Competition Increases Choices and Spurs Lower Prices and Better-Quality Service

Benton Institute for Broadband & Society

Wednesday, October 30, 2019

Digital Beat

Competition Increases Choices and Spurs Lower Prices and Better-Quality Service

Jon Sallet

In the next decade, everyone in America should be able to use High-Performance Broadband. Today, millions of people in the U.S. have no access to robust broadband networks. One essential building block for broadband policy for the next century is promoting broadband competition.

At the same time that income inequality has been growing in the U.S. economy, so too has market concentration. Too often just a handful of large businesses serve a single market. Market concentration adds to the importance of promoting competition, especially given the possibility that growing market power actually exacerbates economic inequality. In other words, lack of competition not only penalizes consumers in the manners traditionally expected (higher prices, lower quality, and slower innovation) but may also add fuel to the income-inequality fire.

Today, limited competition in the broadband marketplace threatens to harm consumers. With limited competition, it is perhaps unsurprising that Americans pay some of the highest broadband prices in the world. In fact, competitive choices have generally been declining over the years as broadband technologies—and consumers’ bandwidth requirements—have evolved.

To the extent that lack of competition results in artificially high prices and/or lower quality, people in some areas are paying more than people in other areas for the same service, getting lower-quality service, or both. People and communities who are especially likely to be impacted by limited competition include middle-class households, rural America, and people with lower incomes.

Broadband for America’s Future: A Vision for the 2020s

In a handful of major U.S. cities, ubiquitous, competitive High-Performance Broadband markets in the 2020s are likely to emerge. These are broadband oases, places where competition between multiple networks drives the price of High-Performance Broadband lower and the features of broadband forward faster. However, these digital oases will be far from pervasive. Other places may find themselves in broadband deserts, with no broadband or with the limited competition that typically produces higher prices.

Public policy should rest on the proposition that more competition, especially beyond one or two providers, will benefit consumers by removing the shadow of artificially high prices (or lower quality or less innovation or all of the above) from consumers.

For more details and recommendations on broadband competition see  Broadband for America's Future: A Vision for the 2020s. And please sign up for updates around the report.

Jonathan Sallet is a Benton Senior Fellow. He works to promote broadband access and deployment, to advance competition, including through antitrust, and to preserve and protect internet openness. He is the former-Federal Communications Commission General Counsel (2013-2016), and Deputy Assistant Attorney General for Litigation, Antitrust Division, US Department of Justice (2016-2017). 

The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities.

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