Cable's Broadband Monopoly Is Becoming Stronger Than Ever
from the do-not-pass-go,-do-not-collect-$200 dept
That's not to say that telcos aren't upgrading their networks at all. Many selectively upgrade customers in markets where fiber is already in the ground and deployment costs are minimal (developments, college campuses), then use marketing magic to pretend these deployments are much larger than they actually are. But in reality most telco execs are now shifting their attention to higher-growth markets like content and advertising, well aware of Wall Street's outright refusal to wait on a return on broadband investment.
As a result, not only are these "broadband" companies incapable of technically offering millions of their customers the FCC definition of broadband (25 Mbps), they're quite actively trying to drive these unwanted customers away with the one-two punch of outright apathy or price hikes for 2003-era speeds.
As a result, phone companies have seen broadband subscriber net losses in five of the last six quarters. In fact, in the first three quarters of 2016, cable companies added about 2,440,000 broadband subscribers, while Telcos lost about 475,000. Last quarter alone the top cable providers added about 775,000 net broadband customers, compared to a net loss of 150,000 broadband subscribers for the nation's telcos:255,000 subscribers last quarter (other estimates from folks like SNL Kagan peg that number at closer to 430,000). But whereas cable providers lost just 90,000 net pay TV customers last quarter, the telcos lost 375,000 net pay TV customers. In short, customers frustrated with slow DSL are fleeing to cable, then signing up for cable TV bundles they may not even want, usually because they're priced more cheaply on promotion than cable broadband alone.
Obviously this is all wonderful news if you're a cable broadband provider. As telcos back away from the residential broadband markets they don't want to upgrade, cable's monopoly becomes stronger than ever. As a result, cable providers can implement their weapon-du-jour against streaming video providers (usage caps and overage fees), without fear of the competitive repercussions you'd see in a healthy market. There's also less incentive than ever to lower prices, or to shore up what has historically been some of the worst customer service in any U.S. industry.
While some (including AT&T and Verizon) like to claim that fifth-generation wireless will come in and save us from this more powerful cable monopoly, there's absolutely no indication these services will be uniformly available -- or cheap. While 5G technically does provide significantly faster broadband with lower latency, usage caps and overage fees will ensure these services are priced out of the range of many households. And again, with the only competition being either expensive and capped satellite broadband, or expensive and capped cable broadband, the end result won't so much be competition as it will be competition theater.
Keep in mind cable providers are being allowed to consolidate at a faster rate than ever before, at the same time we seem intent on turning a blind eye to letting incumbent ISPs quite literally write awful protectionist state laws that hamstring broadband competition and creative solutions to spotty coverage. Combine that with the early signs that a Trump Presidency will likely focus on gutting net neutrality and other consumer protections, and the writing on the wall for U.S. broadband markets should start to come into focus.