Watch what Free Press's Derek Turner has to say about the middle mile choke points controlled by Verizon and AT&T.
Last week, the public interest group Free Press held a policy summit which attracted every telecom policy nerd in Washington, DC, except me. (I has a prior commitment on my schedule.) Of all the speeches given, this one by Free Press's research director Derek Turner, caught my eye because it captures the history of telecommunications and competition over the last several years.
At Sprint, we don't agree with everything Derek said here, but we do agree with his conclusions about why the FCC should act to fix the wireless backhaul market.
What's wireless backhaul you ask? Here's a quick explantion. Most people don't realize that the only wireless part of a mobile phone call is that part where you handset transmits your call to the nearest cell phone tower. The rest of the conversation travels over a wireline network. Moving your wireless call across a wireline (or landline) network is what we call wireless backhaul. (Wireless backhaul is also called "special access" or "the middle mile.")
Because they have territorial monopolies, Verizon and AT&T don't compete with each other to provide wireless backhaul to cell phone companies. In fact they really don't compete with anyone. In the top 50 metro areas where Verizon has a territorial monopoly, it controls more than 90% of the wireless backhaul market in that area. (The same can be said for AT&T.)
Verizon and AT&T can do this because the FCC prematurely deregulated the market for the circuits used to provide backhaul before there was any evidence of signinificant competition. Guess what happened after the FCC deregulated? The landline companies like AT&T and Verizon jacked up their prices considerably. Verizon has markups that are 700% over cost in some areas according to Free Press.
Go to minute 12:47 in this video to hear what Derek has to say about backhaul. He explains it better than I can.
