Broadband Populism or Broadband Pragmatism

[Commentary] A response to Tim Wu's "OPEC 2.0" op-ed. Ou argues that broadband service performance has gone up significantly while prices have declined. Wired long distance fees have almost become nonexistent because unlimited nationwide phone service costs as little as $40 a month. Wireless prices have remained relatively constant but minutes have multiplied. The real reason Wu advocates muni-fiber and open spectrum is because he believes that these municipal fiber or wireless overbuild projects will somehow result in lower costs to consumers. But most of these wireless overbuild projects lay out redundant broadband connections to communities that already have broadband. In doing so, even Wu must surely acknowledge that the result will be higher overall telecommunications expenditures. After all, adding a third wire in a community (municipal fiber to supplement existing telephone and cable broadband), or a new wireless system, is certainly more expensive than just having the existing two. Someone has to pay for the third redundant system. The only way these additional costs could possibly lead to lower prices for consumers is if the profits of companies selling services on the first two wires (cable and telephone companies) were monopolistic. If this were the case, the added competition, while increasing overall costs to society, would reduce profits hopefully enough to outweigh the increased costs (but not so much to limit further investment). Yet, there is no evidence that broadband profit levels are excessive.