Last week, Zoe Chace and Jacob Goldstein, co-hosts of the popular blog-and-podcast Planet Money, interviewed NCTA President & CEO Michael Powell. Parts of the interview were used in a just-released episode of the show about why broadband ISPs in the U.S. aren't regulated the same way as those in the UK, titled “The Last Mile.” You can listen to it here.
Planet Money generally does a good job demystifying complex economic issues while preserving their crucial subtleties. And the show’s ability to build narratives around things that would normally be cripplingly boring is impressive. But I also know they – like many content creators under creative constraints – have to tell a tight story. And telling cable’s complicated tale of deep infrastructure investment and incremental success over time via structural innovation is very difficult, especially when “Cable: The Culprit Behind Those Occasional Netflix Pixels” is so much more compelling.
I was worried the show’s narrative was heading into a spot where, rather than revealing what works, would highlight what could be better. I was partially right. Planet Money didn’t get it all wrong. In fact, they honed in on a few clutch points often missed by many. But they neglected to properly address a few others.
One thing they missed on was suggesting that the 2002 decision to classify cable as an information system was a singular moment that determined the fate of the Internet. It was actually a continuation of a bipartisan approach to treat the Internet in a way that wouldn't burden it with the same regulation that had discouraged investment and innovation in the telephone business for so many years. This approach started with then FCC Chairman William Kennard (a Clinton appointee) and continues today.
Planet Money got it right when they uncovered the roots of the current system. They identified the FCC decision in 2002 was based on a vision of developing more competition, not less. By not compelling ISPs to share their infrastructure like telephone lines, the FCC was establishing a system where competition had to come from new innovation rather than settling for a single, shared solution. This is incredibly important. The ISP marketplace was – and still is – fundamentally designed to foster competition through high innovation. But the show got it wrong on the results of this system. Planet Money suggested that over the last 12 years, the anticipated competition from the 2002 decision never arrived. Not so. Competition isn't limited to a single delivery mechanism, and the US is one of the few nations where three different technologies are widely competing (cable modem, DSL and wireless) and that new technologies are encouraged to enter the market. A system where companies resell the same infrastructure (as is done in the UK and suggested by the show to be a better system) isn’t real competition. It’s like five pen companies all selling the same pen but in different colors for different prices. There’s no innovation and no incentive to make the pens better. There’s only the motive for providers to squeeze marginally more market share through nominal benefits. We want real competition through substantial innovation.
The U.S. system requires a bigger commitment but also has a bigger payoff, resulting in more profound advances in Internet and broadband technology. When fiber, 5 GHz Wi-Fi, advanced copper, cable, and yet-unimagined broadband solutions fight for market share, we become able to advance in leaps and bounds – not just incremental product adjustments. For an example, just look to the work being done developing unlicensed spectrum for better Wi-Fi. These kinds of technological jumps define the U.S. marketplace and are an essential benefit to classifying broadband as an information service instead of a telephone line.
We always welcome conversation and questions about broadband – cable in particular – and the role it plays in Internet innovation. Planet Money provided a compelling but incomplete story that missed some opportunities, but we’re pleased that they’re encouraging dialogue. If only we could get them to tell the story of DOCSIS 3.1…