Commerce Department Study Reveals There's Almost No Competition If You Want Real Broadband

from the what-broadband-problem? dept

Thu, Jan 8th 2015 8:14am — Karl Bode

Just recently, the U.S. Commerce Department's Economics and Statistics Administration (ESA) released yet another study for defenders of the broadband industry status quo to ignore. The study specifically took a look at the competitive options available at higher speeds, and found that -- surprise surprise -- they simply don't exist for most users. FCC boss Tom Wheeler has recently been making the rounds trying to sell the idea that our minimum broadband definition needs to be higher than 4 Mbps, in the process pointing out that three quarters of the country doesn't have the choice of more than 1 ISP when it comes to speeds of 25 Mbps or higher.

The ESA study confirms this and then some. When it comes to speeds of just 3 Mbps, the study notes that 98% of the public has the choice of two providers. Of course 3 Mbps is barely enough for decent HD streaming, much less a household of hungry bandwidth users, and the choice of just two providers means both are going to be expensive. It's fairly similar at speeds of 10 Mbps, where most people at least have the choice of two ISPs -- an apathetic cable operator, engaging in "wink wink nod nod" competition with a phone company. Move past 10 Mbps, and competitive options get worse -- quickly:

"For example, only 37 percent of the population had a choice of two or more providers at speeds of 25 Mbps or greater; only 9 percent had three or more choices. Moreover, four out of ten Americans did not live where very-high-speed broadband service – 100 Mbps or greater – is available. Of those with access to broadband at this speed level, only 8 percent had access to two or more providers; 1 percent had access to three or more. Only 3 percent of the population had 1 Gbps or greater available; none had two or more ISPs at that speed."

So for all the hype surrounding 1 Gbps speeds this year, it's important to remember that only 3% of the population can get it. That's a lot of fiber to the press release. The ESA offers a handy graphical breakdown of the dearth of options in most markets:

It's worth noting that while the ESA makes it clear from the outset that the lack of competition impacts pricing, the word "price" is mentioned just twice in the study. For years ISPs have worked very hard to ensure that specific pricing data never reaches the eyes of the public. The defense is always that ISPs don't want to give competitors access to pricing data, though any ISP worth its salt already knows exactly what its competitors charge -- and where. There's really one reason efforts like our $300 million broadband coverage map don't include pricing data: it makes it easier for the industry's proud defenders of the status quo to continue pretending there isn't a problem.

Competition (PDF)Competition (Text)

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Filed Under: broadband, competition, fcc, net neutrality, tom wheeler

26 Comments

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Ninja (profile), 8 Jan 2015 @ 6:39am

The defense is always that ISPs don't want to give competitors access to pricing data

Call ISP in region X, ask prices. Call in region Y, ask prices. Rinse, repeat. Very, very weak excuse for something that is publicly available with very little effort.

The 1Gbps offering must have its caveats too. I can get 1Gbp here for $1.300 installation fee and $500 monthly for home use. Hardly accessible, no? It would be interesting to see this accessibility with per capita wages considered.
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- Whoever, 8 Jan 2015 @ 8:36am
  
  Getting prices
  Call ISP in region X, ask prices. Call in region Y, ask prices. Rinse, repeat.
  
  Hah, hah. Very funny. Firstly, you won't get the real pricing, you will only get the promotional pricing. Secondly, they won't tell you all the fees that will be tacked on to actual bills.
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  - Anonymous Coward, 8 Jan 2015 @ 8:42am
    
    Re: Getting prices
    Which should be a Felony crime. Y'know, cause it's fraud.
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    - ltlw0lf (profile), 8 Jan 2015 @ 10:42am
      
      Re: Re: Getting prices
      Which should be a Felony crime. Y'know, cause it's fraud.
      
      Sadly, it is only a crime when we do it. If you have enough money to pay for lobbyists and lawyers, you needn't worry yourself about petty issues.
      
