It’s a multi-user enterprise, so I’m happy to run articles by others, regardless of point of view, as long as they’re informative. It’s not a policy-oriented blog, it’s a “just the facts, ma’am” blog. So far I’ve got articles by Larry Roberts and Chuck Jackson, so you could be next.

Unbundling can be seen as a slightly disguised form of price regulation. Profits dropped. Many of the new entrants have found it difficult to build sustainable businesses, while margins for the incumbent phone companies have been squeezed as well.

It’s not exactly clear, however, that this approach is in the public’s long-term interest. Phone companies have less incentive to invest and upgrade their networks if they are going to be forced to share their networks.

Some argue that this is the main reason that there is little investment in bringing fiber to homes in Europe. “Investing in fiber is a huge risk,” Kalyan Dasgupta, a London-based consultant with LECG, wrote me in an e-mail, “and the prospect of taking that risk alone, but having to ’share’ the rewards with other players, is not a prospect that most rational businesses would consider.”

Britain, which has been the biggest proponent of line sharing, has decided to deregulate the wholesale price BT can charge for fiber, so long as it doesn’t favor its own brand of Internet service.

Like any form of price control, unbundling produces short-term gains in access diversity at the expense of long-term investment. Adopting this approach ultimately requires the government to bear the cost of infrastructure improvements, as it ceases to be a rational use of investor dollars to build out enhancements that don’t produce substantial returns in a non-monopoly market. Many of the folks seeking net neutrality regard broadband as a utility, and this becomes a self-fulfilling prophecy. If we treat it that way, that’s that it becomes.

Just as our electric utility networks include less-efficient generating plants that belch excessive amounts of CO2 into the air because the regulators won’t approve rate hikes to pay replacement costs, so too will price-capping broadband stifle innovation in transport networks.

networks, regulation, net neutrality

Even without any change in government policies, Internet speeds in the United States are getting faster. Verizon is wiring half its territory with its FiOS service, which strings fiber optic cable to people’s homes. FiOS now offers 50 Mbps service and has the capacity to offer much faster speeds. As of the end of 2008, 4.1 million homes in the United States had fiber service, which puts the United States right behind Japan, which has brought fiber directly to 8.2 million homes, according to the Fiber to the Home Council. Much of what is called fiber broadband in Korea, Sweden and until recently Japan, only brings the fiber to the basement of apartment buildings or street-corner switch boxes.

Actual download speeds are more important that raw signaling rates: The United States has an average speed of 5.2 Mbps, Japan is 16.7 Mbps, Sweden was 8.8 Mbps, and Korea averaged 7.2 Mbps. There’s a gap alright, but it’s not nearly as large as we’ve been lead to believe.

In fact, the gap is entirely consistent with population density and the extent of government subsidies.