No, Next-Gen Wireless (5G) Won't Magically Fix The Broken U.S. Broadband Market
from the ain't-no-panacea dept
We’ve made it pretty clear by now that despite some promising gigabit fiber deployments, the U.S. broadband industry is actually getting less competitive than ever in countless markets nationwide. That’s occurring in part because telcos like Verizon have shifted their focus toward slinging video ads at Millennials (poorly), instead of upgrading antiquated DSL lines in countless states. As a result, the nation’s two dominant cable providers (Charter Spectrum, Comcast) are securing a growing monopoly over broadband, especially at faster speeds.
The net result is less competition, but more of everything everybody dislikes about American broadband: mindless rate hikes, usage caps, net neutrality violations, terrible customer service, and an obvious, active disdain for the captive customers these companies “serve.”
Of course there’s many (most notably the broadband industry) that try and argue these problems aren’t that big of a deal because fifth-generation (5G) wireless will soon arrive, basking the country in ubiquitous connectivity and broadband competition. That’s certainly the story the broadband industry has been telling the FCC as the agency conducts its annual review of U.S. broadband deployment, even though this ignores that wireless isn’t, and won’t be for years, a suitable-replacement for fixed-line broadband:
“AT&T and Verizon are trying to convince the Federal Communications Commission that mobile broadband is good enough for Internet users who don’t have access to fiber or cable services. The carriers made this claim despite the data usage and speed limitations of mobile services. In the mobile market, even “unlimited” plans can be throttled to unusable speeds after a customer uses just 25GB or so a month. Mobile carriers impose even stricter limits on phone hotspots, making it difficult to use mobile services across multiple devices in the home.
Some other investment-centric websites have tried to argue that 5G wireless will bring so much additional competition to bear on the broadband market that net neutrality (violations of which are just a symptom of limited competition) is no longer relevant:
“AT&T says it will launch its first mobile 5G network by the end of this year. T-Mobile aims for a nationwide 5G network in less than two years, with speeds up to 4 Gbps. All of it means more competition for high-speed internet at home. And that’s why the case for “net neutrality” just collapsed ? not that there ever was a good case for it to begin with.”
You’ll see this claim a lot from carriers as 5G rolls out, but it’s bunk.
While 5G wireless broadband will certainly be useful, it’s not going to magically fix an industry that’s been broken for decades. As noted above, wireless connections are routinely capped, throttled, and face a universe of bizarre restrictions, like the industry’s recent decision to charge you more money if you want HD streams to work as intended. “Unlimited” connections are routinely shown to be very limited (as California firefighters just found out), especially in more rural markets where limited investment results in many users getting kicked off the network for using often-ambiguous amounts of bandwidth.
And while ideally 5G wireless updates should make wireless networks more resilient with greater capacity, there’s an underlying reason that pricing and arbitrary restrictions aren’t going away anytime soon. Namely, the monopoly companies like CenturyLink, Verizon, and AT&T hold over the special access market.
Also known as the business data services (BDS) market, this business segment connects everything from cellular towers to ATMs, and because there’s little real competition there either, the companies have no incentive to seriously lower prices. Worse, Ajit Pai’s FCC has, like all other sector issues, been more than happy to turn a blind eye to the problem. And if you don’t fix the monopoly problems that plague the cell towers and transit lines at the heart of the wireless sector, you aren’t likely to see better rates, broader deployment, and more competition on the retail end anytime soon.
Combine this with the biggest carriers’ stranglehold over wireless spectrum, the death of net neutrality, and the regulatory capture these companies enjoy in countless states, and you should start to see why 5G is a good, modest improvement in technology, but isn’t some mystical panacea for the deep-rooted problems that plague the sector.