Tuesday, October 28, 2014

"What is Broadband?" Could Affect U.S. ISP Market Share

Words matter, the old adage suggests. So do definitions, others might add. One case in point is the possible Federal Communications Commission action to change the definition of “broadband.” At the moment, the FCC uses a definition of 4 Mbps downstream, 1 Mbps upstream.

But the FCC reportedly is considering raising that definition to 10 Mbps, or some suggest, as high as 25 Mbps. Changing the definition would have direct impact on federal support payments for universal access and would change reporting on the status of U.S. high speed access.

But there are other potential implications. Though typical access speeds are growing in the U.S. market, high speed access market share disproportionately is held by cable operators, the reason being that cable services using DOCSIS 3.0 are faster than possible using digital subscriber line.

That is not necessarily true of fiber-to-home services, but the high reliance on DSL by U.S. telcos has lead to a situation where cable providers supply the overwhelming share of faster connections, a situation that also prevails in the U.K. high speed access market.

So imagine the potential impact if high speed access definitions are revised upwards to 25 Mbps, a figure probably less likely than a shift to 10 Mbps. In the instance where the new definition is 25 Mbps, cable suppliers will capture more share of the overall high speed access market, as millions of telco lines would likely no longer qualify as “high speed.”

Some think that Comcast, combined with Time Warner Cable, might, using the 25 Mbps minimum definition, have as much as 50 percent of U.S. market share for high speed Internet access.

That would be a troublesome figure for an antitrust official to contemplate, especially if high speed access is deemed to be the anchor service for any fixed network services provider.

Using the current definition, a future Comcast that has acquired Time Warner Cable would have 40 percent market share of high speed access. Some would note that already exceeds the level of share antitrust authorities consider “competitive.”

Using the 25-Mbps definition, Comcast’s share would be even higher.

In principle, periodic definitional changes make sense for an agency trying to spur faster and more widespread broadband.

By effectively creating tension between goals and the present status, the FCC can encourage continual progress. The FCC does so directly by using definitions that cause universal service fund recipients to build to a higher standard, for example.

But there are other potential effects. Changing the definitions also changes market share calculations. And that matters, when mergers and acquisitions are weighed.

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