Let There Be Bandwidth

[SOURCE: Wall Street Journal, AUTHOR: Bret Swanson, Discovery Institute and Gilder Technology Report]
[Commentary] The $170 billion combination of AT&T and BellSouth into the world's largest telecom company is a perfectly natural progression of business and technology. The merger will rationalize a market beset by decades of political mismanagement. Although this latest reintegration will not reduce the number of competitors in the marketplace, it is sure to supercharge the ever-present denunciations of monopoly that are behind every effort to regulate telecom. This time around, the main agent is the colossus Google. Exactly one decade after the disastrous 1996 act set us on a path for the telecom crash and a plunge to 16th in world broadband rankings, Google is leading an alliance of politicians, lobbyists and interested companies under the aegis of "net neutrality." If enacted, it will repeat the most basic mistakes of earlier legislation. Net neutrality supposedly seeks the modest goal of stopping the cable TV or telecom companies from "blocking" or "degrading" the content or services of online companies like Google, Vonage or AOL, which are invading traditional voice and video businesses. But the interwoven issues of content and conduit pervade the entire information economy, including the systems of Google itself. Barely recovering from the FCC's "open access" mandates that chopped up and assigned ownership rights and prices to the physical infrastructure -- the hardware -- of the Net, we now face the prospect of rigid reassignment of content, applications, services and protocols, too. Blocking and degrading Internet access would quite simply be business suicide for incumbent service providers. Compared to cable's other content operations like basic and premium TV channels, its broadband cable modem services are more than 50 times as profitable per unit of bandwidth consumed. This means that with just a tiny sliver of the usable bandwidth in its pipes, cable's Internet services supply about 20% of the revenue and the majority of their net income. Does anyone really think the bandwidth providers are going to kill their golden goose? The solution to all this is rather simple -- more bandwidth. Abundant bandwidth means the vast majority of online services, such as Web pages, email and voice, won't pose any congestion problems and will thus easily reach end-users. It also means bandwidth cheap enough that content companies won't mind paying for access. Across the network, different carriers have always charged different prices for varying amounts and qualities. Abundant bandwidth also gives the cable and telecom service providers the flexibility they need to manage this transition from a world of 200 dedicated channels to one with millions of open channels. AT&T's biggest challenge may be branding itself to a new generation of voracious communications consumers who are oblivious to "long-distance" and only know a world of no-distance chats, texts and blogs. It would be far better if Washington listened to these teeny-bopper baby belles instead of basing its merger, net neutrality and franchising policies on a Great Grandma Bell world that no longer exists.
http://online.wsj.com/article/SB114170297909791156.html?mod=todays_us_op...
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