FCC's Tom Wheeler Admits There Isn't Really Broadband Competition

from the preach-it,-tom dept

The big broadband providers have all been spinning a yarn for a while now pretending that there's widespread competition. A key partner in this has been the FCC, which for years has helped spread this myth by pushing out totally bogus broadband data. If you want a good laugh, go over to BroadbandMap.gov and type in your address -- and discover a bunch of bogus claims about broadband which you really don't have. The speeds are inflated. The services are inflated. It includes mobile data broadband, despite it being priced much, much higher and with very low caps and limits -- and speeds that no one truly considers to be broadband but, that doesn't stop the big broadband players from using that bogus data to claim there's tons of competition.

It looks like maybe, just maybe, the FCC is going to be getting out of the business of furthering this bogus narrative. FCC boss Tom Wheeler gave a very interesting speech today, in which he spoke out about the lack of any real competition. Not only that, he didn't use the FCC's old bogus definitions of broadband. Instead, he made it clear that when we're talking about real broadband most people have no competition. The FCC released this chart in conjunction with his speech: Every part of that chart is useful, because it doesn't just blindly say "broadband" and lump in a bunch of crap that isn't broadband. It shows there may be some (still not much) competition at very low speeds, but as you get up to real broadband speeds, competition basically disappears, with most people having only one option (or no options!). Past FCC's have lumped all this data together in a misleading way to pretend there's a lot more competition. It's good to see Wheeler clearly admit that there isn't -- and that this is a big problem.

Wheeler makes it clear that 4 Mbps may be the official FCC definition of broadband, but it's not really broadband with today's internet:

The bar on the left reflects the availability of wired broadband using the FCC’s current broadband definition of 4 Mbps. But let’s be clear, this is “yesterday’s broadband.” Four megabits per second isn’t adequate when a single HD video delivered to home or classroom requires 5 Mbps of capacity. This is why we have proposed updating the broadband speed required for universal service support to 10 Mbps.

But even 10 Mbps doesn’t fully capture the increasing demand for better wired broadband, of which downstream speed is, of course, only one component. It’s not uncommon for a U.S. Internet-connected household to have six or more connected devices – including televisions, desktops, laptops, tablets, and smartphones. When these devices are used at the same time, as they often are in the evenings, it’s not hard to overwhelm 10 Mbps of bandwidth.

And consumer demand is growing; today over 60% of peak-time downloads are streaming audio and video. While today that video may be for entertainment, other applications are right behind. For instance, if we are to tackle healthcare costs, high-speed broadband video for remote examination, diagnosis and even surgery is important. If our students are to get a 21st Century education, high-speed broadband to the classroom is essential. And, increasingly, that high-speed will be in both directions

And, he finally admits that wireless broadband is not a real competitor:

We have great hopes for wireless as a potential substitute for fixed broadband connections. But today it seems clear that mobile broadband is just not a full substitute for fixed broadband, especially given mobile pricing levels and limited data allowances. We welcome, and we must encourage, the development of new technologies that can bring greater competition and more choices to consumers.

Furthermore, Wheeler says he recognizes how many other problems are created when there is no real competition in the broadband market:

The simple lesson of history is that competition drives deployment and network innovation. That was true yesterday and it will be true tomorrow. Our challenge is to keep that competition alive and growing.

Of course, some of us have been saying exactly that for years, while wondering why the FCC was doing nothing to help it -- and, actually, often helping to enable consolidation, rather than competition.

Wheeler also notes that while Google Fiber and other experiments have clearly driven big broadband players to increase investment (not decrease it), Google Fiber and a few similar players are few and far between with very limited footprints.

On top of that, he points out that the switching costs are too high. Even if you have choices, if it's a pain to switch from one to the other that makes you captive to the broadband provider you've signed up with -- and apparently he wants that to change as well.

But even two “competitors” overstates the case. Counting the number of choices the consumer has on the day before their Internet service is installed does not measure their competitive alternatives the day after. Once consumers choose a broadband provider, they face high switching costs that include early-termination fees, and equipment rental fees. And, if those disincentives to competition weren’t enough, the media is full of stories of consumers’ struggles to get ISPs to allow them to drop service.

Okay. So all of that was very good to see, and actually quite refreshing from the FCC. But there's the big question that remains: we've seen FCC people claim we need more competition, but they've done little to actually make that happen. And... that's where Wheeler's speech begins to fall down. Then it devolves back into lip service. Wheeler says the FCC will protect competition where it exists, will "encourage" greater competition where it is needed, will work to "create" competition where there is none and where that's impossible, will "shoulder the responsibility for deploying" broadband. But, what will that actually mean in practice?

Wheeler has talked about preempting bans on muni-broadband, but that needs to become a reality (even as some of Big Broadband's friends in Congress have sought to block it). He doesn't really mention anything about net neutrality or reclassifying broadband under Title II -- which would actually give the FCC more power in this space. He doesn't say anything about the Comcast, Time Warner Cable merger, which would clearly (despite what those companies claim) limit competition (not directly in a market by market basis, but in creating a large dominant player in negotiating deals).

Not that anyone actually expected Wheeler to tip his hand on any of those things before an official decision is made, but it's one thing to talk the talk -- and the talk was good -- but to actually walk the walk? It's been a long time since we've seen an FCC willing to make the tough decisions.

Filed Under: broadband, competition, fcc, mergers, muni broadband, muni-broadband, net neutrality, title ii, tom wheeler
Companies: at&t, comcast, google, time warner cable, verizon