Effects of Market Structure on Broadband Quality in Local US Residential Service Markets
Does the entry and exit of competitors to/from broadband services markets have large effects on the quality of broadband plans offered to consumers? Answers to this question inform the design of subsidies to improve broadband in underserved areas and antitrust policy. Researchers found strong evidence that market structure (competition) is very important in explaining the evolution of maximum available speeds available from legacy technology Internet service providers (ISPs) serving US urban census blocks over 2014–2018. Differences in the 2018 market structure seem to be by far the most important predictor of variation in improvements to legacy broadband service quality registered across U.S. duopoly census blocks over this period. Maximum offered legacy ISP speeds with a single fixed wireless ISP entrant have a negative, but statistically insignificant effect, which we speculate is due to the lower quality service entrant shifting the competitive focus toward price, and away from higher speed. With exit, and a duopoly census block devolving into a legacy monopoly, the maximum legacy ISP speed offered dropped by about 320 Mbps. Going from two to three legacy ISPs adds about 60 Mbps. A second fiber entrant resulted in about 90 Mbps added to the maximum speeds available from a legacy ISP.
Effects of Market Structure on Broadband Quality in Local U.S. Residential Service Markets