Is There “Enough” Broadband Competition? And How High Is Up?
Is There “Enough” Broadband Competition? And How High Is Up?
Is There “Enough” Broadband Competition? And How High Is Up?

    Get Involved Today

    Last week, the FCC's Wireline Competition Bureau released the latest round of metrics on broadband deployment in the U.S. Called “High-Speed Services for Internet Access: Status as of June 30, 2006,” the 23-page report assures us that just about every zip code has access to multiple “high speed” internet services (defined as 200 Kbps in one direction) and that many zip codes even multiple providers of “advanced services lines,” which provide an astounding 200 kbps in BOTH directions!

    Unsurprisingly, this has kicked off the usual argument about whether we have “enough” competition so that we don't need net neutrality or any other rules to keep the internet open.

    Allow me to suggest a different approach. Asking if we have “enough” competition is a rather meaningless question. Like so many things “competition” is a rather flexible concept, and focusing on whether there
    is “enough” competition is about as useful as asking “how high is up.”

    The real questions, from a policy perspective, are two-fold.

    1) What do we need to do to get what we (former in my case) Bostonians refer to as “cheap, wicked fast broadband for everyone”?

    2) What do we need to do to make sure the internet stays as open, free, and productive at the edges as possible?

    One way to answer those questions is to ask how our current strategy is measuring up. That includes a rather critical look at the latest FCC
    report. It demonstrates that we are a long way off from generally available “wicked fast” broadband. Sure, you can get what the FCC now designates as “high speed” (200 Kbps one direction) in most places (I still won't concede
    “all”, because there are real problems even with satellite in some areas). But that's not “wicked fast.” That's what we would call “wicked retahded.”

    Now on to the second question, do we need network neutrality because we have competition? That's a damn complicated question, for anyone who cares
    about reality, and not one answered by recourse to funny numbers, “potential” competition, or other variations on the olde shell game. But one
    thing is clear from the market so far – most folks do not consider the various services offering different flavors of “high speed” as substitutes that compete head-to-head. The pricing, take rates, and use patterns are pretty clear that, for residential broadband, it's a slugfest between DSL and cable (and, according to GAO even less competitive for “enterprise” customers), with a handful of niche players (like satellite) and possible contenders (BPL, muni broadband)filling in gaps or serving as supplements.

    Put it another way: Is there any evidence that a significant number of EVDO subscribers have dropped their cable or DSL service because EVDO replaces it? I will wager that far fewer people have dropped their DSL or cable modem service when they got EVDO than mobile phone subscribers that have dropped their landlines.

    Yet mobile phone v. landline competition accounts for a fairly modest percentage of the residential phone market. Most people who have mobile phones view them as supplements for landlines, not replacements. But mobile phones actually perform all the fuinctionalities of landlines. By contrast, your average EVDO subscriber gets far, far lower speeds than that available by cable, FIOS, or DSL.

    Unless ther is some proof that people are treating the various forms of “high speed” access and “advanced services” as actual close substitutes (i.e., regard them as similar enough that they show, at best, merely modest preference for one over the other and will freely switch between them), then comparing these various services and proclaiming the existence of competition is like looking at today's temperature (about 20 degrees in DC) and proclaiming global warming a myth. It is an utterly meaningless point of comparison for purposes of getting at the real issue.

    Freely available puddles don't “compete” with bottled water, because people
    don't regard them as substitutes – although both are “water” and, if you're desperate enough, you can drink out of a puddle to quench your thirst.
    Absent any further evidence, my instinct is to treat “high speed” cellular services as “competing” with DSL or cable the same way free mud puddles compete with bottled water.