      I suspect if I tried to tell them I was going to pay them up-to $80/mo and remove a bunch of money off in hidden refunds, I'd be looking at some jail time (though likely they'd just drop me as a customer and deal with collections for the owed amount.)
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    - Alien Rebel (profile), 8 Jan 2015 @ 10:54am
      
      Re: Re: Getting prices
      Ridiculous. Criminalize fraud? We'd need a war on fraud. We'd have to release millions arrested for marijuana to have enough prison space.
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      - Anonymous Coward, 8 Jan 2015 @ 11:45am
        
        Re: Re: Re: Getting prices
        It'd probably still be cheaper than the War on Stuff We Don't Like And Maybe Want For Ourselves.
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  - Jeremy Lyman (profile), 8 Jan 2015 @ 10:20am
    
    Re: Getting prices
    Also the prices are different for new customers vs existing customers, the first thing they do is ask your address. They don't seem very interested in handing info if they provide service nearby but not to a particular address.
    
    I've spent hours getting an accurate picture of package, prices, speeds, channels and equipment in JUST MY AREA. And none of that can factor in the hidden fees because HIDDEN FEES.
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  - Karl Bode (profile), 8 Jan 2015 @ 11:57am
    
    Re: Getting prices
    Yeah, I've seen pricing vary by street based on demographic and income data, which is another reason they don't want anybody analyzing this data. Though you're right, even if you do manage to get a quote, it's not going to be a reliable indication of much of anything in a broader sense.
    
    I think the OPs point though is that their argument that they can't release pricing data is bunk, which is correct, because big ISPs can hire data miners to actually get a much closer approximation of rates.
    
    Consumers are the odd man out when it comes to that data.
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Anonymous Coward, 8 Jan 2015 @ 8:26am

like stated, the report will be another one that's just ignored. but it isn't just the ISPs/phone companies/cable companies at fault. the main problem, as is usual in the USA, is with politicians and Congress in particular. i doubt if there is another so-called 'democratic' country that has so little respect for the citizens represented and so keen on improving their own bank accounts! while there is this total desire with starting/keeping monopolies, there will be no improvement at all in services supplied to the general public!! the FCC may be starting something here, but i wait with bated breath to see how long it takes Congress to go along with whatever bullshit the lobbyists put out to have any sort of competition in broadband (or anything else, come to that!). so much for the land of opportunity!!
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- Anonymous Coward, 8 Jan 2015 @ 8:59am
  
  Re:
  Yeah, in the UK our local government politics is fairly openly corrupt, but it's usually graft and embezzlement rather than the open bribery you see in the US right up to the national level.
  Our upper-level corruption is a bit more esoteric, but is roughly analogous to a large number of our MPs being members of the Kennedy family... kinda.
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Josh (profile), 8 Jan 2015 @ 8:49am

I work for a local ISP, I'll call X. We are 49% owned by Comcast. This means that we can not go into a place which has Comcast or who has ISPs owned partly by Comcast.
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- art guerrilla (profile), 9 Jan 2015 @ 9:48am
  
  Re:
  *exactly* as the 'free-market' (*cough*bullshit*cough*) was meant to operate, amirite ? ? ?
  
  what a crock: uber-kapitalists who extol the virtues of competition, blah blah blah, then do EVERYTHING in their power to make sure their competition is stifled if not eliminated by laws they lobby for...
  
  its not turtles all the way down, its scumbags all the way down...
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- John Fenderson (profile), 9 Jan 2015 @ 1:54pm
  
  Re:
  "We are 49% owned by Comcast. This means that we can not go into a place which has Comcast or who has ISPs owned partly by Comcast."
  
  In other words, you work for Comcast.
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Anonymous Coward, 8 Jan 2015 @ 9:01am

price(s)?
the word "price" is mentioned just twice in the study.

I didn't find "price" by itself at all in the embedded document, and only one instance of "zero-price", but four instances of "prices" (not including a citation.)

Such arrangements might be zero-price “peering” agreements if data flows are symmetric, or they might entail fees if data flows are asymmetric or a content provider pays for more direct (hence faster) interconnection.

Since market competition can significantly affect consumer prices

Increased market power by sellers often results in higher prices for consumers.

