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
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.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.
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.
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.