The all-seeing-eye tells me my post about the FCC is a popular one, and Calixte and Mags have both come asking me about this topic, so I figure it’s time for another installment of “Ask Janus.” If you have a question to ask that’s remotely related to either politics, government, or something I’ve written about in the past, feel free to leave a comment, shoot me an email, or toss me an IM.

Today’s question is: “Why does Comcast get a legal monopoly in Houston and why does the FCC get to regulate them?”

First, a word about monopolies in general: I misspoke when I referred to Comcast as a legal monopoly. Comcast is not technically a legal monopoly. “Legal monopoly” is a technical economic term that does not properly define the situation that we find ourselves in. The proper technical term for Comcast’s services in Houston is a “natural monopoly.” And just so I don’t have to correct my correction, natural monopolies are perfectly legal.

Okay, so why does Comcast get a natural monopoly in Houston?

The same reason water is provided by one source. The same reason natural gas is provided by one source. The same reason why prior to deregulation we got our power from one source. The answer lies in the network of cabling (dare I say, “the series of tubes”) that is used to distribute Comcast’s services. Basically, Comcast owns the lines. There is no competition because no one else will ever invest in a second set of lines. It’s just not financially possible.

In Houston, AT&T attempts to compete with Comcast but it doesn’t do so in the conventional way. Instead of competing on an individual level with true free market choice, they compete with land developers to have AT&T cabling installed in subdivisions that are under construction. Once the lines are laid however, all competition is over. There will never be a change in cable provider in that neighborhood and there is no longer any competition there. In those areas, AT&T has a monopoly that will never be broken.

“But what about the change of ownership that occurred a few years ago?”

Well, I did some research. Comcast and Time Warner were 50/50 partners in laying the cabling in Houston. At a time when Time Warner was struggling after acquiring too much debt in its rush for acquisition of Adelphia assets, Comcast rearranged some of the debt that they were both liable for to make the partnership unsustainable. When Time Warner couldn’t handle it any more, the two companies agreed to divide up the assets and go their separate ways. Comcast got Houston and Time Warner got Kansas City and parts of west Texas and New Mexico.

There is no competition in the cable industry because there is simply no room for it. It is both acceptable and accepted. But, as I’m sure you can imagine, this situation can lead to rather abusive business practices. Practices, like, oh let’s say capping bandwidth and turning off your access to DNS servers.

That’s where regulation comes in. In virtually all natural monopolies, a choice has to be made: nationalization or regulation. In Houston, the water supply is managed by the government but the other utilities, including cable, are all provided by government-regulated private companies.

So, how does the FCC get involved? Is the FCC the body that regulates the internet?

Well, no. No one really regulates the internet. The internet is, by design, impossible to regulate. There are a number of institutions that try, but no one really has the authority or the power to enforce anything. The internet is an international creature and literally anyone with a computer can create their own little slice of cyberspace.

The FCC comes in for a couple of different reasons, none of which really directly apply to the internet, which makes the situation rather precarious for everyone involved. First of all, cable television is regulated by the FCC. Secondly, VOIP is technically a telecommunications service, which is regulated by the FCC. It is also worth noting that the FCC’s mandate includes all interstate and international communication that starts or ends in the United States.

That said, the FCC does not regulate the internet or internet service providers.  That job falls to Don Quixote.

So the FCC doesn’t regulate the internet or ISPs but it does guard against predatory practices by television, phone, and communication companies. Comcast is an ISP in addition to being a television, phone, and communication company. The FCC therefore regulates Comcast.

Confused yet? Yeah, so is everyone else. Comcast’s practices are abusive, no question there. The FCC regulates Comcast, no question there. But there is a real question about whether the FCC can stick its nose into Comcast’s internet activities. Hence all the lawsuits. Hence I took the opportunity to praise the FCC for doing the right thing for once.

Libertarians will tell you that the FCC is a dark force created to destroy the first amendment. I can see where they’re going with the argument. I don’t really think that swears need to be bleeped and ass crack needs to be blurred out, but I don’t think children really need to be seeing that sort of thing either.

For the first time, the FCC is in a position to defend the first amendment. Limiting bandwidth to customers who cannot switch ISPs limits their ability to host both web sites and data. That limitation is a clear and direct attack on freedom of expression. It says, “Your voice may not reach an audience greater than this.”

I hope that helps answer some questions and I hope everyone out there will join me in supporting the FCC for once. No matter how badly you hate the FCC they’re doing the right thing on this one and we have to stand with them if we want them to keep it up.