Competition the cure for U.S. broadband woes

U.K. analyst Dean Bubley--the guy who predicts there will be 250 million mobile VoIP phones over the next five years--had an "Aha" moment last week at Lee Dryburgh's eComm2008. One of the speakers asked how many ISPs in Edinburgh (Scotland), to which the answer was, "about 30." The same speaker then asked his U.S. audience the same question of their hometown and the answer came back: one or two!

As Bubley puts it: "Now I understand why Americans get so exercised about open access, net neutrality and so on. I hadn't realized quite how appallingly competition policy had failed in the U.S.--I knew it was bad, but I hadn't really grasped just how bad. The stuff I take for granted in the UK--lots of wholesale ISPs, and quite a few local-loop-unbundled ones, plus cable--just doesn't map onto the reality in the U.S."

"I've realized that I sometimes assume that ordinary, mundane, competition will give deep packet inspection and application-blocking a solidly good kicking. Which is fine, if ordinary, mundane competition actually works," says Bubley

In two paragraphs Bubley destroys the self-congratulatory smugness evident yet again in the FCC's latest puffery on broadband deployment in the U.S. The FCC reports a 55 percent increase in broadband lines in fiscal 2007. Pity that the vast number are 200 kbps lines--OK for email and not much more. Nor that many are on shared cable lines where coverage rises and falls depending on what is on prime time.

And probably more significant is the well-documented reluctance of U.S. providers to roll out voice 2.0 type applications. While the FCC was peddling figures suggesting lots of areas with multiple competitors, the reality for most American homes is an incumbent offering vanilla ADSL and, if lucky a cable operator that provides connectivity which is good as long as the kids stay at school.

But rather than decrying the lack of facilities based competition, the public policy debate has instead been high jacked by the net neutrality crowd--a Utopian socialist view akin to demanding there be no slow lanes on the freeway. Look across the Atlantic and the dynamism and energy of the European IP marketplace can be attributed to one simple fact: effective unbundling of the local loop.

Rather than the FCC running around the Ivy League fraternities holding show trials for Comcast for having the audacity of trying to manage network congestion, maybe the FCC should focus on getting real competition--30 ISPs worth--into the network. Amen. Tom