Competition/Antitrust

This election season, Comcast is once again devoting funds to an investment it considers necessary - influencing elections in Seattle (WA) and Fort Collins (CO).  In Seattle, Comcast and CenturyLink have donated $50,000 to a political action committee that supports a candidate opposed to publicly owned Internet infrastructure. In our analysis, we’ve run a range of possible scenarios and offered both a conservative Comcast loss estimate and figures based on higher loss of subscribership.

[Commentary] Handing the network neutrality problem over to a government agency with strong industry ties and poor mechanisms for public accountability poses a real danger of creating more problems than we’d solve. One alternative is to foster a genuinely competitive market for Internet access. If subscribers and customers had adequate information about their options and could vote with their feet, internet service providers (ISPs) would have strong incentives to treat all network traffic fairly. But the ISP market today is under oligopoly control. Nearly one in three American households have no choice when it comes to their Internet, and for all the other consumers choices are quite limited.

Another scenario would be for Congress to step in and pass net neutrality legislation that outlines what the ISPs are not allowed to do. But fighting giant ISP mega-corporations (and their army of lobbyists) in Congress promises to be a tough battle. Yet another option: empower subscribers to not just test their ISP, but challenge it in court if they detect harmful non-neutral practices. That gives all of us the chance to be watchdogs of the public interest, but it too, is likely to face powerful ISP opposition.

[John Ottman is Chairman and co-founder of Minds, Inc. a social media network.]

The Open Technology Institute (OTI) filed reply comments in the Federal Communications Commission’s proceeding to determine whether broadband is being deployed to all Americans in a reasonable and timely manner. As OTI argued in our initial comments, we do not believe that broadband deployment meets that goal.

The record showed ample support for the position that the country has a long way to go in providing broadband in a reasonable and timely fashion to all Americans, including from a broad coalition of public interest advocates including Public Knowledge, representatives from the tech industry such as Microsoft Corp. and INCOMPAS, and representatives from rural industry such as Deere & Company and NTCA—the Rural Broadband Association. Our reply comments focused on the following arguments: (1) the FCC should not allow mobile-only access to constitute deployment of advanced telecommunications capability, (2) the FCC should consider other factors in defining advanced telecommunications capability, (3) the FCC should adopt speed benchmarks in a technology-neutral manner, and (4) the FCC should move quickly to finalize its TV White Spaces proceeding.

A new report from Cable.co.uk shows a wide diversity between the fastest and slowest US broadband states and cities. The fastest municipal speed in the country is in Washington (VA) with a download speed of 210.19Mbps, while the slowest is in North Slope Bo (AK) with a download speed of only 0.28Mbps. The speeds vary widely from municipality to municipality, even for municipalities in the same state. On a statewide basis, Rhode Island ranks at the top with an average speed of 36.69Mbps, while Montana was last. with an average speed of only 10.94Mbps

Mobile-only users are usually perceived as a consequence of fixed-mobile substitution. This study uses a unique dataset based on a survey in France, combined with interviewee's telecommunications billing data, to reveal heterogeneous consumer preferences for fixed services.

With the same mixed logit model we estimate the willingness to pay (WTP) for fixed communications services and fixed-mobile relationship. Results show a very large heterogeneity of WTP for fixed services among consumers. In addition, we show that fixed and mobile data are complement for all consumers. Mobile-only consumers have a much lower but non-zero WTP, and higher price sensitivity compared to fixed-mobile consumers. Consequently, an increase in the fixed offer price would reduce the demand for fixed service. Heterogeneous preferences for fixed services constitute an alternative explanation for the existence of mobile-only users, despite the complementary nature of fixed and mobile broadband. Counter-factual simulations show that the share of mobile-only could also be driven by the way to subsidize mobile handset. For instance, making the handset subsidy only available to fixed-mobile quadruple play subscribers could reduce the share of mobile-only by half.