Satellite broadband service has generally offered slower speeds with lower data caps and greater latency problems at higher prices than wireline broadband service;

All else equal, having fewer competitors at a given speed is likely to drive up prices.

All four instances of "prices" relate directly to consumer prices, and three of those pretty much directly state that less competition means higher prices, so your statement is a bit misleading. However, when I was doing the search for these words, I was getting weird and inconsistent results; at one point it was telling me I was viewing result 4 of 3, and it often did not show all the results if I did more than one search in a row. So I can understand getting this wrong if you just did some searches and trusted what it told you.
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- Karl Bode (profile), 8 Jan 2015 @ 11:59am
  
  Re: price(s)?
  Price is noted four times, not two. Noted. Still, my point was that the report doesn't really highlight massive broader market dysfunction or examine what could be done about it. That deserves several chapters, not four lines.
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Skeptical Cynic (profile), 8 Jan 2015 @ 9:32am

HAHAHAHA LOL
Why is this a surprise?
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Noneone, 8 Jan 2015 @ 9:59am

Availabliity
After the 10 Mbps I'm like most people stuck in the red bar, unless I want to play a crazy amount per month to get to 25 Mbps from only one choice.
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Michael J. Evans, 8 Jan 2015 @ 10:28am

Willing to move but...
Within the metro area I currently live I am willing to move to get 'proper' service. Though the only places that currently offer this as an option tend to be extremely high rent apartments with limited deals that, due to lack of competition and reliance upon single less large companies, might become defunct thus rendering the move moot.

I also rather dislike how, very often, multi-dwelling-units have 'agreements' that prevent competition.
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Anonymous Coward, 8 Jan 2015 @ 10:32am

I live in a small town in SE Texas. We have one ISP available: Time Warner (Roadrunner). Last I checked, they gave us 2 Mbps. I don't know what's going to happen when Comcast absorbs them, but I sincerely hope I can manage to move to Austin before then. Given the choice between Google and Comcast, I'll take Google.
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- Karl Bode (profile), 8 Jan 2015 @ 12:00pm
  
  Re:
  2 Mbps? That's pretty awful, even for Time Warner Cable. Are you intentionally subscribed to their "lite" tier?
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  - Dementia (profile), 10 Jan 2015 @ 2:31pm
    
    Re: Re:
    You think 2Mbps is pretty awful? Trying living more than a few miles outside of any town. I'm lucky to get "Extended DSL from CenturyLink (the ONLY provider available) and if I manage to get speeds better than 256kbps, I'm having a good day.
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Adam (profile), 8 Jan 2015 @ 10:41am

I have one choice. Some areas around me have 2 choices. Some might claim 3 but the 3rd choice is really a company that provides rebranded service under the 2nd choice. So even when you have 2 choices the "choice" is 15Mb/1.5Mb for $59 as the top tier or 75Mb/15Mb for $79 as the top tier. So this tells me something. These companies are happier when they don't merge. Those who don't care about speeds will pay the $59 and those who do will pay the $79. Customer base isn't broken down by "choice" it's broken down by "care". MOST customer care about the price not the speed. There's no competition in overlapped areas because, with the exception of p*ssed off customers, most are going to go with what they care about: cheaper or faster; and pay whatever it costs.
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Anonymous Coward, 8 Jan 2015 @ 10:44am

do we really need more studies to tell us what is already common knowledge
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- Anonymous Coward, 8 Jan 2015 @ 11:17am
  
  Re:
  Considering how many people still claim the market's competitive? Yes.
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LduN (profile), 8 Jan 2015 @ 12:11pm

question
Can they make one of these studies for Canada? I'd like to see how we compare...
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Angel, 11 Jan 2015 @ 7:41pm

Fiber
I pay about 140 a month for Google fiber 1gbps up and down connection and tv otherwise it would be about 70 for just internet with the same speed here in Kansas city, eventually Google will own the game cause as a like long time Warner customer I can tell you that nothing comes close.

Once more markets get Google fober trust me the market will be blown wide open
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