The Tiny Bit Of Competition Remaining In The Broadband Market Is On The Verge Of Extinction

from the scare-quotes-now-mandatory-when-referring-to-broadband-'competition' dept

America, prepare for the coming of your new Broadband Overlords. Karl Bode at Broadband Reports points out the inevitable.

In most areas cable has already won the broadband wars, with inexpensive DOCSIS 3.0 upgrades allowing them to offer speeds that cash-strapped, smaller telcos simply can’t match. As I noted the other day, things are looking even brighter for most cable operators given that AT&T and Verizon have all-but stopped next gen upgrades, and are willfully driving DSL customers they don’t want to cable, strengthening cable’s dominance across most of America over the next five to ten years.

This is all before you factor in the fact that the cable industry appears poised for a new round of consolidation, with Liberty’s John Malone clamoring for a series of deals that could include a Charter acquisition of Time Warner Cable and Cox, or a Time Warner Cable acquisition of Cablevision.

In most areas of the US, cable companies enjoy cushy duopolies, if not outright monopolies. This has never worked out well for the customers, who are routinely subjected to terrible prices and worse service. Unfortunately, the few non-cable companies providing broadband connections seem to be more than happy to cede ground rather than upgrade or repair existing infrastructure.

Karl Bode has been documenting these activities for several months, especially the more egregious anti-consumer actions of Verizon. Most notably, Verizon has used the damage caused by Hurricane Sandy as an excuse to dump its DSL offering and replace it with a service that offers less but costs more.

Verizon has been going around telling many Sandy victims who have been waiting almost eight months for DSL repair — that repairs will never happen. In its place, Verizon is giving those users “Voice Link,” a service that lets users connect home phones to the Verizon Wireless network. The problem? Voice Link is no replacement for DSL: it’s buggy, it lacks many features (like named callerID), doesn’t include data service, and actually is less reliable than many POTS lines during a storm. It’s simply not an even exchange.

At first glance, this looks like nothing more than a bottom line-oriented move by Verizon. Sure, it screws existing customers and makes the company appear to be exploiting a natural disaster to protect profit margins, but it doesn’t explain why Comcast willingly repaired its existing infrastructure post-Sandy. After all, Comcast wouldn’t have done it if it couldn’t justify the expenditure.

There’s another reason both AT&T and Verizon are willingly ceding market share to cable companies. Both telcos would rather push existing customers to their LTE offerings, which are apparently profitable enough to cover any lost customers. For Verizon, the positives for ditching fixed line services are even greater, thanks to a rather symbiotic relationship with cable providers — further bad news for customers seeking competitive options.

Consumer advocates remain worried that Verizon’s co-marketing partnership and spectrum deal with the cable industry contains either a documented or undocumented “gentlemen’s agreement” that Verizon will limit future expansion of FiOS to prohibit more intense landline broadband competition. As we discussed, that would mean that the company’s already stalled FiOS upgrades would remain that way as a courtesy, in exchange for being able to sell LTE service to millions of new cable customers.

All of this points to a small handful of cable companies controlling the American broadband experience. Verizon and AT&T are both actively attempting to gut regulations prohibiting them from (advantageously) fleeing markets. The broadband speeds and connectivity that cableco cheerleaders and spokespeople proudly hail as “capable” will very likely remain at their current “adequate or below” level. Smaller competitors will be squeezed out of the market by the unified front of wireless providers and cable companies.

In addition to the negatives listed above, Susan Crawford at Wired suggests this could lead to widespread adoption of metered billing, something most cable providers are hesitant to put into practice due to its massive unpopularity — but who cares about massive unpopularity when the public has no alternatives where they can take their business?

It works out to be the perfect storm for the two industries, both of which will likely see gains in market share for their most profitable offerings.

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Comments on “The Tiny Bit Of Competition Remaining In The Broadband Market Is On The Verge Of Extinction”

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Ninja (profile) says:

It’s happening like everywhere. Such Governmental concessions act only as monopoly inducers. The US has a huge aggravating issue that is the ability of those greatly benefited by such monopolistic public policies to lobby for more control with the huge sums of money they get. Much like a truckload of stuff happening exactly because this is so explicit this is one of the things that will bring the US as a country to its economic knees. And the Americans will be the ones who will pay much like they paid Goldman Sachs and the likes huge bonuses when the subprime shit hit the fan a while back.

yaga (profile) says:

Re: Re:

While it’s true that the companies can lobby for more control, at least it’s open and someone can try to watchdog it. Look at a country like Brazil, where the backroom dealings and out and out corruption aren’t as easy to track or watchdog. Or a reporter that tries to write about it gets, at best a warning to stop, and, at worse, killed.

