Everyone Complains About the Lack of Competition. Now Someone Wants to Do Something About It.
Friday, July 16, 2021
Everyone Complains About the Lack of Competition. Now Someone Wants to Do Something About It.
You’re reading the Benton Institute for Broadband & Society’s Weekly Digest, a recap of the biggest (or most overlooked) broadband stories of the week. The digest is delivered via e-mail each Friday.
Round-Up for the Week of July 12-16, 2021
Everybody talks about the weather, but nobody does anything about it.—Charles Dudley Warner
Competition is crucial for promoting consumer welfare and spurring innovation and investment in broadband access networks. Competition provides consumers the benefits of choice, better service, and lower prices. Although I'd like to claim credit for those words, they were written by the National Broadband Plan team over a decade ago. The plan noted that building broadband networks—especially wireline networks—requires large fixed and sunk investments. Consequently, the industry will probably always have a relatively small number of facilities-based competitors, at least for wireline service. In the hope of spurring more competition, the National Broadband Plan included a number of recommendations for policymakers. Some were adopted, some never acted on, and some adopted and then rejected.
National Broadband Plan architect Blair Levin would later say that one of the great outcomes of the plan vis-à-vis competition was something not included in the report at all: Google Fiber. He and Larry Downes went on to write about how Google Fiber agitated incumbent providers, regulators, and investors to change their approach and policies on gig-speed internet, initiating a "game of Gigs" that broke a stalemate in investments in next-generation networks.
But the benefits of competition from Google Fiber reached too few communities in the U.S. In most local markets, if truly high-speed broadband service is available, it is offered by just one or two providers, at best. That's not true competition. And it is reflected by the evidence that consumers in the United States pay more on average for monthly internet service than consumers abroad—especially for higher speed tiers, as New America reported at this time last year. As Benton Senior Fellow Jonathan Sallet wrote:
We can expect people with only one choice to pay monopoly prices, and people with only two choices to pay the higher prices typically charged by duopolies. People with three or more choices typically pay less. Clearly, people who can barely afford to pay a competitive price, say, low-income Americans, are particularly vulnerable to artificially high prices.
So as the debate about investing in broadband infrastructure continues in Washington this month, it was heartening to see that President Joseph Biden acted to address competition in residential broadband service. Here's a quick look at what he did.
Executive Order on Promoting Competition in the American Economy
On July 9, President Biden signed an Executive Order launching a "whole-of-government" effort to promote competition across the economy. The Executive Order includes 72 initiatives. One aim is to save households money on their broadband bills. While signing the Executive Order, President Biden said:
There are more than 65 million Americans who live in a place with only one high-speed Internet provider. Research shows, when you have [limited] Internet operation, you pay up to five times more on average than families in places with more choices. That’s what a lack of competition does: it raises the prices you pay.
The President outlined seven tasks for the Federal Communications Commission to consider to help lower broadband bills.
To promote competition, lower prices, and a vibrant and innovative telecommunications ecosystem, the Chair of the Federal Communications Commission is encouraged to work with the rest of the FCC to consider:
- Adopting “Net Neutrality” rules similar to those previously adopted under title II of the Communications Act of 1934 (as amended by the Telecommunications Act of 1996) in the “Protecting and Promoting the Open Internet” order (80 Fed. Reg. 19738) adopted in 2015;
- Conducting future spectrum auctions under rules that are designed to help avoid excessive concentration of spectrum license holdings in the United States, so as to prevent spectrum stockpiling, warehousing of spectrum by licensees, or the creation of barriers to entry, and to improve the conditions of competition in industries that depend upon radio spectrum, including mobile communications and radio-based broadband services;
- Providing support for the continued development and adoption of 5G Open Radio Access Network (O-RAN) protocols and software, continuing to attend meetings of voluntary and consensus-based standards development organizations, so as to promote or encourage a fair and representative standard-setting process, and undertaking any other measures that might promote increased openness, innovation, and competition in the markets for 5G equipment;
- Prohibiting unjust or unreasonable early termination fees for end-user communications contracts, enabling consumers to more easily switch providers;
- Initiating a rulemaking that requires broadband service providers to display a broadband consumer label, such as that described in the Public Notice of the Commission issued on April 4, 2016 (DA 16–357), so as to give consumers clear, concise, and accurate information regarding provider prices and fees, performance, and network practices;
- Initiating a rulemaking to require broadband service providers to regularly report broadband price and subscription rates to the Federal Communications Commission for the purpose of disseminating that information to the public in a useful manner, to improve price transparency and market functioning; and
- Initiating a rulemaking to prevent landlords and cable and Internet service providers from inhibiting tenants’ choices among providers.
