AT&T warns of the danger of building monopoly fiber networks

by Steve Blum • , , , , ,

I’m shocked, shocked to find subsidised monopolies here.

AT&T has issued an open warning about the dangers of giving public subsidies to an organization, in this case a school or library, to build its own dark fiber network…

If private fiber networks are deployed only to serve certain select locations…they will risk becoming islands of connectivity in a sea of inadequate broadband…If E-rate [federal subsidies for educational sector broadband] is to be used to deploy networks, then it will only be cost effective for the country if the funds are used by telecom providers to build publicly available networks in communities that lack adequate broadband today.

The consequences of putting dark fiber in the ground are dire, perhaps comparable only to the threat posed by wantonly releasing dihydrogen monoxide into the environment…

Indeed, to the extent that dark fiber might appear to be less expensive than services provided over a robust, community-wide network, that appearance is deceiving. By impairing the scale and scope economies available to providers of community-wide services, dark fiber imposes additional costs on society-at-large that should not be ignored.

What AT&T really fears, of course, is that schools will stop spending subsidy money on its managed services, and partner with its competitors to build dark fiber networks that will drive down the price of Internet bandwidth.

That’s what happened in Santa Cruz, where the University of California partnered with Sunesys to build a middle mile fiber line to Silicon Valley. UC Santa Cruz only uses a small fraction of the strands available. Sunesys sells the rest to all comers at market rates. The cost of a wholesale-grade megabit of Internet connectivity in Santa Cruz was cut by a factor of ten, allowing local, independent ISPs to provide entrepreneurs with gigabit class service at affordable prices.

Subsidising fiber between two points, only for a single user, is indeed bad public policy. The solution isn’t to keep paying AT&T to build its own “islands of connectivity”. When a community’s dark fiber can only be accessed by one provider, the result is always “a sea of inadequate broadband”. As AT&T correctly points out….

Allowing that to happen would conflict with the national Universal Service Fund imperative to get high speed broadband service to all Americans in all parts of the country.