FCC Chairman Tom Wheeler says that the only way that more residential and business customers will be able to get access to more affordable broadband service is if there are more competitive choices in the market.
Today, there's a lack of competitive choice when it comes to broadband. Despite pioneering efforts of municipal service providers like Chattanooga, Tenn.-based EPB, consumers can only choose the local cable provider or telco. The availability of higher speed broadband of 10-100 Mbps varies by market.
Verizon (NYSE: VZ) has publicly stated it would not bring its fiber-to-the-home (FTTH) service to any new markets, leaving many other communities with little choice of a slower DSL connection or a higher priced cable offering, for example.
Making matters worse, service providers make it difficult for users to switch providers.
"Users cannot respond by easily switching providers," Wheeler said. "As a result, even though there may be competition, the marketplace may not be offering consumers competitive opportunities to change providers, especially once they've signed up with a provider in the first place."
All of these factors have created what could be called a speed gap.
Although 93 of U.S. residential customers can get access to a broadband provider, Wheeler said during a speech at Washington, D.C., startup incubator 1776 that less than 15 percent can purchase a 4 Mbps speed service.
Wheeler added that the FCC's 4 Mbps definition of broadband is "yesterday's broadband" and isn't adequate when a single HD video delivered to a home or classroom requires 5 Mbps of capacity. "This is why we have proposed updating the broadband speed required for universal service support to 10 Mbps."
When taking into account higher speeds such as 25 Mbps, Wheeler pointed out that over 19 percent of U.S. residents can get service, while another 55 percent have only one provider that offers such a service.
But the gap gets even wider when one considers 50 Mbps service. According to the FCC figures, less than 2 percent of U.S. residents can buy service from three or more broadband providers.
Under Wheeler's new competition agenda, the regulator plans to drive three main tenets: protect competition, including opposing acquisition efforts, encourage competition by opening new mobile broadband spectrum and driving net neutrality rules that Wheeler says ensures "the Internet remains free from barriers erected by last-mile providers." In addition, the regulator wants to help create new competitors in areas where "meaningful" competition is not present today.
Wheeler pointed out how Google's move to deliver 1 Gbps fiber-to-the-home (FTTH) service to Kansas City and Provo has driven incumbent telcos and cable operators such as AT&T (NYSE: T), CenturyLink (NYSE: CTL) and Cox to respond with their own fiber-based broadband services.
"AT&T has announced plans to deploy gigabit fiber to 21 major metropolitan markets," Wheeler said. "Many of these are in the same markets where Google has announced plans to lay fiber. A year ago, Cox Cable said it wouldn't be upgrading to gigabit networks because it would cost billions. Now it says it will, starting with communities where Google and CenturyLink are deploying fiber."
Jim Cicconi, Senior Executive Vice President of External and Legislative Affairs for AT&T, responded positively to Wheeler's speech. He pointed out that the service provider has been announcing a number of cities where it will deploy its 1 Gbps FTTH service, including St. Louis, which it announced on Wednesday.
"AT&T has been investing vigorously to make that vision a reality," wrote Cicconi. "Since 2008, AT&T has invested nearly $119 billion, much of that to provide Americans with competitive broadband services, both wired and wireless. These have included our award-winning U-Verse service, our Project VIP broadband expansion, our Mobile 4G LTE network, and, most recently, our GigaPower service being deployed in locations across the country. Just yesterday, in fact, we announced that we will bring our GigaPower service to St. Louis, adding to our list of up to 100 cities and municipalities nationwide that will receive our ultra-fast fiber network."
The one way to help get consumers the higher speeds they need is by enabling more service providers to deploy fiber. "In the end, at this moment, only fiber gives the local cable company a competitive run for its money," Wheeler said. "Once fiber is in place, its beauty is that throughput increases are largely a matter of upgrading the electronics at both ends, something that costs much less than laying new connections."
His speech was applauded by the FTTH Council, one of the advocates of fiber-based broadband services, and other industry groups.
"Surrounded by innovators at D.C.'s start-up hub 1776, FCC Chair Tom Wheeler reaffirmed what consumers, communities and companies across the country have said: We need unlimited bandwidth to fuel our economy and compete around the world," said Heather Burnett Gold, FTTH Council president. "And it is clear, as the chairman noted, that all-fiber networks are the way to get there. Companies and communities have made tremendous headway in the last few years to build these future-proof networks, but there are still barriers to investment and deployment."
Public Knowledge echoed a similar sentiment, but added that the FCC needs to acknowledge the concerns brought up by competitive service providers about creating a more level playing field.
"If the FCC wants to see new competitors, it needs to act on pending complaints by competitors that incumbents already use their market power to smother competition," said Harold Feld, senior vice president at Public Knowledge. "The T-Mobile Data Roaming Petition, special access reform, and interconnection issues all provide ways for Chairman Wheeler to apply his understanding of the broadband market in ways that will give Americans real broadband choices."
- see this data sheet
FCC's Wheeler challenges Tennessee's anti-municipal broadband laws
FCC's Wheeler wants to eliminate municipal broadband barriers
FCC's Wheeler says he'll maintain the Open Internet