In addition, the President directed the Secretary of Commerce to conduct a study, in consultation with the Attorney General and the Chair of the Federal Trade Commission, regarding findings and recommendations for improving competition, reducing barriers to entry, and maximizing user benefit with respect to the mobile application ecosystem. The Secretary of Commerce is to conduct an open and transparent stakeholder consultation process and report to a new White House Competition Council within one year.
A Broadband Competition Agenda
As Benton's Jonathan Sallet noted last summer, broadband competition is more important than ever—but it is too limited. At a typical broadband speed of 100/10 Mbps, at least 80% of Americans face either a monopoly (no choice) or a duopoly (only one choice) for fixed service. It’s worse in rural America, where monopoly service is even more prevalent.
The Benton Institute for Broadband & Society has endorsed more transparency in the residential broadband market.
- We called for disclosure and collection of residential broadband pricing (with fees and ancillary charges) for each market so that the FCC and the public can analyze the state of competition.
- We asked for reinstatement of the Broadband Consumer Disclosure Label, which will empower consumers to make better-informed choices.
- We've outlined three ways to ensure competitive broadband choices for renters.
The Benton Institute believes there are additional steps we can take to improve broadband competitiveness:
- Public dollars should support deployment of high-performance, high-capacity broadband networks that are scalable to meet future needs.
- We should prioritize open-access networks that facilitate competition between multiple providers.
- Federal funding should support the deployment of middle-mile networks that offer nondiscriminatory access to private providers to reach residences and small businesses.
- States should repeal restrictions on municipalities and counties that want to act themselves to increase broadband deployment.
- The federal government should provide the kind of support offered by multiple states, including Illinois, which provide grants to eligible municipalities and/or economic development organizations in order to assist in the creation of a local or regional broadband strategy.
We'll give President Biden the last word here on the importance of competition:
Competition works. We know it works. We’ve seen it works when it exists. Fair competition is what made America the wealthiest, most innovative nation in history. That’s why people come here to invent things and start new businesses.
- Reaction to Executive Order on Promoting Competition in the American Economy
- Consumer Reports launches Broadband Together — a nationwide search for the truth about your internet service
- How Internet and TV providers get away with jacking up your bill (Washington Post)
- Meet Tim Wu, the Man Behind Biden’s Push to Promote Business Competition (Wall Street Journal)
Beach Reads (resist tl;dr)
- Biden's call to restore net neutrality: What you should know (C|Net)
- High-Speed Internet Is Essential For All Counties (National Association of Counties)
- Massive government spending hasn't solved the rural Wisconsin internet problem (Milwaukee Journal Sentinel)
- Wisconsin Governor's Task Force on Broadband Access Report
ICYMI from Benton
2016 Called. It Wants to Know How Lifeline is Doing (Kevin Taglang)
The Good, The Bad, The Ugly (Michael Copps)
July 18—NARUC Summer Policy Summit (NARUC)
July 19—How Broadband Can Promote Telehealth Equity (Partnership for a Connected Illinois)
July 19—2021 Former FCC Chairs Symposium (Multicultural Media, Telecom and Internet Council)
July 20-21—Broadband is the Electricity of the 21st Century: Let’s Light Up Every Community (Next Century Cities)
July 21—Open Federal Trade Commission Meeting (FTC)
July 25—Fiber Connect 2021 (Fiber Broadband Association)
Aug 4—Broadband Infrastructure Program Webinar (NTIA)
Aug 5—August 2021 Open Meeting (FCC)
Aug 5—Broadband Infrastructure Program Webinar (NTIA)
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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