The Broadband Fallacy


Broadband is all the rage in Portugal these days, and whatever the flavour (fixed, wireless or imaginary), there are two constants in any related discussion: the government's responsibilities and the incumbent's dominance.

Gallons of ink (and gigabytes of pixels) are being spent discussing the extremely narrow margins under which ADSL resellers operate (the incumbent has the only viable wholesale ADSL offer in town, or rather, in the whole country), crying foul at the regulator's timid shuffling of cue(less) cards, and weaving profound insights into the meaning of a few terse comments that the EEC Commissioner uttered during his latest visit.

The shrapnel is still flying, and every local pundit is trying to deflect some towards the government - who provided the masses with ample targets by (over the course of the past few years), reluctantly rescinding control over the incumbent, failing to provide the regulator with a backbone (in the anatomical sense) and sponsoring a series of committees aimed at dragging Portugal into their vision of an Information Society.

While I would not be so crass as to state that none of this did us any good (I leave that sort of argument to those interested in proving some half-assed political point), I nevertheless have to point out that it could have been a lot better if someone had had the nerve (several years back) to provide the regulator with more clout and push the market open. And this is without any political bias, largely because:

  • I don't do politics - period. I loathe politics, and judge politicians by their immunity to lobbies rather than their underlying ideologies (which none of them follow coherently anyway)
  • Either major party had a clear shot at solving this and bungled it.

Getting back to the point (and in case you missed it the first time around) instead of making half-hearted attempts at bringing broadband to the masses by creating lobbies whose sole purpose seems to be delivering hours of pompous speeches on the benefits of an open, egalitarian Information Society, the powers that be (or, in this case, were) would have done much better by simply stepping aside and letting the market play itself out.

But they didn't, and the resulting telecomms landscape is still dominated by the former incumbent - who, in all but name, provides pretty much all the broadband choices (cable, ADSL and leased lines) in the market, leveraging a complex set of internal relationships that enable it to design, negotiate and launch new offerings with the speed and grace of a herd of greased elephants (that is, in large volumes, massive quantities and with heavy market impact).

Further evidence of the seriousness of the situation is the fact that it's a recurring one: Pretty much the same thing happened before with dial-up internet access, indirect voice access, and now ADSL (unbundling and cable access having been postponed indefinetly), with several other minor tussles between the incumbent, the regulator and entrants over the past few years.

One exception (for the moment) is Wi-Fi, but since that is effectively based on an entirely new set of rules (or lack thereof), everyone is forced to play evenly, at least openly. And Wi-Fi is not, by itself, a broadband offering - it's only an access method.

Nevertheless, the bandwidth craze and the resulting tussles over the incumbent's wholesale ADSL offer is now causing some entrants to throw amazing tantrums by witholding their ADSL offerings temporarily and making highly verbal efforts at replacing them with (get this) co-branded UMTS offerings. It's a TDD solution, which raises a few issues - besides the profitability ones, but that's besides the point now - the main point is that they state they were pushed to do this due to the incumbent's stance in ADSL.

As is usual in other cases of regulatory mismanagement (or economic blindness, take your pick) the most likely beneficiaries of all this are not, by any stretch of the imagination, the consumers. Or the bandwidth-deprived schoolchildren the committees style themselves as championing. No, the manufacturers are the only ones most likely to reap immediate benefits, as operators struggle to squeeze through the few holes the political lobbies have left them.

And you (the reader) have no real say in the matter, despite all the arguments about "consumer choice". That's the real fallacy, as far as I'm concerned.