Last updated on May 13th, 2019 at 02:22 pm
– Whose ox is gored?
By Bob Chernow, for SBT
For many years, I have chaired both the Regional Telecommunications Commission and the North Shore Cable Commission, while working as a stockbroker and small business owner and investor. A "mantra" that has permeated my activities is that competition is good for local communities, consumers, and businesses.
Unfortunately, competitive entities often ignore that guiding principle in pursuit of the bottom line. Many large businesses go to great extremes to reduce competition with the hope of manipulating prices and controlling the market.
I understand why. They can get more, while providing less. Let me offer a few examples:
Time Warner Cable has made it difficult if not impossible for ISPs (local Internet providers) to use Time Warner’s infrastructure. When AOL merged with Time Warner they agreed to open up their system. That has only been done on a limited basis with one firm. Indeed, Time Warner has a policy by which they will not permit ISPs to advertise on cable.
A few years ago, Time Warner made a sweetheart deal with the FCC so that local government effectively lost its right to regulate rates on cable and permitted Time Warner to raise its yearly rates about 6%. That money was used to upgrade its cable system with fiber optics on which its Internet system, Roadrunner, operates. Now the co-opted FCC has "separated" Internet from cable at the behest of Time Warner and other cable operators.
Good for them; bad for us.
Why? Because the only competition in the field comes from telephone companies such as SBC Ameritech. These companies are regulated differently than cable. The FCC and the federal government want the Baby Bells to be more competitive within their own system and burden them with mountains of restrictive rules and costs which makes it difficult to compete with cable operators.
What is needed, of course, is an even playing field, a phenomenon presently lacking.
Here’s another example: In many small Wisconsin communities, high-speed access to the Internet is not available. The telephone companies believe that the market is not "profitable" enough for investment. Many municipal electric companies want to fill the void and provide Internet access, but have been forestalled by companies like Verizon (formerly GTE), which have tried to stop them.
The reason is simple. Local municipal electric companies are willing to provide better service at a lower price. The telephone company wants to keep its effective monopoly without providing new service. They know that many small businesses will flock to better service at a lower cost. Wouldn’t you?
Why is this important to us as small and medium-sized businesses? It is important because we need a means to communicate with businesses, consumers, and clients using a reliable and economic system. When one side controls the market, we pay the price. When we have a monopoly it is hard to find an alternative, at any price.
What is the solution? First, place cable and the telephone companies on a level playing field, functioning under the same regulations. Second, permit local municipal electric utilities to complete in rural areas where the phone companies refuse to provide service for a reasonable fee.
In the end, healthy competition results in better prices and services, benefiting all of us.
April 26, 2002 Small Business Times, Milwaukee