Big Telco hates "regulation," but they love their billions in government handouts

When it comes to killing Net Neutrality, Big Telco's major talking point is that "government regulation" has no place in telcoms; but the reality is that the nation's telecommunications providers are the recipients of regulatory gifts that run to $5B/year, and are expected to do very little in return for this corporate welfare.

Cities have always offered big subsidies to telcos, often thanks to state rules that dictate how much municipalities must pay for access to telco infrastructure, allowing the telcos to charge arbitrary amounts without guaranteeing that cities will get anything in return.

In addition, these rules often ban cities from granting pole and other infrastructure access to the incumbent telcos' competitors, ensuring that the telcos never have to compete with better companies. Cities pay again for "smart city" infrastructure that locks them into using the incumbent's network services at whatever they feel like charging, effectively forever, with no service guarantees.

Nationally, the Ajit Pai's FCC is about to open the government money firehoses, letting carriers bid to provide service to poor and underserved parts of the country, offering $2B to any company that can supply service at barely usable speeds — this, after years of hundreds of millions in subsidies paid to carriers to build rural networks that never materialized.

How did we get here? America, alone among developed nations, never thought of basic telecommunications services as a public service, to be built and controlled by the government. Instead, we have traditionally relied on private companies to serve all Americans at a reasonable cost. In the past, in order to keep the price of local telephone services low and to ensure that everyone in rural areas had communications service, the federal government imposed fees on long-distance telephone service, to subsidize service for low-income and rural customers. Now, following an astounding wave of consolidation and deregulation, we have the worst of both worlds: mostly unregulated private monopolists, selling expensive, mostly second-class data services to the rich and looking to the state to pay them to provide internet access services to everyone else.

Chairman Pai seems to have one theme when it comes to subsidies: Treat giant companies well, and hope that they'll do Americans a favor by selling them some form of service. From the perspective of the shareholders of AT&T, Verizon, CenturyLink, Comcast, and Spectrum—the Big Five telecommunications companies that dominate internet access in America—this makes perfect sense. Costly infrastructure investment that drives up the companies' debt levels is irrational.

The Dangers of Big City Subsidies [Susan Crawford/Wired]