Nov. 4 2015 01:03 PM

Let’s think twice before negotiating with Internet Service Providers

Google Fiber recently announced that San Diego is on a short list of potential sites for its next “fiberhood” project. This comes at the same time the federal government and the White House have made clear policy declarations to support community-owned broadband developments.

This is exciting, but worth some thought.

A fiberhood is a community that has an infrastructure for blazing fast Internet speeds, available to every home. Think of it as a freeway for cars that travel as fast as rocket ships. Want to stream Netflix while downloading a movie? No problem. You could have a person streaming Netflix while downloading a movie in one room, someone playing online video games in another, and someone else giving an online presentation to a coworker in China while uploading video files, all at the same time.

The Internet connection wouldn’t skip a beat.

The interest in fiberhoods is more than just about Internet connection speeds. Studies show that home values in these “connected communities” increase by about 3 to 5 percent overnight. High-tech businesses flock to these communities, bringing jobs and tax revenues. And Internet Service Providers (ISPs) that bring fiber technology to communities often charge less than you are paying now for your spotty connections.

So why wouldn’t our city just swing open the door and let a major service provider invest in such a valuable infrastructure? For the same reason we wouldn’t let Ford or BMW own our roads.

The Internet, like our roads, is a method of public transit. And major ISPs like AT&T, Cox, and Google, build the cars that bring the Internet to your home.

Opponents of community-owned broadband say governments should stay out of business. And because fiber-optic infrastructure is traditionally treated as a private business asset, the argument is that we should leave broadband development to the free market.

But if major car manufacturers owned the roads, and in turn could choose who got to drive on them, do we really think this would create more competition for better cars?

For this reason, it is no coincidence that ISPs like Time Warner are notoriously the least customer-friendly companies in the world. They have very little, if any, competition in a given community.

If a company wants to compete with a major ISP, for example, it not only has to bring cars that will deliver the Internet to your home or business, it has to first build an entire network of roads.

So, once a major provider builds its infrastructure in a given area, it is largely immune from future competition in the marketplace for consumers. This is, in large part, why there are a lot more car manufacturers than ISPs, despite the fact that it is much harder to build a car than it is to deliver the Internet to a home.

Does this mean the government has to get into the Internet business if we want to increase competition? No. Not any more than the government got in the car business when it started building roads.

Building broadband networks is not rocket science. Whatever major service provider you have, it’s the smart guys and gals like the folks at San Diego’s Qualcomm or Alcatel-Lucent who build the sophisticated technology that brings the Internet to your home. The rest of the Internet infrastructure is pretty much just a string of fiber shoved through a conduit and placed underground.

So really, the only difference between a major provider and a city like San Diego’s ability to build and own the Internet backbone is the value the ISPs and the city bring, respectively, to the negotiating table.

Google Fiber has no customers in San Diego. It has no existing infrastructure in San Diego.

And without the city’s permit approval, it can’t just start digging up San Diego to lay down their fiber.

But the fact that Google has put San Diego on its short list of potential investment locales means one thing at the end of the day: Building and owning the information roads in San Diego is a good business investment.

The difference between a road for cars and a road for Internet is that ISPs can charge consumers to use the lines that deliver the Internet. And they should. If they own it.

That prompts the question: Should we have a toll on every street?

This is why San Diego should not rush to give up its negotiating leverage. The city has the power to determine the contractual terms that determine who receives what benefits from an investment in our infrastructure.

We have the power to make sure our Internet roads stay open for any number of ISPs to compete for a customer’s satisfaction. We have the ability to leverage our bonding power so that we can invest in a profitable venture. We can guarantee low-income communities low-cost access. And we can cut a deal that gives us the benefits associated with ownership and control of any valuable asset.

But we can only do all this if we take the time to understand the extent of our leverage, and the value of that asset. So, should we even have a discussion with Google about bringing fiber-optic technology to our city? Absolutely. Just as we should invite AT&T, Time Warner, Cox and any other service provider to help us do the same.

And only so long as that discussion focuses on the most important issue the city should bring to any negotiating table: focusing on what can we do together to ensure the best service, and the best long-term deal, for the citizens of San Diego.


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