Ninja (profile) says:

Re: Re: Re:

Indeed Brazil has some of the problems the US has which includes the espionage part and even the violent reactions from law enforcement towards protests as a whole. And it seems there’s a real estate bubble inflating and getting ready to burst there too due to the corporate control.

While the corporations cannot donate directly to any candidate there is some maneuverability to what they can donate to political parties. The recent protests are a direct result of none of the current 30-something parties really representing anyone but themselves.

The corruption in Brazil is not easy to track it is true but that’s mainly because of a problem with the laws themselves. In these terms Brazil has had quite the evolution over the last decade whereas the US devolved.

And there are tons of backdoor negotiations going on in the US too. The lobby is just the tip of the iceberg, the one that’s visible. Much like Brazil there are other means to influence a Governmental policy that does not involve direct donations to a candidate or party.

anonymouse says:

Re: Re: Re: Re:

One of the problems might actually become a solution. Lobbyists have to donate money to the party and the politicians get there cut of that money, but as everyone knows the system is corrupt people will probably start approaching the politicians directly and offering them access to cash in return for supporting their position. Now in a roundabout way this is good as it means someone like the telco’s could pay off a few of the relevant people to vote in their favor with nobody knowing about it until a law has passed. And politicians could start to be outed for taking cash, they might seem all powerful but they are not when they are going against the party doctrine.

Anonymous Coward says:

as usual, the customer is going to get hit. this time, hit hard! no one is interested in doing anything for the customer, particularly if it impacts the bottom line. having monopolies at the moment are only going to lessen any chance for customers to change provider, so you can bet that prices will definitely go up and customer service/satisfaction is going to go down. it’s the natural road when customers cant change provider for the one they are with to then treat like crap even more. the US is one of the worst places for broadband speed, choice and reliability as well as service in general. this is going to make it worse!

Anonymous Coward says:


So let me get this compete with Google, cable broadband companies offer much higher speeds now than what was available and the smaller companies that don’t offer are now left out in the cold? I’m sorry but isn’t this article sort of calling the kettle black? I mean Techdirt had in the past stated that Google Fibre was a good thing to drive cable companies to compete with Google’s 1Gbit Internet and now that they’ve raised the speeds at lower price brackets, you start complaining?

That Anonymous Coward (profile) says:

Re: ???

You mean when the cable companies offered that HUGE 25 bump to their speeds ONLY in the markets where Google Fiber was available, while ignoring the rest of the country?

And your glossing over these phone companies who are getting government handouts to provide service cutting deals with the alleged competition to cut the market up so the corporations get better deals without having to offer better service?

Until Google Fiber has a much larger rollout they can’t offer real competition, but funny there are some smaller providers out there offering services on the same level as Google for around the same pricing, yet the big players can’t seem to roll these things out and instead use inferior tech to drive consumers to the overpriced offerings.

Did you momma drop you as a baby to hear that nice thumping noise?

Mike Masnick (profile) says:

Re: ???

So let me get this compete with Google, cable broadband companies offer much higher speeds now than what was available

Oh really? Google is in ONE city so far, with two more announced. And the cable competitors there made a marginal change to their service, and that’s it.

I mean Techdirt had in the past stated that Google Fibre was a good thing to drive cable companies to compete with Google’s 1Gbit Internet and now that they’ve raised the speeds at lower price brackets, you start complaining?

If Google Fiber were a serious national competitor in most markets, you might have a point. But it’s not. So you don’t.

And, actually, the marginal changes in Kansas City actually shows how wrong you are. The cable competitors don’t do shit until there’s REAL competition, and they’re close to killing off what little competition they had from DSL.

Wally (profile) says:

Re: Re: ???

Have you seen the maximum speed most DSL providers offer? 10 to 15 megabits…and that’s over RJ-11 standard phone wires…the signals degrade the longer the phone wires are RJ-11 to the RG6 and RG59 coaxial standards used by cable companies and you’ll find that the signal doesn’t degrade as quickly over long distances, all you need is a cable modem on a normal cable TV connection…no filters required, and the Coaxial wire standards currently offer a maximum of 54 to 60 megabits per second.

DSL is technologically a dead horse and the only reason it exists is because you cannot quite get cable access in rural areas. It uses old telephone lines and the POTS networks and require a signal filter to separate the signal from your phone line which is not as shielded as a coaxial cable and thus the signal decays are quicker than that of coaxial cables.

