August 22nd, 2005
While Baby Bells sit on their assets...
Let’s ask David Berlind’s question again. "Are Baby Bells abusing their government granted right-of-way?" The answer is NO they are not — but only because they are doing exactly what the government is allowing them to do. They do it because they can get away with it. The more interesting point is that the Baby Bells just don’t get it.
By "hoarding their assets," the Baby Bells are, in fact, leaving money on the table. Like a greedy child hoarding his candy, these assets will eventually go stale as the free market figures out how to live without them. Never mind that United States infrastructure continues to fall behind that of the rest of the industrialized world; we are talking about how a company goes about creating wealth for itself and its stockholders in a commodity marketplace. The Baby Bells have been monopolies in a commodity market for so long that they have no idea how to use their assets to create wealth. It is not by hoarding commodities. They can only create wealth by moving into non-commodity markets — as quickly as they possible can.
Sure, the cost of completing all those "fiber to the curb" projects they started decades ago is truly staggering, but the cost of NOT doing so is even higher. (In Philadelphia and elsewhere they are tired of waiting and are going ahead without their local Baby Bells. Talk about a lost opportunity!)
Twenty years ago you bought video from the cable TV folks and you bought POTS (plain old telephone service) from a Bell operating company. Cellular service existed but it was prohibitively expensive.
Today, you can buy telephone service from the cable TV folks and from the cellular folks as well as the Baby Bells and you can buy TV service from a satellite company. Streaming video is also coming to a cellular provider near you. You can buy broadband from the cable TV folks and, in a growing number of cities, from the cellular folks, and if your Baby Bell has built out to you, from your Baby Bell. Soon, you will be able to buy broadband from your local electric company — which means they too will be able to sell you telephone service.
David’s article points out that Verizon is holding back 99% of its wired bandwidth. Isn’t it interesting that, at the same time, VerizonWireless (a Verizon/Vodaphone partnership) is building out its EVDO cellular data network as fast as it can? The difference is that one is a regulated asset and the other is not. It is no accident that the Baby Bells all have cellular assets. Similarly, the cable TV folks own satellite TV assets as well.
Until federal, state, and local authorities figure it out and mandate that the Baby Bells build-out their infrastructure to provide an acceptable level of service for all (POTS is not an acceptable level of service in an information-driven economy), the Baby Bells are going to pour their investment dollars elsewhere — no matter how much it costs them in the long run to ignore this valuable asset.
