Incumbents, Free Press Support Broadband Study for Different Reasons
Free Press and big broadband providers drew different conclusions about future broadband investment and competition from a broadband report requested by the FCC for its National Broadband Plan, written by the Columbia Institute for Tele-Information (CITI). In comments Friday, companies said the study highlighted significant industry investment, while Free Press said it showed consumers “are faced with slow speeds, high prices and few choices.” Meanwhile, the Satellite Industry Association objected to the report’s assessment of the quality of satellite broadband.
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USTelecom said the report “reinforces the fact that, largely through the investments of private providers, broadband has been deployed and adopted in the United States at a rate rivaling any previous technology.” AT&T said the FCC can facilitate that investment by “providing regulatory certainty and stability” and avoiding “untested regulatory ’solutions’ to hypothetical problems” like net neutrality. Verizon said the “findings confirm that today’s broadband market is characterized by a high level of competition and investment among facilities-based providers, resulting in a large and growing number of consumer choices for broadband services in most areas.”
Free Press said the study “reinforces the fact that broadband competition has not materialized,” and that broadband isn’t being deployed “in a reasonable and timely fashion.” The only technology CITI reports “that even presents the appearance of intermodal competition to ADSL or FTTx service and cable modem service is mobile wireless,” but CITI concludes that most consumers see wireless as a complementary -- not substitute -- service, Free Press said. The study’s finding that broadband investment will drop from 2008 to 2011 shows the dearth of competition, it said. “If the duopoly broadband market structure were poised to experience an explosion of intermodal competitors, as the industry has repeatedly claimed, the incumbents would surely be ramping up investment to compete with these new entrants.”
The study showed a lack of price competition that has encouraged providers to advertise speeds that are sometimes double the actual speed, Free Press said. Broadband providers’ focus on increasing average revenue per user means higher monthly bills for consumers, it added.
Though it mostly praised the study, USTelecom took issue with CITI’s predictions about broadband provider spending. CITI predicted declines through 2015, but many analysts believe growth will resume starting 2011, said USTelecom, citing reports by Yankee Group, the Telecommunications Industry Association and Infonetics. Also, the association complained that CITI didn’t clearly differentiate between “broadband” and “legacy” spending, and questioned the study’s “premature conclusion that wireless substitution will be minimal and its premise that broadband providers do not compete on price.” Meanwhile, Time Warner Cable said the study is good but “has a limited shelf life,” because the broadband market is changing constantly.
SIA complained that the report “repeats without meaningful scrutiny a number of outdated perceptions about satellite technology that have been demonstrated in this and related Commission proceedings to be without merit.” The report is right about satellite’s ability to reach hard-to- serve consumers, “but it is incorrect in its inferences and assertions that the broadband services these systems will deliver are somehow inferior or inadequate when it comes to meeting users’ core requirements,” SIA said: Videogames and some other broadband apps “could be adversely affected by latency,” but they “represent a very small segment of overall Internet use.”