They are two different technologies Mike and one offers faster speeds. Cable Internet exists because the infrastructure is more sturdy than that of DSL and requires less effort to obtain when you’ve got a basic cable package.

RyanNerd (profile) says:

Microwave wireless Internet anyone?

An opportunity for a business that has line of site towers and could offer customers a non-cable / non-telco Internet solution.
This is what I am doing. I dumped DSL for Cable and when my rates started getting hiked up I went with a local business that offered Microwave (better service, lower cost and faster speeds). I’ve been with the service for over two years now.

ought_of_tha_blew_Jimmy_Dean says:

Re: Microwave wireless Internet anyone?

Isn’t that what HughesNet uses with their satellites? I’ve used their service in the past and it was fucking pathetic. Even if it fast their F.A.P destroys it by throttling bandwidth before you can finish downloading even a medium size game. Not to mention a ping of 1000ms at minimum which makes it impossible to game.

Is your service like that or is it wireless to a main tower? I had a wireless connection in the country and it was alright at best. The ping was decent at around 80 to 120 but my downloads were only 500 to 1200kbs.

I would consider it if they could match my cable that I get 20 to 50 ms and download speeds upwards of 7500kbs. I pay out the ass for it, but I really do love it. I wish Google was here šŸ™ because I’d give my left nut for a 1gbps connection.

Bengie says:

Not all doom-and-gloom

It is typically darkest just before the sun rises. People will only get pushed so far, and most people have been complacent. These incumbents are going to keep pushing until people get pissed.

The good news in there are a lot of smaller ISPs that are using cheap fiber to easily compete with incumbents in places the incumbents “don’t want”.

This means these smaller ISPs are taking root in these lesser areas and can use them as a base of operation to expand into other more lucrative markets in the future.

Anonymous Coward says:

Yet another monopoly that will slow innovation and hurt America’s economy. The problem is, these are all ‘short term’ strategies. Their purpose is to ‘maximize profit’ over the term, as quickly as possible.

This is a problem because of the economic damage this will cause after 6-10 years of price gouging.

Just like the Free Exploitation Agreements, those are also ‘short term’ maximize profit deals, and we saw what happened in 2008 because of FEA. We still haven’t recovered from these ‘short term’ maximization of profits. The entire world is still feeling the effects of these ‘short term deals’ long after they crashed an burned in 2008.

Steevo (profile) says:

Those ILECs need some standards set for them by society.

They have been paid all those years with a guaranteed ROI to maintain the PSTN and now they want out. What business gets a guaranteed profit? Only monopolies like them.

You heard what the Attorney General of New York told Verizon? “Get in there and serve your customers or sell out to someone who will.”

These companies made billions of dollars as regulated utilities, now they are offering DSL service using that same PSTN, and guess what?

Internet is now the equivalent of what telephone was a generation ago.

We need to bring them all under proper regulation, since they have taken all that money from their customers for so many years.

They should get in there and bond pairs, put in fiber, whatever it takes to give adequate service to their customers.

Those utility easements on all our property that they got for free, that’s not free. There is a quid pro quo.

We deserve it.

Dennis Working on that Phd says:

It's all about holes in your house

So this post will often grossly oversimplify some of the physics (especially about wireless), but the general themes hold. I’m neither a physicist or a network engineer but just a programmer/sysadmin/devops who likes his networks to go fast at his house.

Yes, the monopoly or duopoly of ISP service is pretty wretched, but guess what? It’s going to be around for a long, long time. Most detached homes (and certainly apartment complexes/buildings) have 5 holes that lead outside (other than your doors and windows and, depending on the quality, mouse holes) — a POTS (Plain Old Telephone Service) line, a coaxial line (cable TV cord), a power line, a water line, and a sewer line.

Power lines, with their 60hz AC electrons (here in ‘Murica as is clearly your target audience) throw off enough EMF to radically disrupt long range data transmission (fine inside a building but the further you go, the worse it’s going to get — also a problem, for different reasons, with POTS) and not to mention water or sewage, are not really practical ways of getting data into your home.

So there are currently 2 holes in your house by which data can arrive — POTS and Coax. Hence the duopoly.

“But wireless will save us!”

No, no, it won’t. I can run a wire or a fiber-optic over to my neighbor’s house, or I can run ten of them in parallel. If I run ten, I get roughly ten times the data connection throughput because the wires do not interfere with each other due to insulators and cladding and non-transmissive sheaths and what not.

