COVID-19 Is Exposing A Virulent Strain Of Broadband Market Failure Denialism

from the ill-communication dept

A few weeks ago, the US telecom industry began pushing a bullshit narrative through its usual allies. In short, the claim revolves around the argument that the only reason the US internet still works during a pandemic was because the Trump FCC ignored the public, ignored most objective experts, and gutted itself at the behest of telecom industry lobbyists. The argument first popped up over at AEI, then the Trump FCC, then the pages of the Wall Street Journal, and has since been seen in numerous op-eds nationwide. I’d wager that’s not a coincidence, and I’d also wager we’ll be seeing a lot more of them.

All of the pieces try to argue that the only reason the US internet works during a pandemic is because the FCC gutted its authority over telecom as part of its “restoring internet freedom” net neutrality repeal. This repeal, the story goes, drove significant investment in US broadband networks (not remotely true), resulting in telecom Utopia (also not true). The argument also posits that in Europe, where regulators have generally taken a more active role in policing things like industry consolidation and telecom monopolies, the internet all but fell apart (guess what: not true).

Usually, like in this op-ed, there’s ample insistence that the US broadband sector is largely wonderful while the EU has gone to hell:

“Unlike here, European networks are more heavily regulated. This has led to less investment and worse performance for consumers for years. American consumers are being generally well served by the private sector.”

Anybody who has spent five minutes talking to Comcast customer support — or tried to get scandal-plagued ISP like Frontier Communications to upgrade rotten DSL lines — knows this is bullshit. Still, we penned a lengthy post exploring just how full of shit this argument is, and how there’s absolutely zero supporting evidence for the claims. The entire house of cards is built on fluff and nonsense, and it’s just ethically grotesque to use a disaster to help justify regulatory capture and market failure.

While it’s true that the US internet, in general, has held up relatively well during a pandemic, the same can’t be said of the so called “last mile,” or the link from your ISP’s network to your home. Yes, the core internet and most primary transit routes, designed to handle massive capacity spikes during events like the Superbowl, has handled the load relatively well. The problem, as Sascha Meinrath correctly notes here, is sluggish speeds on consumer and business lines that, for many, haven’t been upgraded in years:

“Right now, an international consortium of network scientists is collecting 750,000 U.S. broadband speed tests from internet service provider (ISP) customers each day, and we?ve been tracking a stunning loss of connectivity speeds to people?s homes. According to most ISPs, the core network is handling the extra load. But our data show that the last-mile network infrastructure appears to be falling down on the job.”

Again, your 5 Mbps DSL line might be ok during normal times, but it’s not going to serve you well during a pandemic when your entire family is streaming 4K videos, gaming, and Zooming. And your DSL line isn’t upgraded because there’s (1) very little competition forcing your ISP to do so, and (2) the US government is filled to the brim with sycophants who prioritize campaign contributions and ISP revenues over the health of the market and consumer welfare. And while there’s a contingency of industry-linked folks who try very hard to pretend otherwise, this is a policy failure that’s directly tied to mindless deregulation, a lack of competition, and, more importantly, corruption. In short, the complete opposite of the industry’s latest talking point.

For years we’ve been noting how US telcos have refused to repair or upgrade aging DSL lines because it’s not profitable enough, quickly enough for Wall Street’s liking. Facing no competition and no regulatory oversight, there’s zero incentive for a giant US broadband provider to try very hard. Similarly, because our lawmakers and regulators are largely of the captured, revolving door variety, they rubber stamp shitty mergers, turn a blind eye to very obvious industry problems, routinely throwing billions in taxpayer money at monopolies in exchange for fiber networks that are usually only partially deployed — if they’re deployed at all.

Meanwhile, US telcos that have all but given up on upgrading aging DSL lines have helped cement an even bigger Comcast monopoly across vast swaths of America. It’s a problem that the telecom sector, Trump FCC, and various industry apologists will ignore to almost comical effect. Also ignored is the fact that this results in US broadband subscribers paying some of the highest prices for broadband in the developed world:

“Numerous studies, including those conducted by the FCC itself, show that broadband pricing is the second-largest barrier to broadband adoption (availability is the first). It?s obvious that if people are being charged a lot for a service, they?re less likely to purchase it. And independent researchers have already documented that poor areas often pay more than rich communities for connectivity. Redlining of minority and rural areas appears to be widespread, and we need accurate pricing data from the FCC to meaningfully address these disparities.”

