could the FCC require access providers with significant market power to provide open access, or
face regulation if they don’t. The policy — open access — should be clear, even if cable
companies control how it is implemented in the first instance.
The need for this policy is pressing. The Bureau’s evidence that cable will
negotiate open access contracts is both slight, and beside the point. The Bureau points to
negotiations with America Online, which it suggests is evidence that cable will provide
independent access generally. But the principle of open access, and the value preserved by End-
to-End architecture, is not that the largest and most powerful have the right to access. The
principle of open access, and the design of End-to-End, is that anyonewith a better mousetrap
gets access to the market.
Technological Limitations to Open Access
The Bureau repeats technological arguments about why open access is not
feasible in the context of broadband cable. These arguments are misleading at best.
First, the Bureau repeats cables claim that there is something technologically
impossible about giving ISPs access to the cable lines. Cable, it is claimed, is a “shared
medium,” while DSL is dedicated.
This is a fundamentally misleading argument. The Internet itself is a shared
medium. Its performance, as the report notes, “var[ies] depending on the number of actual
subscribers using the Internet connection at the same time.”2 0The only difference between DSL
and cable is the place where one enters the shared pool. It is true that cable is architected to share
19See Broadband Today, Staff Report To William E. Kennard, Chairman Federal Communications Commission On
Industry Monitoring Sessions Convened By Cable Services Bureau 35 (October 1999).
20Id. at 19.
bandwidth among local users, whereas DSL does not. But whether that difference results in a
difference in performance is simply a function of how many users the cable company decides to
connect, and not upon whether the users it connects have different ISPs. Give a certain profile of
usage, cable broadband can guarantee an effective equivalent of unshared access simply by not
overselling the access they attach at any single node. More to the point, the cable companies can
control usage whether or not they also own the ISPs, merely by limiting the number and size of
network subscriptions. So the shared medium argument does not justify bundling of ISP service
with access to the network.
Second, the Bureau argues that security on a cable node is less effective than on a
DSL connection, since data from other computers passes by all computers on a network node (as
is the case, for example, with an Ethernet network). This argument too is misleading. There is a
difference in the security approaches necessary to implement broadband cable securely, since
users on a particular node are all exposed to the same network traffic. But cable companies are
already developing technologies to eliminate that security risk. There is no reason to believe that
a properly implemented cable system would be any less secure than a comparable DSL system.
And again, there is no reason to believe that cable control over ISPs is necessary to achieve this
Third, the Bureau makes much of AT&T’s expectations that it would be permitted
to run a closed network. The report sites the colorful mixed metaphor of one analyst, that an
open access requirement “puts a shotgun slug through two inches of Excel spreadsheets that
[cable companies] use to generate their rate-of-return calculations.”2 1The argument is apparently
21Id. at 34.
a point about economic justice or fairness — that it would be unjust or unfair to change the rules
If AT&T had these expectations, they were unreasonable. In an age that has
reaped extraordinary benefits from the regulations that deregulated the telephone monopoly, and
that is beginning to reap the benefits from similar regulations deregulating other local
monopolies — for example, electricity — no reasonable business could believe it likely that it
could sustain an old-world regulatory structure that protected monopoly. And if AT&T did build
its models on that assumption, doubtless Excel is quite capable of recalculating the returns on a
different set of assumptions. That, after all, is what an electronic spreadsheet is for.
Incentives to Build Broadband Connections
The Bureau repeats the threat of cable companies, that they won’t invest as
quickly if they are forced to open access. In effect, the argument is that we must grant cable
companies not just a monopoly over the wires, but a right to expand that monopoly into
competitive markets, in order to give them an incentive to implement broadband access. This
argument is simply wrong as a matter of economics. It is possible to grant whatever incentives
are needed by setting the appropriate price for control of the wires themselves. Allowing the
cable companies to gain that incentive by monopolizing a competitive market offers no
guarantee of giving the appropriate incentive, and (as discussed above) poses significant risks to
competition and innovation.
We also suggest that the cable companies protest too much. We have heard many
times the argument that an industry won’t ever develop — or will collapse — if it isn’t given
preferential treatment by the government. Most of those arguments turn out to be illusory. In the
late 1970s, Hollywood argued to Congress that the movie business would not exist in ten years