from the do-not-pass-go,-do-not-collect-$200 dept
Fun fact: about 2,950,000 new subscribers signed up for broadband last year, and roughly 95 percent of them signed up with the biggest cable companies (primarily Comcast and Charter). These two cable giants’ market share continues to grow not really because they’re good — but because they’re the only option countless Americans have if they want modern-era broadband speeds.
We’ve long noted how most U.S. telcos spent the better part of the last fifteen years refusing to meaningfully upgrade (or sometimes even repair) their broadband networks. As a result, if you want a modern (100-200 Mbps, low latency, no weird restrictions) connection in America, your choice is increasingly: Comcast (unless your town is building its own broadband network).
That’s the textbook definition of market failure and monopolization (shielded by regulatory capture), but in clinical analysis of market share such concepts wind up not being mentioned at all. Take this PC Magazine analysis of the latest broadband market share data from Leichtman Research:
Cable accounted for almost all of 2020’s growth, 2.8 million and change, and most of that came from sign-ups at the two biggest internet providers in America. Comcast added 1.33 million subscribers for its Xfinity service to reach 31.9 million total, and Charter’s Spectrum service took in 1.2 million new subscribers to hit 30 million.
Analysis like this is always so sterile, lacking any context of the impact of this consolidation. As Comcast dominates a market, it exploits the lack of competition not only to routinely raise rates (even during a pandemic, as it turns out) but to also impose all manner of arbitrary usage restrictions and obnoxious, unnecessary fees, allowing it to drive up the advertised price even further.
In a bid to justify market failure, monopolization, and the corruption and regulatory capture that protects it, policymakers will often point to some looming technological innovation just over the horizon that will make all of this better without intervention. In the early 2000s it was broadband over powerline (BPL), which failed due to interference issues. Now it’s technologies like Starlink and fifth-generation (5G) wireless.
But we’ve noted repeatedly in lengthy posts how both Starlink and 5G won’t be some magical panacea. Starlink has a usage ceiling of only around 800,000 subscribers (in a country where 20-42 million lack access and another 83 million live under a monopoly). 5G can help fix some coverage gaps, but cost, reliability, and network restrictions usually don’t make it a suitable replacement for something like fiber.
As somebody who’s been covering telecom for a long time, something that has always stood out to me is how unwilling regulators, lawmakers, analysts, and even reporters are to call a duck a duck. In this case, the duck is monopolization and market failure. And it’s pretty hard to fix something you’re not even willing to describe accurately in analysis, news coverage, or pretty political speeches.
The problem (market failure and monopolization shielded by corruption and regulatory capture) is always ambiguously referred to as something else — usually using terms that eliminate any responsibility and causality. For example, the problem is most commonly referred to as the “digital divide” — a term that begs you to believe that the problem just fell from the sky, and wasn’t a conscious, multi-decade policy choice by heavily lobbied U.S. lawmakers.