13 March 2017

This is the Magic of the Marketplace that New FCC Chair Ajit Pai So Loves

The Wonders of the Market
There is a (soon to be canceled by the Trump administration, no doubt) federal program that requires that low cost internet be provided to poor people where broadband is available.

AT&T's way of dealing with this was to scrupulously ensure that there was no broadband available to the poor so that they could over charge them:
It's no secret that ISPs can make more money from network upgrades in wealthy neighborhoods than low-income ones, and a new analysis of Cleveland, Ohio, by broadband advocacy groups appears to show that AT&T is following that strategy. The National Digital Inclusion Alliance (NDIA) and a Cleveland-based group called Connect Your Community alleged in their report today that "AT&T has systematically discriminated against lower-income Cleveland neighborhoods in its deployment of home Internet and video technologies over the past decade."

Last year, the NDIA brought attention to AT&T's refusal to provide $5-per-month Internet service to poor people in areas where the company hasn't upgraded its network. When the Federal Communications Commission approved AT&T's purchase of DirecTV in 2015, the FCC required AT&T to provide discount broadband to poor people as condition of the merger. But the condition apparently allowed AT&T to charge full price in areas where maximum download speeds were less than 3Mbps. After the NDIA spoke out, AT&T announced it would stop exploiting the loophole and instead provide discount Internet to poor people in all parts of its network.

Today's followup report from the NDIA and Connect Your Community analyzes FCC data on AT&T Internet deployments in Cleveland, where many residents were initially declared ineligible for the discount broadband service.

"Specifically, AT&T has chosen not to extend its 'fiber-to-the-node' VDSL infrastructure—which is now the standard for most Cuyahoga County suburbs and other urban AT&T markets throughout the US—to the majority of Cleveland Census blocks, including the overwhelming majority of blocks with individual poverty rates above 35 percent," the report said.


AT&T DSL speeds are often extremely slow when service is delivered entirely over copper telephone wires from central offices that can be nearly three miles from individual homes. Data speeds degrade with distance over copper, so AT&T boosts speeds in many areas by bringing fiber deeper into each neighborhood with its fiber-to-the-node (FTTN) technology. AT&T's fastest speeds of all involve bringing fiber all the way to each home.

"AT&T apparently chose not to install fiber-to-the-node infrastructure anywhere in the areas served by its four Cleveland central offices with the greatest concentration of high-poverty neighborhoods," the advocacy groups wrote. "The absence of FTTN in these lower-income neighborhoods, and the overall disparity in FTTN deployment between Cleveland and the suburbs, can be traced largely to AT&T’s failure to deploy FTTN anywhere in the service areas of four 'central offices'... with large lower-income customer bases: those at 6513 Guthrie, 5400 Prospect, 2130 East 107th, and 12223 St. Clair."

By contrast, "Most of Cuyahoga County’s suburban communities are fully covered" by faster AT&T network technologies, including fiber-to-the-home, the report said.


The NDIA shared its findings with Federal Communications Commission member Mignon Clyburn, a Democrat, but it isn't expecting any action from the FCC's Republican leadership.

"The current chair of the FCC [Ajit Pai] is not likely to be interested," Siefer told Ars. "We have shared this research with Commissioner Clyburn's office. We do not see a path in the current climate (federally and in Ohio) to force AT&T to make the upgrades. We do see this research as proof that further deregulation is not going to reduce the digital divide. Our solutions will likely include local, state, and federal policies that encourage equitable build-out. We also need competition to bring down residential broadband costs. If AT&T is not going to serve low-income areas then we need policies and initiatives that actively recruit other broadband providers."
Pai's theory is that if you allow poorly regulated monopolists to gouge and charge monopoly rents, then they will invest in better service.

Reality indicates that all that if you allow poorly regulated monopolists to gouge and charge monopoly rents, they will invest in ensuring that they can maintain those monopoly rents, to the exclusion of customer service and innovation.

AT&T spent its money in Ohio on banning municipal broadband, instead of getting poor people decent internet service.

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