Wireless doesn’t work that way. If you have a directional wireless with highly confined beam, you can almost get there, but for an omnidirectional antenna/transceiver, not gonna happen.

I worked for a LOS spread-spectrum microwave wireless ISP many, many years ago, and let me tell you, even with directional antennas, a lot of engineering, and a crack maintenance/install team, if it rains, your Internet is down or at least degraded. The reason for this is exactly the same reason your Microwave OVEN works! Water, Salts, and other elements absorb microwave radiation and turn it into heat. Aka why your Banquet TV dinner is hot and edible after 5.5 minutes in the microwave oven. Oh, and if you live in a wooded area, just imagine heating your TV dinner through those trees since that’s what the microwaves have to traverse (I don’t recommend trying it, but if someone wants a Darwin award, tape a Banquet TV Dinner to the back of a pine tree and a microwave oven to the other side with the door open. See how long it takes to cook the meal or kill you). It’s part and parcel to why your get crappy cell reception (hey, that’s microwave, too! As is your over the air TV) in certain places. So, no, terrestrial microwave isn’t going to save us.


… is far away. Even with LEO (Low Earth Orbit) satellites, you’re going to take a big latency hit (Dude, I just spawned and insta died in my game because my ping time is almost half a second). And LEO has problems of its own — the satellites move around relative to you. Geo-stat satellites are easier to deal with (which is why your Dish/Direct/Hughes all use them), but kids, that’s filling up. It’s like trying to find a nice plot of farm land in the middle of Manhattan. Good luck with that one. And GEO is further away than LEO. So, um, that latency I mentioned, yea, double that. (Dude, I died before I even spawned. WTF? They must be hackers!)

NO, they have an isolated fixed line. Even if it was piggy-backed on an ancient 4 wire (or even 2 [shudder] wire) connection meant to carry analog voice traffic 50-70 years ago. It’s ancient, but it still travels along the surface of this planet at mostly almost kinda-ish light speed until it hits fiber at the (no more than 8 mile away) DSLAM.

And that’s the real problem. We’re trying to piggy-back packet-switched data communications on 2 different technologies that are either analog circuit-switched technologies with a retrofit or analog broadcast technology with a retrofit. It’s like trying to wear your older brother’s clothes as hand-me-downs despite the fact that you’re a differently proportioned sister. . .

And that’s the problem and exactly why Google fiber is only in 1 little place right now. You need to build out a whole network AND drill a 6th hole into your home — not one meant for analog TV or analog phone. One meant for packet-switched data. It’s fiber to the home, and we don’t see it often yet.

I’m lucky where I live, and the county government is cruel to ATT and Charter as monopoly hole fillers (hahah). If you roll out anything to some of the county, you have to roll it out to most of the rest. This is why, living deep in the woods in South Carolina (yes, put that in your pipe and smoke it — SOUTH CAROLINA), I get a (well, never hit theoretical max since I also have the IP TV bundle and like to watch Jack Bower and Agent Gibbs while I download Fedora images) 42mbps fiber to the curb connection with CAT5e to the house as a basic+ package. I had 25mbps with Charter before, but they made me angry and had a bus network that meant my neighbors could decrease my throughput šŸ˜‰ I guarantee you that you would never get that from any microwave (4g LTE, spread-spectrum, terrestrial, satellite) where I live. Never. At least not without killing the forest around me and probably boiling my flesh in the Microwave Radiation Human Cooking Tournament. I can barely talk on my cell phone without going to the porch.

Until we get a dedicated “data” hole in our houses/apartments, we’re never going to see what is being suggested, and the government (well, at least Federal or State) take-over or mandate won’t help. Just pop on over to and look at how their (the UK’s) rural broadband forced and government funded rollout is doing. I could invite 5 of them over to my house with all of their devices and still do better (in SOUTH CAROLINA — not the tech mecha of the world by any stretch).

Local oversight of monopolies is the best oversight of monopolies. And unless you want to drill hundreds of holes into your house for thing X and thing Y and thing Z, maybe it’s time to start realizing that your local county/city government is the place to look for broadband equality and competition. Nobody: Google, Microsoft, Oracle, or God — will be rolling out huge fiber to the house in areas that aren’t financially or politically successful. But if you have a big bank or lawyer’s office downtown that demands better throughput, if you have savvy local government, you might just get fiber to the curb at a reasonable price way out in the sticks (like where I live).

Peace and love.


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