Generous by your definition means a quick ride to bankruptcy for most ISPs. Looking at your <http://www.zdnet.com/blog/ou/a-geeks-trip-to-capitol-hill-on-network-manage ment/1039> past ridiculous claims and the literature of Free Press, you define "cost" as marginal costs while ignoring all other costs that are substantially larger. According to one of Free Press' papers, Cable broadband should be faster and slashed to a fraction of the cost while still allowing them plenty of gross margin profit. But based on the current sub 10% net margins the ISPs live with, that means they'll eventually get run out of business.
From: [email protected] [mailto:[email protected]] On Behalf Of Dave Burstein Sent: Sunday, August 29, 2010 4:00 PM To: Richard Bennett Cc: [email protected]; [email protected] Subject: [ NNSquad ] Unbundling rates Richard wrote: "They want cable and telco to pull fiber and then wholesale it to ISPs at or below cost." Every unbundling proposal I can think of, specifically including U.S. UNE's, is defined with a generous return on capital. I'm not very optimistic about unbundling affecting most U.S. consumers because I think the scale the carriers now have in TV,voice, Internet connectivity, and operations make it extremely difficult for unbundling to work in the U.S. but the specific question Richard - and Jules Genachowski - have to answer is, "If we find monopoly like-pricing unacceptable, what alternative do you offer?" Currently, Verizon, Comcast and their peers are charging $100 for high speeds that cost $50 and less in France, England, and Vermont. To me, that is pretty good evidence competition is weak and prices could be much lower. I'm willing to accept that competition might work in low speeds/wireless, because 300 megahertz is enough for 10 networks like Verizon's LTE. V & T are pulling away from the others so successfully it will probably require strong government action to protect competition for that to work, and at least through 2013-2015 U.S. wireless prices will be somewhat higher than if we had strong competition. I'm not happy, but waiting that long is not off-the-wall. But unless someone sees something that will bring prices for highspeed/wired connections, I feel something must be done. Richard, are you really an advocate of strong regulation and probably price-fixing for high speeds? Or do you have a better way to reduce monopoly-like prices? db
