Letter to the Wall Street Journal

November 20, 2000

To the editor:

The government-mandated cable modem “open access” argument relies on technical ignorance and vague notions of inequity. Both were on full display in “Cable Alliances Prompt Some Consumers to Pay Twice for Web Access” [November 20th Marketplace Section]. From the beginning, the story interprets the current marketplace for high-speed Internet access as irrational and dominated by conglomerates uninterested in consumer opinion.

“David M. Box needs only one high-speed Internet account to run his computer consulting business…but each month he pays for two,” the article states. “Why? His cable company forces his to accept its proprietary Internet service even though he already has an account with America Online, Inc.” The notion that anyone is “forced” to accept a specific Internet Service is where the specious mandated “open access” argument begins. The unique “tree and branch” architecture of a cable system is fundamentally different from that of the telephone. This architecture, with a headend facility that connects consumers to the ISP and Internet backbone, makes any substantive distinction between the cable wire and ISP a contrivance of pro-regulatory forces. As the government-mandated “open access” experience in Canada confirms, the addition of even one or two ISPs to a cable network is both costly and disruptive to the existing service.

Furthermore, the additional money that Mr. Box pays for the value added content of a rival ISP is less in percentage terms than the same content premium in the dial-up world. For example, Mr. Box pays an additional $9.95 for AOL on top of the $39.95 for cable modem service. This is only 24.9 percent of the initial cost. In a dial-up model, this premium is much higher at 57.35 percent, when one considers that at $21.95, AOL is about $8 more than a simple Internet service.


Jason M. Thomas

Policy Analyst

Citizens for a Sound Economy