The Case For An Internet Franchise Model
Internet service in America is not what it should be. Most consumers have two choices for access: the phone company or the cable company. By a quirk of fate, networks built with cables designed for television service can deliver more Internet bandwidth than networks built with cables designed for telephone service. So, the cable company generally wins.
There is a lot more to the story and a lot more we can do as a society to improve the competitive environment and Internet service overall. The first point to examine is that the United States has all the same technology as all the other countries that we hear about with great Internet service. Japan, South Korea, and the like don’t have any unique access technology. So, technology is not the difference.
Perhaps it’s geography? South Korea and Japan are home to newer, denser cities, and that significantly lowers the cost of building and deploying a network. But that is still not the whole story.
Let’s look at the history of technology as it developed in the United States. Way back when, lots of small companies launched small telephone networks that served a geographic area. The trouble was those networks did not have the legal authority to provide service to the entire area. They needed to enter buildings and use the public rights of way for manholes, poles, and other structures to build the network efficiently.
The problem was solved by creating new “telephone franchise” laws, which still apply today. A city, county, or state enters into a contract with a telephone company to provide service inside that jurisdiction. In fact, the phone companies are required to provide service to everyone in the jurisdiction under the concept of universal service, which also still applies today. Almost every structure in the United States has access to a landline phone connection, even though nobody really uses them anymore!
Fast forward to the early 1970s, when the cable television industry started. Same problem, same solution. Many small cable companies needed access to public rights of way to build video networks. Again, new laws were created, forming the foundation of video franchises (sometimes referred to as cable franchises). Over time, cable service spread to a majority of homes in the U.S. Interestingly, the concept of universal service was not applied to video franchises, so the cable companies can typically only install equipment in buildings with an owner’s permission.
Fast forward in time again to today, when Internet connectivity is required for modern life. Companies have been building Internet networks for 20 years, but the concept of an “Internet franchise” has never taken root. That means every Internet Service Provider (ISP) must forge its own path to market without a clear legal framework. Meanwhile, the companies that hold voice or video franchises dominate the market, due to their established networks that were built for a franchised service and retrofitted for Internet. New ISP competitors (like my company, Webpass) can also obtain a voice or video franchise, but that requires them to offer those services. Guess what? Customers are abandoning traditional cable TV and telephone service in droves in favor of application-based services like Netflix, WhatsApp, and Skype. At this point, phone and cable companies are Internet companies in everything but name, and they must remain that way to protect their franchise rights.
So what about the other two big ISP categories, cellular and fiber? Cellular phone companies are also Internet companies in everything but name. Since the introduction of the iPhone, they pass much more Internet traffic than voice traffic, and they market their services accordingly. Unfortunately, they are bound by a third set of regulations that has not adapted to the realities of consumer choice. Meanwhile, fiber companies promise unlimited Internet bandwidth, but they are regulated under a fourth set of rules that render fiber networks the most expensive to build. Google Fiber is the poster child for that fact. Since launching six years ago with vast resources, Google has rolled out the service slowly to a relatively small geographic footprint.
Clearly, the idea that you can regulate Internet companies in four distinct regimes—landline phone service, video service, cellular carriers, and fiber providers—is destined for the dustbin of history. Enter the Internet franchise.
Cities should create an Internet franchise legal framework to unite the regulatory environment. Grant ISPs access to public rights of way and to buildings—like other utilities—and the ability to deploy wireless services in a timely fashion. Government must accept that technology will change and demand for the Internet will continue to grow. The Internet is the Internet regardless of which technology is used to reach it. Ubiquitous connectivity for everyone is achievable.
The current draft of the Internet franchise concept I propose is available at Webpass.net, tailored to San Francisco because that is where I live. Please read it, support it, and let your local government representative know. Internet service in America will vastly improve when Internet franchises exist.