it was the best technique for the study or not. What the FCC statisticians did was use a technique called clustering, in this case business customers were clustered by zip code. Given a stratified sample that's usually a good choice, except if you are on the side oppositie the telcos and cable companies, in which case it should be done building by building or, even better, customer by customer. If you object to the governemt wasting money on this for doing it by zip codes, wait until you see the bill for the more refined techniques.
Statisticians, sociometricians, econometricians, and research scientists (I've been there done that in all four categories) have to make choices when they structure an experiment. Frankly, I think the use of clustering by zip code wasn't a good choice especially in a competition study but it was almost certainly the least worst choice given a limited budget to conduct such a study. Why is the least worst? At least you still capture those municipalities awarding monopolies in their localities.
FWIW, if everyone had the budget the GAO has for each of their studies, there wouldn't be a problem. I 've compared what they get to do their studies and what I had (the cost of paper & pens). I am seriously underwhelmed by their acuity in the face of overwhelming resources, to say the least.
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Derek Kerton (profile), 1 Dec 2006 @ 2:02am

The Data Is Used To Formulate Policy
Aside from the earlier comment that we need accurate data because we simply deserve an honest government, there is a more important factor at work here.

The Data and results need to be accurate, or at least approximations of the truth because serious policy discussions are being made based on the results.

In the case of this data, if the FCC concludes that there IS competition, despite the fact that there actually is not, there will be a greater permissiveness in government and courts for mergers, consolidations, etc, which further reduce competition. Any efforts the government may have undertaken to stimulate competition would cease, since, apparently, we would already have competition.

The obvious example of this is the fact that telco lobbies, astroturf groups funded by telco, and corrupt politicians often trot out the FCC data as if it's fact. They then argue that things like Network Neutrality are ridiculous interferences in a competitive market. Many people accept the FCC conclusions at face value. That is wrong. Whatever you think of Net Neutrality, you need to have accurate facts.

As to the statistician above who points out that perhaps the FCC merely used the most cost effective research technique, I find that unacceptable. If the "least worst" research method yields inaccurate results, then it is worse than spending $0 and having no research - thus NOT least worse.

And any researcher worth his salt can come up with a better, scientific, research method than the faulted zip code clustering. For example, a research firm could run a random telephone survey, ask 10,000 random Americans how many broadband options they have at their home. This would have inaccuracies, too, of course, but would provide better-quality results than the piss-poor FCC research.

We're not conspiracy theorists here at Techdirt, but we will say it stinks a little that the FCC data seems to play so well into the hands of the "There is broadband competition in the US" side of the debate. It's possible that the bias is deliberate. That is a more nefarious possibility, because it's one thing to say that the FCC is incompetent in their research, but more frightening to think our government is trying to fool us in order to benefit some special interest.

But that would never happen...
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widepart, 1 Dec 2006 @ 5:54am

what is means is your government is agian holding
citizens back for the sake of profits for some companies over others.

The U S is falling behind other countries when it comes to broadband availablity and the speeds offered and prices low enough for people to afford.

This form of control is injuring the American competitivenes worldwide.
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Anonymous Coward, 1 Dec 2006 @ 7:53am

Re: Then start an ISP
Since there are so many spots without service you should be able to really make some good money by undercutting all the overcharging ISPs.
In a free market that is what would happen. The problem is that it is not a free market because of government regulations that protect the entrenched monopolies. That is why many people want to see the elimination of the monopoly protections. Barring that, they would like to at least see the government regulate the monopolies they protect. The bought-and-paid-for government (FCC, etc.) is mostly responding by trying to protect their big "donor" monopolies by denying the existence of the problem (bogus reports, etc.).
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D.J., 1 Dec 2006 @ 8:47am

Also
Not to mention that no matter what choices you have in your area, the big 4 telcos.

ATT
Bellsouth (they havent merged yet)
Verizon
Quest

All control the backbones the smaller isps use to connect their customers.

So they make their cut either way.
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Lewis Salem, 1 Dec 2006 @ 9:25am

Thanks!
Thanks steveH! No more adobe pdf loading hell and process overhead.
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Mike, 2 Dec 2006 @ 2:03pm

Also...
In addition to some of the comments made above, the data of broadband competitiveness offered by the FCC also serves to highlight the extent to which the current administration panders to and protects "big business"-- all to the detriment of the average consumer. The methods utilized by the FCC are no accident...they are specifically chosen to yield results that provide the appearance of fairness and legality. The end result being the perpetuation of monopolies who provide substandard service at ever increasing prices.
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HollyBarrett, 12 Nov 2007 @ 5:35pm

people and their competitiveness
why do people compete so much it is okay to compete avargly but some people go overbored it is not right.
What i don't understand why they act how they do when they lose it is like they are being controled by competitiveness. some abuse their loved ones or friends if they take it to sereisly and that can lead to disater i hope you will understand what i have just written and come to some conclusions but right not i have to study for inquiry at school by the way i am 12 years of age and please don't write to me back bie now it was nice writing this letter 1382648926472629452
[ link to this | view in thread ]
HollyBarrett, 12 Nov 2007 @ 5:36pm

people and their competitiveness
why do people compete so much it is okay to compete avargly but some people go overbored it is not right.
What i don't understand why they act how they do when they lose it is like they are being controled by competitiveness. some abuse their loved ones or friends if they take it to sereisly and that can lead to disater i hope you will understand what i have just written and come to some conclusions but right not i have to study for inquiry at school by the way i am 12 years of age and please don't write to me back bie now it was nice writing this letter 1382648926472629452
[ link to this | view in thread ]