FCC's Tom Wheeler Admits There Isn't Really Broadband Competition

from the preach-it,-tom dept

The big broadband providers have all been spinning a yarn for a while now pretending that there’s widespread competition. A key partner in this has been the FCC, which for years has helped spread this myth by pushing out totally bogus broadband data. If you want a good laugh, go over to BroadbandMap.gov and type in your address — and discover a bunch of bogus claims about broadband which you really don’t have. The speeds are inflated. The services are inflated. It includes mobile data broadband, despite it being priced much, much higher and with very low caps and limits — and speeds that no one truly considers to be broadband but, that doesn’t stop the big broadband players from using that bogus data to claim there’s tons of competition.

It looks like maybe, just maybe, the FCC is going to be getting out of the business of furthering this bogus narrative. FCC boss Tom Wheeler gave a very interesting speech today, in which he spoke out about the lack of any real competition. Not only that, he didn’t use the FCC’s old bogus definitions of broadband. Instead, he made it clear that when we’re talking about real broadband most people have no competition. The FCC released this chart in conjunction with his speech:

Every part of that chart is useful, because it doesn’t just blindly say “broadband” and lump in a bunch of crap that isn’t broadband. It shows there may be some (still not much) competition at very low speeds, but as you get up to real broadband speeds, competition basically disappears, with most people having only one option (or no options!). Past FCC’s have lumped all this data together in a misleading way to pretend there’s a lot more competition. It’s good to see Wheeler clearly admit that there isn’t — and that this is a big problem.

Wheeler makes it clear that 4 Mbps may be the official FCC definition of broadband, but it’s not really broadband with today’s internet:

The bar on the left reflects the availability of wired broadband using the FCC?s current broadband definition of 4 Mbps. But let?s be clear, this is ?yesterday?s broadband.? Four megabits per second isn?t adequate when a single HD video delivered to home or classroom requires 5 Mbps of capacity. This is why we have proposed updating the broadband speed required for universal service support to 10 Mbps.

But even 10 Mbps doesn?t fully capture the increasing demand for better wired broadband, of which downstream speed is, of course, only one component. It?s not uncommon for a U.S. Internet-connected household to have six or more connected devices ? including televisions, desktops, laptops, tablets, and smartphones. When these devices are used at the same time, as they often are in the evenings, it?s not hard to overwhelm 10 Mbps of bandwidth.

And consumer demand is growing; today over 60% of peak-time downloads are streaming audio and video. While today that video may be for entertainment, other applications are right behind. For instance, if we are to tackle healthcare costs, high-speed broadband video for remote examination, diagnosis and even surgery is important. If our students are to get a 21st Century education, high-speed broadband to the classroom is essential. And, increasingly, that high-speed will be in both directions

And, he finally admits that wireless broadband is not a real competitor:

We have great hopes for wireless as a potential substitute for fixed broadband connections. But today it seems clear that mobile broadband is just not a full substitute for fixed broadband, especially given mobile pricing levels and limited data allowances. We welcome, and we must encourage, the development of new technologies that can bring greater competition and more choices to consumers.

Furthermore, Wheeler says he recognizes how many other problems are created when there is no real competition in the broadband market:

The simple lesson of history is that competition drives deployment and network innovation. That was true yesterday and it will be true tomorrow. Our challenge is to keep that competition alive and growing.

Of course, some of us have been saying exactly that for years, while wondering why the FCC was doing nothing to help it — and, actually, often helping to enable consolidation, rather than competition.

Wheeler also notes that while Google Fiber and other experiments have clearly driven big broadband players to increase investment (not decrease it), Google Fiber and a few similar players are few and far between with very limited footprints.

On top of that, he points out that the switching costs are too high. Even if you have choices, if it’s a pain to switch from one to the other that makes you captive to the broadband provider you’ve signed up with — and apparently he wants that to change as well.

But even two ?competitors? overstates the case. Counting the number of choices the consumer has on the day before their Internet service is installed does not measure their competitive alternatives the day after. Once consumers choose a broadband provider, they face high switching costs that include early-termination fees, and equipment rental fees. And, if those disincentives to competition weren?t enough, the media is full of stories of consumers? struggles to get ISPs to allow them to drop service.

Okay. So all of that was very good to see, and actually quite refreshing from the FCC. But there’s the big question that remains: we’ve seen FCC people claim we need more competition, but they’ve done little to actually make that happen. And… that’s where Wheeler’s speech begins to fall down. Then it devolves back into lip service. Wheeler says the FCC will protect competition where it exists, will “encourage” greater competition where it is needed, will work to “create” competition where there is none and where that’s impossible, will “shoulder the responsibility for deploying” broadband. But, what will that actually mean in practice?

