Friday, December 08, 2006

Real Property and Real Competition

Two recent items got me thinking about buildings--real property--and telecom competition, and, ultimately, about how respect for private property rights ought to inform telecom policy.

First item: I've just skimmed the recently issued GAO report on so-called "special access" services, those high-capacity dedicated circuits used by large volume corporate business users and "non-incumbent" carriers to transport high volumes of communications traffic. These are not the circuits used by residential users or small "Mom and Pop" businesses, so for some number of years it has baffled me that the FCC has had to spend so much time and energy defending the regulatory flexibility it thus far has granted the LECs for these circuits subject to the most competitive pressures.

But here's what's bugging me: Running through the GAO report, and, frankly, some of the FCC's UNE orders of three or four years ago, seems to be the notion that special access competition should be assessed on a commercial building-by-building basis. The report presents extensive data on the number of buildings that have more than one provider of special access. This is an exceedingly narrow--and inappropriate--measure of the telecom marketplace. If there is demand to warrant, with the various technological platforms available and competitive providers ready to snatch business, it is economically feasible in many, if not most, commercial areas for a new entrant to put in its own dedicated circuit from a nearby collocation office to a building. The competitive provider may have existing facilities down the block or around the corner that could be connected to a building assuming demand for such a connection. Making every building its own market just doesn't make economic sense.

Second item: In FCC Chairman Martin's December 6 speech at the Phoenix Center conference, he made a number of points concerning broadband deployment and video competition, and some of them, especially those concerning reform of the local franchise process made eminent good sense. If the Commission has the authority to do so under the 1992 Cable Act, some of the remedies the Commission is contemplating, such as imposing deadlines for action by local franchise authorities and caps on franchise fees, would speed up the introduction of additional video competition to the benefit consumers. But one of the items Chairman Martin says he is asking the FCC staff to look at is whether new entrants are being "unreasonably foreclosed" from providing service to consumers living in apartments and, if so, what can be done about it.

So both GAO's assessment of special access competitiveness and Chairman Martin's focus on the video marketplace spotlight the actions of particular building owners. That being so, it is useful to remember that there may be many reasons, from avoidance of disruption to the building's physical plant to the desire of the building owner to reap certain benefits in exchange for exclusivity, for the building not to allow multiple providers access to its building. But one reason is surely not to displease the building's tenants, who after all are free to relocate if they prefer a location with more choice in communications providers. If enough tenants value more communications choices above whatever other combination of price and amenities brought them to the building in the first place, they will move--and the building owner will get the message.

I understand that GAO did not suggest in its report that the government should mandate access to buildings in contravention to a building owners wishes. Neither did Chairman Martin in his speech. But with the focus on particular buildings, it is probably useful to remember that both instances represent cases in which respect for the right of a property owner to manage and use its real property as it pleases almost certainly outweigh any countervailing government interest in interfering with the owner's choices. This is especially so in an environment in which, due to technological and marketplace developments, consumers are steadily being treated to more communications choices.