Thursday, October 11, 2012

Break Up Big Telecom

Have you looked at your wireless bill lately? If you’re like most Americans your bill has continued to go up while your service continues to dwindle and you are even capped at a low rate of usage. T Mobile charges $70 a month for a data plan capped at 5gbs at 4G speeds. It is the same with wired internet, cable providers charge you $50-70 month for subpar service of 5mbps with capped usages only to charge you exorbitant fees for going over your data limit. Why do they do this, because if you can’t go over a certain threshold they won’t be forced to update their infrastructure?  In fact, the United States internet infrastructure ranks 15th in the world, that’s right behind Romania and Hong Kong. Like the Oil Trusts of the early 20th century wired telecommunications companies are monopolies, although only regionally. Time Warner and Comcast’s services do not overlap and they are permitted to function unopposed from one and other. Likewise, AT&T and Verizon maintain a hold over 80% of wireless customers. Without the necessary competition to lead to competitive pricing and innovation the US internet infrastructure is in desperate need of an upgrade and Americans are burdened with overpricing. One option is for the FCC to file suit and force these companies to divest into smaller competing companies to help breed innovation. Some optimism is on the forefront as Google has introduced its Google Fiber to Kansas City. This plan has provided fiber optics to the city and those making use of Google Fiber boast speeds of 1gbps, that’s 200 times faster what current cable providers allow. It is imperative for this country that something is done as not everyone can live in Kansas City.

Some countries have already developed successful plans for keeping their infrastructure up to par to a 21st century landscape. Countries like New Zealand have been wildly successful models. In fact, New Zealand bars companies who provide network services from developing content or alternate services, which prevents network service providers from favoring their own content and services. New Zealand, also took the stance of treating fiber networks in much of the way we deal with water and electricity in this country. By building the infrastructure and then allowing private companies buy the networks in which homes and businesses are built upon. This not only leads to greater innovation in infrastructure it frees up capital for future infrastructure projects, all the while spurring private investment.

In the early 20th century the Standard Oil Trust had a similar hold over oil in this country. Much like the big telecommunications companies the gouged price and set their own price standards. That is until Teddy Roosevelt broke up Standard Oil among other prominent monopolies. This isn’t the first time a company such as AT&T has been accused of being a monopoly. In fact, just last year it was barred from purchasing T Mobile for just that reason. Reagan divested the company in the early 80’s and AT&T corp was broken apart from South Western Bell. In 1995 South Western Bell bought its former parent company and 22 of its former subsidiaries and took on its former parents name and logo once again. It is time for the government to not only break up this Telecom monopoly but regional monopolies like Comcast and Mediacom and bar these businesses from competing in both networking and data services which has allowed them to simply “harvest” their profits rather than compete to earn them.
Break Up Big Telecom

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