When I moved into an apartment in Cambridge earlier this year, the Comcast installer was blunt: “We’ve got an exclusive deal with the city,” he said. “No competition coming in here.”
The installer may have gotten his facts wrong —
Boston Mayor Marty Walsh and his counterparts in Cambridge and Somerville need to fix this situation quickly. Otherwise, this innovative, market-creating region will lose its edge. To be the place where the jobs of the future are born, Boston needs to ensure that all its businesses and homes are connected to wholesale high-capacity, fiber lines that allow for competitive, inexpensive, and unlimited Internet communications both upstream and down. This is basic infrastructure, not a luxury, and we need it now.
Here’s the problem: Last week’s news that Comcast plans a $45 billion merger with Time Warner Cable makes an atrocious situation worse. The cable giants long ago cooperated by way of swaps and deals to cluster their systems in individual metro areas (”You take San Francisco, I’ll take Dallas”), so they never enter each other’s territories. Comcast’s argument in favor of the deal is that it doesn’t reduce competition.
That’s misleading. Don’t think of these companies as selling “cable.” They’re infrastructure. For more than 75 percent of Americans, their only choice for high-capacity wired Internet access is their local cable monopoly. And we’re all driven into buying bundles of television with that data access; 91 percent of Americans who subscribe to high-speed Internet access also buy pay TV. Comcast routinely charges more per month for Internet access alone than it charges for the bundle. As my Comcast installer told me, “It’s just about impossible to buy Internet access by itself.”
And that’s where Comcast’s true advantage lies: Because it has more subscribers than anyone else, by far, it pays a third or a half what a smaller infrastructure provider would pay for programming. Because a new infrastructure provider would have to enter two markets at once in order to compete — both buying programming and building a network — the presence of a bulked-up Comcast in any area (including Boston) after the merger will make it even less likely that competition will emerge on its own.
When a gatekeeper or terminating monopoly is controlling access to a utility, you have two choices: You can try to limit the monopoly’s power with words, installing a cop on the beat, or you can just build an alternative network. Given how ineffective regulators have been constraining the power of the cable monopolists, and given that cable mergers are always approved, it’s becoming clearer that the right choice for American cities is to route around the cable behemoths.
The way to do this is to install a new wholesale fiber network controlled by the city. Fiber is future-proof — scientists haven’t found a limit to its information-carrying capacity — and it’s just like a street grid: basic, non-luxury infrastructure that makes the free market flourish. Cities do not have to be in the business of competing with private providers, but their control of the basic infrastructure is essential to make sure that competition emerges. Many retail Internet service providers can take advantage of the grid and serve customers directly. And they can join together to buy programming at a low price. Result: low prices, fast services, and choice.
Don’t take my word for it: This week the FCC announced that it plans to block the effectiveness of any state law that raises hurdles to cities’ ability to make their own decisions about fiber networks. And Google announced that it is working with many cities on Google Fiber projects (Boston isn’t one of them).
Cities are where the action is. And Boston, our city of new ideas, should be leading the charge.