Study: Community Broadband Drives Competition, Lowering Costs

from the Do-not-pass-go,-do-not-collect-$200 dept

For all of the talk about being #1, America's broadband networks are routinely mediocre. The U.S. consistently ranks among the middle of the pack in speeds and overall availability, while Americans continue to pay some of the highest prices in the developed world for both fixed and mobile broadband. The reasons aren't mysterious: we've let a bunch of telecom giants monopolize the sector, dictate most US telecom policy in exchange for campaign contributions, and literally write state and federal law with a relentless focus on hamstringing competition.

We then stand around with a dumb look on our collective faces, wondering what went wrong. Rinse, wash, repeat.

While this has been true for 30 years or so, the pandemic has finally started shining a brighter light on the problem. After all, an estimated 42 million Americans can't get access to any broadband whatsoever despite endless billions in subsidies and mammoth industry tax breaks. Millions more can't afford service thanks to monopolization and a lack of competition. A new report by the Open Technology Institute revealed last week once again that Americans pay some of the highest prices for broadband in the developed world:

"We find substantial evidence of an affordability crisis in the United States. Based on our dataset, the most affordable average monthly prices are in Asian and European cities. Just three U.S. cities rank in the top half of cities when sorted by average monthly costs. The most affordable U.S. city—Ammon, Idaho—ranks seventh. The overwhelming majority of the U.S. cities in our dataset rank in the bottom half for average monthly costs."

Why Ammon, Idaho? It's a community owned and operated open access fiber network that encourages, you guessed it, actual competition. Data repeatedly shows such networks offer faster, better, and cheaper service -- in part because they're more accountable to the local community being locals themselves, but also because they can spur incumbent providers to improve service and lower costs. It's something the OTI study noted quite clearly:

And yet, there's an entire telecom-sector backed cottage industry of folks who attempt to malign community broadband and public/private partnerships. Time and time again, such networks are demonized (incorrectly) as inevitable boondoggles and not simply an organic response to market failure. Why? Because such networks challenge the status quo enjoyed by AT&T, Verizon, and Comcast, which all but own a bipartisan laundry list of state and federal lawmakers and a chorus of "experts" happy and willing to try and argue that US broadband is both competitive and hugely innovative.

But the data doesn't budge. US broadband simply isn't competitive, particularly at faster speeds of 100 Mbps or greater:

“When you factor in price at [100 Mbps] speed,” FCC Commissioner Jessica Rosenworcel has written, “the United States is not even close to leading the world." Our findings support this statement. At the 100 Mbps minimum download speed tier, the United States has the most expensive average monthly price, followed by Asia and Europe. Eight of the 10 most expensive cities in this speed tier are in the United States."

That didn't happen by accident. And none of this should be surprising to anyone.

US phone companies have given up on upgrading their aging DSL networks because it's simply not profitable quickly enough for Wall Street's liking. As a result, cable giants like Comcast and Charter Spectrum have secured a monopoly over faster broadband speeds across huge swaths of the nation, driving up costs and ensuring some of the worst customer service in any industry in America. Contrary to industry's claims, wireless is not some panacea for this problem for reasons we've well explored. And while low orbit satellite might help a little, that too isn't going to be a miracle cure.

Study, after study, after study make it clear: US broadband is patchy, expensive, and slower than a long list of countries due to limited competition and state and federal corruption. We know this, the data repeatedly shows it, and yet year after year we simply double down on the same mistakes for what, by now, should be a fairly obvious reason: it's what wealthy US telecom monopolists want.

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Filed Under: broadband, community broadband, competition, muni broadband