Open Access - One Guy's Opinion
Open Access (to broadband networks) is seeing renewed interest. Open Access exists when a network ‘owner’ offers wholesale access so retail providers can compete for market share (without the capital risk of building a #broadband network). Advocacy for #openaccess generally originates with policy makers - not network owners. Open Access does have benefits. For example, streets are dug up once to construct a new network, the community realizes the benefits of a new, high-speed network (education, hospitals, job creation, and #workfromhome), and most importantly the competition to encourage the incumbent provider to perform better. Policy makers often cite ‘network neutrality’ as an underlying objective. That is, where the network owner will not favor the speed or reliability of their network traffic over a competitors’ network traffic.
I disagree with Open Access as a policy or strategy. It’s no secret that customer service is the industry’s Achille’s heal. Competition is a better regulator than policy ever will be, and #competition should be the objective; improved customer service and lower prices will result. Any misbehavior by the incumbent provider (i.e., net-neutrality) will be mitigated.
U.S. broadband providers invested $2 Trillion dollars in network upgrades since the 1996 Telecom Act according to USTelecom | The Broadband Association The result has been revolutionary. For instance, a T-1 (or 1.5 MB/sec) in 1996 was almost exclusively a large commercial offering and cost $500 to $2500 / month. After 25 years of network investment, (almost) everyone has access to at least 20x the speed of a T-1 at a fraction of the price.
The same USTelecom | The Broadband Association study states 2021’s $86B investment was accompanied by a 14.7% DROP in prices for popular speed choices & 12% for the highest speeds. Recent network investments are currently heavily-focused on the most rural areas of the country ensuring future economic development in those areas.
Contrast the above with an Open Access model and a goal of #netneutrality . Again, retail providers in an Open Access do not own the network and generally have few options to #differentiate their brand or services. Broadband speeds (the “product”) may be dictated by the network owner. Installation, maintenance, and even tier 1 customer care may be delivered by the network owner. With multiple providers offering the same product and effectively the same customer care, differentiation falls on price. Retail providers did not make the significant #capitalinvestment to build the network. Without the risk of capital loss, these resellers can set uneconomic prices. The industry has countless stories of operators attempting to outrun a cash burn.
Competition (as envisioned by the Telecom Act of 1996) is delivering on the promises of #innovation, lower prices, remote work, and improving #customerexperience. Rural communities are growing as Americans move from congested cities for improved quality of life. Broadband competition is a material (if not primary) driver of these changes. Regulatory policies like Open Access – however well intentioned – are a poor surrogate for competition.