I agree that it is wise to be wary of regulation in this case--but honestly, I think it's time we at least experiment. The market and regulatory forces at play have basically forced themselves into this position.
You can't legislate-away economics. If you make cable and fiber networks into an unattractive investment, nobody will invest in them, and they'll go on life-support just like the phone network. Cable companies will pivot to content, like Comcast is already doing with its purchase of NBC. The vacuum won't be filled, because at the end of the day no VC is going to put up billions of dollars to eke out shit returns on a heavily-regulated service.
What was the organization usually tasked with public goods, again?
The way we got the buildout of the telephone networks was the creation of the AT&T monopoly by the government, and they took their job seriously. An alternate approach would be nationalizing it and forcing the government to take care of it.
Free market isn't likely to fix the problem.
What I have a hard time understanding is your implied argument here: that by forcing a bundle on consumers that includes a high-margin product (cable TV) as well as a low-margin one (broadband), we're doing those consumers a favor. How do I benefit from a subsidized broadband service if I also have to participate in the over-priced and unwanted service that is allowing the subsidy?
Bundling, in the sense that the FCC is referring to it, is the bundling of internet service with the physical infrastructure it's delivered on.
Un-bundling in this case doesn't mean they have to sell you ESPN without HBO, it means they have to let third-party operators operate on their wiring, switches, and other physical infrastructure for a regulated price.
Given your premise: I can imagine that, with improper price setting by the FCC, this mandatory wholesale infrastructure sharing could be problematic (long-term unprofitable and thus discouraging towards infrastructure investment).
Priced appropriately to the cost of provision of service, however, how does this put the infrastructure builder (Comcast, Level 3, or whomever else) on unfair footing? It just means Comcast the builder has to expect the same rents from Comcast the service provider as it does from Netflix the service provider.
Forgive me for missing the point - I expect you and rayiner understand this far better than I do and I'm trying to catch up.
People who think that either rate-setting in the context of unbundling or in the context of municipal-fiber will be based on a rational analysis of how much revenues will be needed to justify investment are delusional. Rates for everything from electricity to sewage are artificially low, and consequently in many cases utilities are stuck with century-old infrastructure. Public utilities are a big reason the American Society of Civil Engineers estimates we have a multi-trillion backlog of infrastructure capital expenditures.
The folks who think we should upgrade the fiber networks to enable cloud services will have to get in line with the folks who think we should upgrade our power plants and get rid of century-old polluting coal ones, or upgrade our sewage systems so they don't dump raw sewage into rivers when it rains. And they'll be shouted down by the folks complaining that grandma's electric/water/internet bill is too high, and asking "how can you afford fiber service when you can barely feed your family?"
That's an interesting notion, given that market pressure would be to invest as little as one possible can while extracting as much cash as possible. I certainly have the impression that, in Sweden, the public utilities, which were making sure the power grid had adequate excess capacity and good reliability because this infrastructure is in the "national interest" did a much better job in that respect than the market-based solution. There is simply no comparison between power reliability in the U.S. and in Sweden.
It seems like the crux of your argument is that it costs something like $60/month to provide internet service and $20/month on top of that to provide TV service but they charge $50/month for each, so they wouldn't be profitable without the TV service. But who is setting these prices?
Is there some law that requires them to charge a money losing price for internet service and then make it up on TV service? Why don't they just charge a profit-making price for internet service?
[1] In my building, in downtown Baltimore, I can get 50/15 FiOS for $50/month, no cap but no TV service, or triple-play cable at 50/5, capped for $109 per month. Almost everyone subscribes to cable rather than FiOS.
If the ISPs at this point charge a price for just internet service that makes offering that service profitable, what are you expecting customers to do? Go without internet service?
Cost of programming content is $5.2 billion, but video programming generates $10 billion in revenues. Operating income is $4.6 billion. Obviously there's marketing, sales, and operational costs that also go away if you don't have video service. But there's also $1.1 billion in advertising revenue that probably goes away too. And really, the numbers are totally incomplete without looking at capex and depreciation too.
Analysis is similar for Charter, except they're running a net loss straight-up.