Wheeler has talked about preempting bans on muni-broadband, but that needs to become a reality (even as some of Big Broadband’s friends in Congress have sought to block it). He doesn’t really mention anything about net neutrality or reclassifying broadband under Title II — which would actually give the FCC more power in this space. He doesn’t say anything about the Comcast, Time Warner Cable merger, which would clearly (despite what those companies claim) limit competition (not directly in a market by market basis, but in creating a large dominant player in negotiating deals).

Not that anyone actually expected Wheeler to tip his hand on any of those things before an official decision is made, but it’s one thing to talk the talk — and the talk was good — but to actually walk the walk? It’s been a long time since we’ve seen an FCC willing to make the tough decisions.

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Companies: at&t, comcast, google, time warner cable, verizon

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Comments on “FCC's Tom Wheeler Admits There Isn't Really Broadband Competition”

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52 Comments
Mason Wheeler (profile) says:

Re: The problem is systemic

Yes, exactly. If he wants to prove that he’s serious about creating competition, and not just all talk, a real good place to start would be to just go ahead and do what the law says the government is supposed to do to parasitic monopolies that abuse their market power and break up Comcast, Verizon, TWC, etc into multiple, competing (this is important: competing, not regional) companies.

Two years ago, I’d have followed a statement like that up with “not that that’s ever likely to actually happen, of course,” but then again two years ago I wouldn’t have thought we’d ever make it this far, so… who knows? If we push for it, it looks like people are starting to listen.

Tell the FCC: break up telecom giants. We want real competition and we want it now!

nasch (profile) says:

Re: Re: The problem is systemic

go ahead and do what the law says the government is supposed to do to parasitic monopolies that abuse their market power and break up Comcast, Verizon, TWC, etc into multiple, competing (this is important: competing, not regional) companies.

Does the FCC have the authority to do that? Seems like the DOJ would have to get involved.

Anonymous Coward says:

Wow, broadbandmap.gov is WAY wrong

I just ran my neighborhood. It shows Comcast and Verizon, which is correct. But it shows Comcast offering 100M to 1G (false) (way false) (extremely false) and it shows Verizon offering 3-6M (ludicrously false).

There is NO WAY that the aging Comcast physical plant here can support 100M. Cables are old and not terminated properly. Many of the termination points are exposed to the weather. So are many of the cables, which aren’t actually trenched. Outages are so frequent as to be routine.

And Verizon…Verizon long ago redlined this neighborhood out of FIOS, so the only alternative is DSL, and given the distance from the CO, it’s slow DSL. It won’t hit 3M unless someone picks up the CO and moves it so it’s just down the block.

So wherever the data is coming from, it’s bogus.

R.H. (profile) says:

Re: Wow, broadbandmap.gov is WAY wrong

Their data for ISP speeds are the maximums for your entire zip-code. If anyone can get 100 mbps from Comcast or 3 mbps from Verizon, they’ll call Comcast 100 mbps-1 gbps+ and Verizon 3-6 mbps. That’s a major part of why the numbers are so bad.

For example, my zip-code for example includes a large amount of farmland, a small city and some suburban apartments and houses in between. In the city there are a number of local wireless ISP’s with reasonable speeds and rates but they don’t provide reliable service to those of us in the less urban areas. Even so, they still show up as available on the map. On top of that, the DSLAM for the local DSL provider is in the city so the map shows 3-6 mbps for them even though they struggle to provide 1.5-3 mbps where I am a couple miles away.

art guerrilla (profile) says:

Re: Re: Wow, broadbandmap.gov is WAY wrong

bwa ha ha ha haaaaa
just went to the map, and it is a joke…
it lists that i have like 6-7 ‘providers’ i could choose from ! ! !
wowie zowie, what have i been bitching about all these years ! ! !
oh, wait a minute, all but one is a wireless provider (which they are listing as some 10-25 Mbs speed, ha ha, you’re funny), and the one cable provider they list has had a map showing they covered BEYOND our area by 2-3 miles for the last 15-20 years, BUT THEY ARE LYING, THEY DO NOT OFFER SERVICE HERE…
well, that’s funny, our ACTUAL ISP is NOT listed, you know, the one with the fucking ‘NON-COMPETE AGREEMENTS’ with everyone else… when you call up ANY potential ISP competitor, the second you enter your zip code, it literally transfers you to the shit ISP we already have but can’t escape from…

Anonymous Coward says:

Get concessions before the merger

Now that the FCC has Comcast by the Nu-, I mean, under their thumb, they may be able to wring some concessions out of them.