Try to find any instance where Ajit Pai, or anybody in this chorus of telecom monopoly apologists, actually admits that the US broadband market isn’t competitive and, as a result, is hugely expensive for businesses and consumers alike. You simply won’t find it. What you will find are a lot of excuses and straw men arguments like this latest one, designed to distract the press, public, and policymakers from very obvious market failure. Market failure that was a major problem in normal times, and exponentially more so during a pandemic where broadband is an essential lifeline.

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Comments on “COVID-19 Is Exposing A Virulent Strain Of Broadband Market Failure Denialism”

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28 Comments
This comment has been deemed insightful by the community.
Anonymous Coward says:

"Unlike here, European networks are more heavily regulated. This has led to less investment and worse performance for consumers for years. American consumers are being generally well served by the private sector."

Which explains why living in a small village I get broadband over DSL, a choice of ISP’s, and the only noticeable traffic change due to the pandemic is the lack of vehicles on the road.

This comment has been deemed insightful by the community.
Anonymous Coward says:

Re: Re:

I signed up to a new ISP 6 months ago. I got £75 cashback for joining them, they had the lowest prices, free modem (no rental fee), no usage caps and the price advertised is the price I pay. The competition is so high, they are paying people to be their customers. When the contract expires in 12 months, I’ll find another ISP.

MathFox says:

Re: Healthy competition

Here in the Netherlands in most homes there is a choice between cable (one provider) and ADSL (multiple providers) offering 20-100 Mbit/s packages for decent prices. All-in, no hidden fees. I am one of the lucky guys to have fiber to his home… also decently priced.

What I hear is that there are continuous network upgrades, by the telecom operators in Europe. And there’s (preventive) maintenance too.

Scary Devil Monastery (profile) says:

Re: Re:

…And living in Stockholm my own ISP has the deal that if I ever can produce three screenshots from different days showing a dip in bandwidth below half of what I pay for I don’t have to pay the broadband bill that month.

Sweden is regulates as hell so by the assertions made in the OP I should by rights be fighting over a DSL with the rest of the people in my block rather than enjoying the hell out of a cheap 100 Mbit line.

Scary Devil Monastery (profile) says:

Re: Re:

"Nowadays, their lies are so stupidly obvious that it would be comical if not so friggin evil."

It used to be that kind of lies were only pushed by the talking heads trying to make the USSR look like a worker’s utopia. In the US not even con men went that obvious.

Today? It’s as if the soviet commissars from 1960 have all gotten jobs doing US lobbying…

Koby (profile) says:

No Government Success

Having big government regulation isn’t going to cause the product to improve. Otherwise, systems like Amtrak would be the ultimate mode of transportation here in the U.S. Government regulation isn’t going to encourage competition (remember, government regulation locks in incumbent corporations in many industries), nor will it reduce the cronyism or lobbying or campaign contributions.

Although eliminating monopoly power would encourage competition, price wars, and an improvement in service.

That One Guy (profile) says:

Re: Fox Union For Coop agrees, anti-fox measures terrible idea

Exactly! Like I said above clearly the people in europe are all hallucinating the massively better internet service/options they have, because obviously regulations could never work to create a competitive field and keep companies from abusing their positions for monetary gain at the cost of their customers.

Snark aside, while you may be correct that regulations won’t get the job done in the US it’s almost certainly not for the reason you think. As example after example from other countries show regulations absolutely can make for a competitive industry with multiple options and reasonable price, the problem in the US is that the ones setting the regulations are almost to a person owned by the companies that they are supposedly setting limits on, such that the regulations are either toothless, never enforced, or are at times literally written by the companies themselves.

Remove the rampant corruption and they’d likely work fine, just like they do elsewhere.

