The iPhone, Net Neutrality and the FCC

[Commentary] Broadband usage caps or pricing tiers are nasty road bumps or even brick walls on the decades-long path of progress and productivity that has driven the U.S. economy since the early 1980s. I think competition fixes all that.

But less than 1% of 30,000 cable markets had more than one provider in 2000 and 2005. Any guesses for 2010? In Paris and Tokyo, competition is vibrant, with eight to 10 competitors, speeds higher, and prices much lower than in the U.S. More competition here is the way to keep bandwidth charges reasonable. Thinking a few more chess moves ahead, the Federal Communications Commission can use the threat of regulation to kick-start real competition in wireless data and cable broadband. How? Just threaten local cable companies with common carrier/telecommunications service regulations, unless they can prove that there are viable competitors, municipality by municipality. And not pokey phone-company DSL competition, but real broadband providers offering service at, say, 10 megabits per second. To do this, the FCC would set common-carrier pricing for consumers of now-Title I designated cable-modem Internet service just below the debt-servicing level of the cable companies. Comcast has almost $30 billion in debt, Time Warner Cable $24 billion, and Cablevision $11 billion. With potential negative cash flow, see how fast cable companies will start lobbying for competitors. We would all get fiber to our homes in a heartbeat and network neutrality would happen naturally. Plus, the stock market will gladly fund the new and hopefully less debt-laden competition. The same tactic can work with wireless data.

Competition is the only way we can stop talking about allocating scarce resources via regulation and network neutrality and start talking about how we are going to use a future bandwidth bounty of 100 megabits per second. Maybe video calls will finally come of age.