Broadband before its time

The late Orson Welles was famous for his 1938 radio broadcast of “The War of The Worlds” and as the director/star of “Citizen Kane.” But he became globally recognizable to many generations for his Paul Masson wine commercials. You remember: “We will sell no wine before its time.”

Almost 20 years ago, I helped write Probe Research's landmark study, “The End of the RBOCs,” in which we argued that one of the then-seven Bell companies would sell its outside plant in exchange for regulatory freedom to offer any service. This was a novel concept, and it made perfect sense. But it was totally premature. Like a good wine, it had to wait for its time. That time is now.

I just shooed away a nice man selling Cablevision's triple play door-to-door, trying to get me all bundled up long-term before Verizon's FiOS service comes to my neighborhood. It got me thinking. My house has one water pipe, one electrical connection and one gas hookup. Why do I, or anyone else, need two wired broadband pipes? Why does my town need two caravans of trucks digging up streets, lawns, etc.? Wouldn't the billions be better spent ensuring universal broadband access for everyone in a timely manner?

The answer to the last question is yes.

We don't need two broadband fiber pipes. We don't need local government Wi-Fi. What we need is for broadband to be treated like our electric, gas and water services: as true utilities. Yes, we all need more fiber in our diet. But we all need competition based on value-added and compelling experiences — not the commodity pipe.

Telcos and cable companies don't really want to install, manage and maintain “plumbing.” The days when customer control was asserted because access to all services came through a monopoly access network ended with the mass adoption of the Internet. Voice over IP and wireless are just the nails in the coffin.

Why not have the service providers divest their outside plant and local switches? Local or regional authorities could regulate them and, perish the thought, really do the job. Let's say that it is in the national interest and a right for everyone in this country to have universal, nondiscriminatory access to broadband at reasonable rates. Let's force that broadband utility to use its revenues to provide the broadband facilities we need to flourish as a country, including ubiquitous local wireless access. Let's close the broadband deployment gap that exists between the U.S. and the rest of the developed world. If this is not a great argument on the basis of economic efficiency, it is certainly a great one for fairness and economic development.

Who would benefit from having one broadband access utility with equal access and interconnection? For starters, customers would have lower rates and more choice in value-added services. Billions in needless expenses for duplicative plant construction, management and upgrades would be avoided.

And did I mention Wall Street? Think of the divestment fees, the financing fees, the change in valuations and the enrichment of shareholders. Think of the promise of write-downs for all that old copper. This is a mother lode for the investment community. Corks would fly at public service commissions around the country. Plus, it is a win-win for rate-payers as well as shareholders. Politicians would rejoice.

OK, so we have this little “liquidity” problem at the moment. But financing, while tough in this environment, wouldn't be impossible. There is not exactly a lot of risk here. If you think I'm crazy, check with your favorite academics and think tanks. Just remember you heard it here first.

Now, if you will please excuse me, it's time to crack open a bottle of Paul Masson Cabernet. Cheers!

Peter Bernstein is president of
Peter A. Bernstein Associates Inc.
He can be reached at pabernstein@optonline.net.