Maybe no rate increases in markets without complete saturation of 1GB Internet. Ever. Or open your pipes for free in markets until you reach complete saturation of 1GB Internet.

This doesn’t mean everyone has to sign on for GB Internet, it just has to be offered to each household served.

If Comcast doesn’t like it, just submit their request to an SLJ. Then it will never see the light of day.

Anonymous Coward says:

Just got my connection upgraded for free from 100 Mbps to 200 Mbps, and I only pay 7 euro ($9) a month for it, in Eastern Europe.

Also my ISP never bitches about data caps or “Youtube eating their bandwidth”, or whatever. Such things are only a “made-up” problem in US, because the ISPs have been intentionally keeping speeds and investments down, in order to milk its current customers for more money, by upselling them to much more expensive connections, for a little more speed.

Erik Grant says:

Tom Wheeler

Has anybody else been pleasantly surprised by the FCC chair in the last six months? When they picked him, it sounded like he was just another industry shill. And while he has been all talk to this point, at least he isn’t licking Comcast’s boots and asking for seconds.

He still needs to take action, but government is slow, and that’s just the way it is. At least talking the talk paves the way for walking the walk, which is better than anything we’ve had for a long time.

Erik Grant says:

Re: Re: Tom Wheeler

It definitely feels like he’s made progress. At the start of his tenure, I remember thinking he seemed weak. Now, he’s actually starting to listen to consumers and do his job. I would be curious to look back over his previous commentary since he was appointed and see how his rhetoric has changed.

It’s overly optimistic, but it would be pretty funny if he played the telecoms to get their blessing and then completely changed direction. That seems like an awfully unsavory thing for a politician to do though, he probably wouldn’t do a thing like that.

Chronno S. Trigger (profile) says:

Re: 3 choices???

Where I live we have Verizon, Comcast, Telerama, SpeekEasy, Steel City Broadband, and another Fiber company I don’t remember the name of. I live in the Greater Pittsburgh Area, so one of the suburbs of Pittsburgh that you can’t really tell apart. Verizon and Comcast offer the fastest speeds at the lowest prices, but the rest are business class that will offer to residential.

I count myself as vary lucky, but that won’t stop me from arguing for everyone else.

Anonymous Coward says:

Re: Re: Re:

There’s a good chance that this was intended as a joke. In case you were serious, I want to point out that the commisioners are appointed by the president and approved by congress, they don’t run for office and don’t need donations. Unless you’re implying an “actual” bribe (something that’s still illegal) and not the legalize bribery of campaign donations.

R.H. (profile) says:

Re: Re:

If you read the asterisked footnote for the leftmost bar, it says that the 4 mbps up / 1 mbps down data is actually for 3 mbps up / 768 kbps down since those are the closest speeds that the FCC has data for. You’ll also note that the words up and down are reversed…although that’s probably a typo that propagated through cut and paste.

John Fenderson (profile) says:

Title II

He doesn’t really mention anything about net neutrality or reclassifying broadband under Title II — which would actually give the FCC more power in this space.

Although I think that reclassification would be a huge win for everybody no matter what, I’m OK with it not happening if the market had actual competition.

Anonymous Coward says:

how the hell can you have competition when the incumbent BB providers have meetings to decide amongst themselves what the prices will be for what service and also get those hard working, under paid politicians to bring in state laws that prevent any other BB providers from putting in ‘another’ system, even locally, or where there is no BB atm? i read where one of the big 3 is trying to stop a competitor from installing a system now or in the future in atown that has nothing at the moment! how damn disgraceful is that? and another that threatened legal action against a senator for doing the same sort of thing!
the main problem with everything in the USA has been caused by politicians taking bribes that have allowed a minimal number of companies do everything in certain fields. now it’s gradually being let out and more is being found out, crap is starting to build. when it hits fan, it wont be pretty!! the merger of TWC and Comcast is going to reduce even further any competition and Wheeler knows it! while 2 or 3 companies are allowed to do what they want and in particular stop anyone else from starting something that would compete, you know you’ve got real problems. if Wheeler isn’t careful, he is gonna make a complete screw up of what will probably be the only chance for real, positive change to happen!!

i wonder if the judge who ruled against what was then ‘net neutrality’ had any idea of the fucking shit storm he was kicking off?

