Copyright 2002 The Christian Science Publishing Society Christian Science Monitor (Boston, MA)
August 19, 2002, Monday
SECTION: FEATURES; WORK & MONEY; Pg. 14
LENGTH: 537 words
HEADLINE:
Broadband competition may face new limitations
BYLINE: Noel C. Paul
HIGHLIGHT: An FCC ruling passed this spring may cut
down on service options for consumers.
BODY: Consumers considering how much broadband service will cost in the
future might naturally suspect that competition will lower prices.
Broadband is an attractive business now. Often only
two companies compete for customer contracts in most communities. Both the cable
and telephone industries have consistently raised prices over the past year.
Observers say they earn profit margins of about 40 percent.
Yet a recent decision by the Federal Communications
Commission will likely block more companies from entering the fray, consumer
advocates say. The FCC decided in March that cable companies were no
longer required to share their systems with competing broadband service
providers. The agency is currently reassessing its "open-access" rule for local phone companies as well.
The result, consumer advocates say, is that
consumers will have fewer choices for broadband service, and will undoubtedly
pay more.
"For the first time in the history of
this country, the major means of communication and commerce will not be subject
to a common-carrier obligation," says Mark Cooper, director of research for the
Consumer Federation of America (CFA), a consumer-advocacy group in Washington,
D.C. "People need to understand how radical a concept this is."
Even before the March decision, broadband providers
EarthLink and Juneau were the only major competitors able to gain marginal
access to cable company networks, according to Mr. Cooper. In fact, just 10
providers service 85 percent of broadband customers nationwide. The FCC's
decision could shrink that number, experts say.
The limited competition contrasts sharply with the Internet dial-up
industry, in which there has never been fewer than 10 competitors offering
service for every 100,000 consumers, primarily because of a government-mandated
open-access rule, according to the CFA.
Cable
industry officials argue that the government does not need to mandate
open-access in order for competition to flourish. "Government regulation would
only slow the process of bringing choice to networks," says AT&T Broadband
spokesperson Sarah Eder.
Cable companies will be
able to share their networks better, says Ms. Eder, if they are able to develop
unique business relationships with smaller competitors rather than be required
to fit them into a government-mandated model.
She
points to relationships AT&T recently established with two small broadband
providers in New England and Seattle as evidence of increasing competition.
Some cable providers are offering even more choices
to consumers. TimeWarner/America Online, for example, now allows people to
choose among up to five cable-based services in some areas of the country,
according to Marc Smith, spokesperson of the National Cable &
Telecommunications Association.
Mr. Smith says
the cable companies have earned the right to determine with which companies they
wish to share their networks. "We as an industry have invested over $ 60 billion
since 1996," says Smith. "We should be the ones to decide how the network is
utilized."