Sunday, February 16, 2014

The Public Option: Municipal Broadband Access

The recent announcement of the Comcast acquisition of Time Warner Cable has caused quite a furore. Consumer advocates are worried that it will cause problems, higher prices, bad performance etc. The issue is it will lead to the creation of a giant monopoly. Comcast argues that it is not a monopoly and as it is Time Warner and Comcast do not compete in any market so it should make no difference anyway. There are two issues here: (a) first is the question why have Time Warner and Comcast, two giant corporations not competed anywhere yet? and, (b) the second and more important issue is not that of competition for cable service, which ostensibly Dish Networks also provides, but for Broadband access, where 19 of the top 20 metropolitan areas in the US will have only one choice for wired Broadband.

The merger/acquisition is not between two Cable companies, but that of wired Broadband ISPs that are virtual monopolies.

Our work, Richard T. B. Ma and Vishal Misra, The Public Option: a Non-regulatory Alternative to Network NeutralityIEEE/ACM Transactions on Networking, 2013, proposed a non-regulatory option to Network Neutrality that works for consumers. A presentation based on the work is available here. We developed a realistic equilibrium model for congestion on the Internet, taking into account content bandwidth demand, user patience levels and the impact of protocols like TCP.

Our analysis showed that if the Internet provider is a monopoly, it can hurt consumers in many ways. If Network Neutrality is not in place, ISPs can create scenarios that hurt both consumers as well as content providers, with the remedy being paying more revenue to the ISP. This revenue can be collected directly from the broadband subscribers, or by the content providers in the style of AT&T sponsored data. In either case, the extra costs will be passed on to the consumer.

The alternative is true competition with multiple providers, where consumers have options that they can instantly switch to (and for our arguments, a month qualifies as instantly). In fact, our work shows that if true competition exists with multiple providers, network neutrality does not benefit consumers and there is a case to be made for non-neutral ISP services, one size does not fit all. But only if there is true competition. A way to get more competition at the eyeball level for consumers is via something like local loop unbundling (LLU). LLU operators are prevalent in Europe where the broadband market does have healthy competition and lower rates than the US.

The other option is what we call The Public Option. The Public Option is an ISP that voluntarily implements Network Neutrality. Our work shows that the presence of the Public Option is good for social welfare - ISPs can implement non network-neutral policies if they desire, but the consumers and content providers do not lose out.

One of the possibilities that we laid out in our paper was that The Public Option be implemented via municipal broadband.

Our proposal is almost exactly what Susan Crawford has been advocating, like the municipal broadband effort in Massachusetts. As she spoke about in a recent talk, the concept has shown to be viable economically in Stockholm, via the Stokab project. Google fiber, while attractive, isn't going to be a real option for 99% of the nation. It will show what true broadband access is capable of (which the rest of the world is learning much faster than the US), but Google will never become a FTTH ISP.  Local bodies can provide an alternative, and we think The Public Option via municipal broadband is the way to go.


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