R.H. (profile) says:

Wired ISP Competition

At my address the national broadband map is actually rather accurate. At least where wired providers are concerned. It shows Charter (even though it only shows their highest tier) and Frontier. Charter provides a maximum of 100 mbps down for my address. Frontier sells a 6 mbps connection that, they confirmed, at my address would probably be somewhere between 1.5 and 3 mbps maximum. I don’t live in an extremely rural area. I’m about 5 minutes outside of a city of just under 100,000. Where I live though, I have one choice if I’m going to be using Netflix (or cloud backups of my computer). That’s a problem for me.

any moose cow word says:

Actual competition in the broadband market would improve things considerably from where we are now. However, even competition would only get us so far when every competitor must maintain redundant overlapping infrastructure in order to provide service, and any new entrants in the market must build out entirely new infrastructure, or at least buyout lines from another that’s exiting the market. The cost issues involved not only hinder competition, it creates a bottom price for service that no amount of competition can cross. Also, barriers such as contract term requirements and incompatible technologies between providers prevents customers from readily jumping to another provider. Instead of an actual open market, where customers are free to choose their provider, what we have in even the best of circumstances is just multiple overlapping monopolies, with all of the cost that entails.

The cellular industry in the US isn’t much better. Though it arguably has more competition, at least in metropolitan areas, the competitors still have the cost of building and maintaining overlapping coverage over different frequencies. They even have the same issues with contract terms, and sometimes incompatible technologies, that bar customers from readily jumping between providers.

The only way to allow real market competition and actually lower prices is to have a single regulated infrastructure provider, either private or public, with multiple service providers running over it. In fact, many other countries do just that, and pay far less for faster speeds and better service!

Think about it, service providers in other industries don’t behave like this at all. Fedex and UPS are competing postal delivery services, but neither had to build new roads to deliver packages to your home–they use the same roads that the original US postal service uses. Areas that have competitive electricity and gas providers didn’t have to bring new wires or pipes out to you home either–they use much of the same infrastructure that the original service provider built. So, why should internet or cell service be any different? It’s not as if the data packets from netflix or pandora are any different depending on which service provider you use (though the packets may not get there as expediently), just as the gas and electricity coming to your home isn’t any different depending on which provider you use.

We don’t have any real reason to have this mess that we do except for the fact that tying customers to the monopoly providers hold over the infrastructure and the services they run over it is more profitable. Even a monopoly that overlaps with competitors doesn’t mean much if they had to bear similar cost of building and maintaining infrastructure just to enter the market. This is why the incumbents hate fiber, the lower cost and higher capacity allows new entrants to undercut their inflated monopolistic prices. They also hate pubic ISPs that don’t have to pay fat dividends to investors. Cities, however, usually have to pay back bond investors, with interest–but those payments don’t continue forever.

Whatever (profile) says:

Re: Re:

WHile it’s a great idea (and something I have pushed before), “ulility” final mile is pretty hard to accomplish. It requires both a huge investment by someone in final mile cabling, and a huge commitment to maintain and support that final mile long term.

Moreover, you would have to consider what that final mile would be. Would it be an IP based data link, 1 gig (say) fiber, to which providers could provide service in that manner, or would it be a multi strand, 1 strand per service situation? Would the final mile data link be maintained as a utility billed to consumers directly, or billed to the providers based on use?

At the end of the day, building it is a big expense. Maintaining it is a big expense. It’s not simple to get anyone to sign up to take that responsibility.

any moose cow word says:

Re: Re: Re:

None of these issues are new, and have already been solved in many different situations. Sometimes it’s by a private entity, sometimes by a public entity through funds or bonds. Yes, the investment cost is high and requires some guaranty of a return on that investment, a level of commitment from the effected community is usually required before even the first line is laid.

As for the actual layout, it’s usually just one strand data links. There’s little point in requiring one strand per service in residential areas, where most customers will be. None of the services are going saturate a 1 gig connection, and there’s no way to know just how many services there will be 10-20 years later. It’d be just more ridiculously redundant infrastructure. Business customers on the other hand might opt for multiple strands. A business might need more bandwidth than a single connection can carry at the time the fiber is laid. Quality fiber usually can handle more, it’s just a matter of upgrading the equipment at the end points (or repeaters in the middle) as the technology become available. Others such as apartments and business plazas would have one strand per unit.

As for your last question, the billing would depend on the parties involved and the agreements that were made as part of the original buildout. I don’t know what’s typical for ISPs, but I’ve seen both billing structures in other industries. The point is really a non-issue.

Again, none of the issues you raised are new at all.

Anonymous Coward says:

Re: Re: Re: Re:

In the countries it seems that the most typical arrangement is that the lines owner bills the service provider a flat rate for the line, rack space, and power, and then that gets included as a line item on everyone’s bill, as is done for Local Loop Unbundling in many places for telephone lines (and DSLAMs).

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