Anonymous Coward says:

Re: No Government Success

"Having big government regulation isn’t going to cause the product to improve."

Who made such a claim? Regulation is supposed to stop illegal activities and ensure common interfaces, stuff like that. If that improves the product than so be it, but they are not necessarily tied.

Koby (profile) says:

Re: Re: No Government Success

Who made such a claim? Regulation is supposed to stop illegal activities and ensure common interfaces…

There are a lot of things that big government regulations promise that they will accomplish, but in reality they don’t. And that’s the point: the "claim" is an observation that government regulation is rarely a panacea. I’m asking you to be wary of signing a nationwide contract with a provider that won’t let you fire them if they do a poor job.

This comment has been deemed insightful by the community.
Rocky says:

Re: Re: Re: No Government Success

Yeah, those FDA regulations for example – they don’t really work. Got food-poisoning lately?

Or those workplace regulations, have your cheap-skate employer turned on the heat yet?

There are vast amounts of government regulations in place that works just fine – but you don’t notice it because it actually stops things from happening that would harm you or otherwise negatively affect you.

Only an idiot thinks government regulation doesn’t work on the whole. There are certainly problems, but most of them are caused by companies and their pet-politicians.

Koby (profile) says:

Re: Re: Re:2 No Government Success

Yeah, those FDA regulations for example – they don’t really work. Got food-poisoning lately?

https://www.foodsafety.gov/recalls-and-outbreaks

Yes, apparently someone has, and it happens all the time. Remember. the ones listed here in the recalls were NOT prevented. Moreover, it is my understanding that the FDA isn’t actually doing any testing themselves. Pretty much they just leave the actual testing to private industry nowadays.

Or those workplace regulations, have your cheap-skate employer turned on the heat yet?

I’m certainly in favor of safe and proper working conditions. But this, too, did not improve the product.

In general, if you can think of a way that government could create a better product, with better service, greater bandwidth, lower price, ect., then rather than trying to get the government to mandate this better idea, I think that you should try to run a company and put those ideas into place. Or perhaps invest in a startup that adheres to those ideas. If the idea really is so good, then customers will clearly flock to your business.

Unless there isn’t a free market because there’s a monopoly in place…

This comment has been deemed insightful by the community.
Rocky says:

Re: Re: Re:3 No Government Success

You stated: There are a lot of things that big government regulations promise that they will accomplish, but in reality they don’t.

You then try to rebut my post with a link that wouldn’t exists if not for "big government regulations".

In general, if you can think of a way that government could create a better product, with better service, greater bandwidth, lower price, ect., then rather than trying to get the government to mandate this better idea, I think that you should try to run a company and put those ideas into place. Or perhaps invest in a startup that adheres to those ideas. If the idea really is so good, then customers will clearly flock to your business.

You seem to have a poor grasp of the realities for startups in the USA that doesn’t have some very deep pockets behind them (statistics show that about 90% of startups fail in the USA) – and those figures would be even higher with no regulations to stop predatory practices. And your concept of a "really good idea sells" is so naivë it’s mind-boggling.

Funnily enough, regulations works just fine in the rest of the world but it seems the USA is a special case where nothing works if it happens to be for the public good. It seems the USA has gone from "we can do anything" to "we can’t do anything because it doesn’t work here (add bad excuse here)".

Also, there is no such thing as a free market – unless it’s regulated you will invariably end up with monopolies that encompasses all types markets. Good luck trying to start your own business during such conditions.

This comment has been deemed insightful by the community.
Anonymous Coward says:

Re: Re: Re:3 No Government Success

In general, if you can think of a way that government could create a better product, with better service, greater bandwidth, lower price, ect.,

When it come to telecoms, the infra structure is a natural monopoly, because duplicating the cables and fibres to every home,office,factory doubles the costs to leave half the installed infrastructure idle. This is why where phone and cable are now competing, the phone system is largely being left to rot.

About the only solution to that problem is regulation of the Infrastructure, leading to in the UK the Infra structure provider, Openreach, being created as a distinct entity from the major phone, and now also ISP, provider, BT.

