In all the debate about broadband Internet, Comcast, the FCC and the open Internet, one topic that comes up a lot is the subject of municipal broadband.
Comcast fights tooth and nail against these initiatives, and the standard analysis is that they run an inefficient business. As monopolists, they can charge high prices, deliver substandard service and opposition to municipal networks is just them not wanting to surrender to competition which would force them to cut costs (and profits), spend on infrastructure (further cutting profits) and lose even more customers to competitors, be they Netflix or new entrants selling television service over a municipal fiber optic network.
I've started wondering if maybe Comcast's solution isn't fighting this initiative, but instead joining it by selling off their cable plant to municipalities.
It sounds crazy at first, but if you stop to think about it Comcast's network is something of an albatross around their neck. They need it if they want to continue as monopolists, but there's a certain obsolescence built into their existing cable plant that will ultimately have to be dealt with, and it won't be cheap. Despite the costs involved and Comcast's objections, competitors (Google, Century Link, regional providers) are stringing vastly superior fiber networks already and that trend isn't going away. Eventually Comcast will need to upgrade a cable plant that in many ways dates back to the late 1960s and uses RF over coax and can't compete with fiber optics.
By backing municipal broadband, Comcast gets the opportunity to unload this albatross on the government and socialize the cost of upgrading it to an all-fiber network. It provides a major political advantage to Comcast, who could instead be seen as a savior rather than an enemy. The political pressure to provide ever-increasing internet capacity would shift to the government, not them.
Comcast could then shift its focus to places where it already has strengths, like contracts with TV channels and content providers. They would end up using the network they originally built for distribution, but freed from the sole cost of maintaining it. In terms of the future, providing content is a better business to be in than running a physical network. UPS would rather focus on delivering packages than building highways.
Municipal networks would see this largely as a win, as Comcast despite their problems, has a decent fiber-based backhaul network and the cost of expanding this to fiber to the home is less than building it all from scratch.
Most municipal network concepts are built around a government owned, contractually managed infrastructure that service providers buy access into. Since Comcast has substantial experiencing in managing what amounts to a municipal network, it would also make sense for Comcast to spin off those parts of their business that are involved in managing the physical network and have this new entity compete for municipal network management contracts. The separation from Comcast's service provision business will insulate them from bias claims.
At the end of the day, Comcast the content provider would be free of physical plant maintenance and able to focus on their content delivery business, their management entity would probably end up managing a good chunk of their old local network foot print and consumers would end up with competitive Internet service options at lower prices in addition to correcting the market prices for video services.
The alternative choices for Comcast are fairly unpleasant. Political and consumer opinion is opposed to their monopoly tactics. The FCC is nullifying their ability to collect rents on data transit via common carrier status, competitors are (slowly) building superior networks, consumers are dropping cable television for streaming video services and Comcast will ultimately have to invest significant money into upgrading its infrastructure to the home.
