Is U.S. High Speed Access Market Competitive, or Not? Data Conflicts

The U.S. Federal Communications Commission has released the text of its order that federally preempts Tennessee and North Carolina law restricting municipal broadband service.

The FCC says it acted under provisions of section 706 of the Telecommunications Act of 1996
that authorizes the FCC to adopt policies promoting broadband infrastructure investment and competition.

Just how much competition exists, in the high speed access market, and how much is feasible, are matters about which reasonable people can, and do, disagree. The majority FCC view obviously is that too little competition exists, while others would argue competition is reasonably robust, and is increasing.

Others might argue there is a danger that competition could decrease, long term, based substantially on the worsening profitability of such services. That is not to argue that every provider is so challenged.

On the other hand, the most-important suppliers--cable TV firms and the largest telos--do face growing challenges to the basic business model.

Consider mobile Internet access pricing. From 2010 to 2013, U.S. mobile data pricing (per unit sold) declined by only single digits year over year.

But in the first nine months of 2014, data pricing dropped by 77 percent, according to industry analyst Chetan Sharma.

In the fixed business, Google Fiber has changed consumer expectations about market level speed and pricing, creating an expectation that a symmetrical gigabit service costs $70 a month. Other suppliers essentially now are working around the Google Fiber price leadership.

Consider what Sonic.net is doing. It now is selling gigabit connections, with voice service, for $40 a month, submarining even Google Fiber pricing of $70 a month for gigabit high speed access.

CenturyLink now is selling a gigabit service for about $110 a month, guaranteed for a year.

A 100-Mbps service costs $70 a month, with the price guaranteed for a year.

A 40-Mbps service costs $30 a month, guaranteed for a year. All those prices are for stand-alone service, with no phone service.

A year ago, a CenturyLink offer of 40 Mbps would have cost more than $77 a month.

The point is that some claim there is not enough ISP competition to create consumer benefit. Others would argue the price data suggests competition already is robust, leading to substantially lower prices offered by the suppliers in a position to sell to most households, and radically lower prices in some markets.
Post a Comment

Popular posts from this blog

Spectrum Fees, High Incremental Capex, Lower Value in Ecosystem Mean Historic Changes Might be Necessary

For Ting, Operating Costs are Key to Business Model

Lower FTTH Costs Improve the Business Model, But How Much?