Open reach provides and manage the Infrastructure from exchange to end points, and connects each end point to whichever ISP the end point has signed up to, in the exchanges which are shared. That way you have competition ate the service (ISP and phone level), without the expense duplicating fibres and cables in the ground and over the poles.

Without regulations, and a regulator that is not run by political appointees who will always have their eye out for their next job, you will not have competition in the provision of services, outside the fixed line and mobile service, where because of being very different services, both can co-exists. Also, because mobile is well mobile, there is competition in providing services because users expect service wherever they go.

The Cable/phone overlap is an accident of history, because originally they offered different and distinct analogue services. Now that everything is digital, they are in direct competition, and in the longer term on one digital service provider at the Infrastructure level will survive in any area. Unless and until the infrastructure is regulated and opened up for competing services on top of it, and preferably the Infrastructure provider is forcibly divorced from service providers, you will suffer from monopoly control of digital services. Note, the Openreach/BT divorce was forced by the regulator as the natural end point of forced opening up of the Infrastructure.

Anonymous Coward says:

Re: Re: Re:3 No Government Success

"But this, too, did not improve the product."

Government regulations upon industry are not about improving the products and why would they? Who is government to tell private business whether their products should be improved? No – government tells private business to not screw things up so much otherwise taxes will have to cover the cost of cleaning up after them.

This comment has been deemed insightful by the community.
Anonymous Coward says:

Re: No Government Success

Look at how regulation, and the appointment of regulators is carried out in Europe, as it works quite well.

The biggest problem that the US has with regulation is that its regulatory agencies are headed by people who are there because of political patronage, and are likely to be looking for a new job whenever the government changes, or the heat get too much and the appearance of doing something is required.

Scary Devil Monastery (profile) says:

Re: No Government Success

"Although eliminating monopoly power would encourage competition, price wars, and an improvement in service."

…and it’s that part, right there, which is absolutely vital for having a free market to begin with.
Once you’ve regulated the core infrastructure, leveling the playing field, then you can start debating whether any downstream segments of industry need regulating and if so, how much. But without having the rules laid down on how the infrastructure is handled, you effectively don’t have a market to begin with.

Anonymous Coward says:

Re: Re: No Government Success

Funny how it’s the same idiots who demand that government do something about Facebook, about Microsoft, about Google, but the moment it’s suggested that Ajit Pai get off his ass and help to ensure people in rural areas have semi-functioning Internet access they froth at the mouth and scream "BUT MUH LACK OF REGULATION!"

Well… to be fair, it’s not so much "funny" as opposed to "threadbare bullshit".

This comment has been deemed insightful by the community.
Anonymous Coward says:

Usage Caps "Magically Disappear" During Our Zombie Apocalypse

The usual BS about our poor tortured network and how we simply MUST cap bandwidth in order to maintain fairness for everybody has been dialed back (temporarily, I’m sure).

In addition to the "normal" people who are now schooling and working over the Internet, and sucking down vast TV, movie, and gaming bandwidth relative to usual, there’s guys like me who are outliers. My ISP removed my usage cap, and I’ve really cranked it up. I’ve torrented SEASONS of shows I had previously allowed to languish in my I’ll-get-around-to-it-eventually pile. In full self-quarantine, I stream news constantly when not streaming via Kodi or watching YouTube. Separately, I constantly stream videos that generate revenue for my household. I presently have two routers, two servers, and six user nodes, running live on my home network – lots of potential to share data. Finally, I run a Freenet node 24/7/365 – I’ve quadrupled the node’s bandwidth allowance for the duration of the absence of the usage cap.

I normally pull/push about a terabyte per month. I’m estimating my current consumption at a bit over double that. Usage caps on non-DSL networks can easily be seen for the pocket-picking scam they always have been thanks to our current zombie apocalypse.

ECA (profile) says:

Re: Re:

The REAL problem comes with them declaring ITS OPINION..
Lies are Lies and if you got a Major location to have your OPINION broadcast, you should be liable…

But, we had a few laws about this, (GONE)..
And then we get a Political group that Isnt.. as soon as something is posted or shown on TV, those people disappear.. wonderful nation but still a few problems.

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