Mentioning the public interest just once, the Federal Communications Commission adopted its 20th wireless competition report this week. As mandated by law, each year the FCC is tasked with reviewing the competitive market conditions with respect to commercial mobile services (voice, messaging and wireless broadband) including the number of competitors, an analysis of whether any competitors have a dominant share of the market, and a statement of whether additional providers or classes of providers would be likely to enhance competition. Each year, the headline-grabbing decision before the FCC is whether or not there is “effective competition.” This week, for the first time in eight years, the FCC concluded that there is “effective competition.”

[Commentary] This week, the Federal Communications Commission (FCC) will officially confirm that the US wireless marketplace is characterized by effective competition. As this new generation of wireless service takes hold, it seems likely that most Americans will no longer have a reason to buy both types of service.

Peter Rysavy, an engineer whose firm has been examining wireless technology issues for more than two decades, says that “eventually consumers will pay for just one broadband connection, fixed and mobile.” He sees 5G as “a serious threat” to the wireline-only companies because it will enable consumers who generally prefer wireless to abandon wired broadband altogether.

[Shane Tews is president of Logan Circle Strategies]

The Government Accountability Office was asked to examine factors affecting broadband competition. This report covers (1) selected experts’ and stakeholders’ views on factors affecting broadband competition and (2) how Federal Communications Commission promotes broadband competition and examines consumers’ experience with it.

Selected experts and stakeholders told GAO that infrastructure costs and other factors can limit broadband deployment and the extent of broadband competition. Factors these individuals identified included providers’ costs to deploy antennas, install wires or cables, and obtain permits to access existing infrastructure. Such infrastructure includes utility poles needed for deploying wired components of broadband networks. These costs can limit competition, particularly in non-urban and less populated areas, where providers’ return on investment can be lower due to fewer potential customers. Experts and stakeholders also identified industry consolidation and increasing similarity of fixed and mobile broadband as factors that are likely to affect broadband competition moving forward.

GAO recommends that the FCC should annually solicit and report on stakeholder input regarding (1) its actions to promote broadband competition and (2) how varying levels of broadband deployment affect prices and service quality. FCC concurred with GAO’s recommendations.

The Federal Communications Commission is currently in the process of redefining much of rural and low-income America in reverse when it comes to internet access. The good news: There is still time to tell them that’s a bad idea. In fact, just recently, the FCC listened to calls from stakeholders, as well as 12 members of the US Senate, to extend the time allotted for people to weigh in.

So let’s all get cracking! Let’s not let the agency change the rules for its own homework assignment so it doesn’t have to do the project. Congress told them in no uncertain terms to get real, high-functioning connectivity to all Americans, to every corner of our nation. No one should have to settle for less.

The Federal Communications Commission’s recent inquiry into reducing the minimum speeds for broadband—something that sparked criticism among open internet advocacy groups—is the latest example of how FCC Chairman Ajit Pai has failed to champion policies that would enable rural broadband to succeed once it’s built.

The most recent indication that the rural broadband promised under Pai’s chairmanship might not be the digital divide fix the FCC thinks is the agency’s approach to its annual evaluation of broadband standards, which is mandated by Section 706 of the Telecommunications Act of 1996 and the subsequent Broadband Data Improvement Act of 2008. According to the notice adopted on Aug. 8, the FCC will “seek comment on whether a mobile speed benchmark of 10Mbps/1Mbps is appropriate for mobile broadband”—and, more to the point, if mobile broadband is good enough to replace fixed broadband. While seemingly innocuous, this is a marked pivot from the standards adopted under former Chairman Tom Wheeler, which established 25Mbps/3Mbps as the minimum. Given Pai’s initial opposition to those standards as a commissioner (ones that were in line with telecommunications lobbyists) and the short period for comment of the current inquiry, the new move seems like a clear move against innovation. More importantly, the new inquiry’s focus on lowering broadband speeds at a time when the FCC has demonstrated a commitment to rural broadband seems like an easy out in defining what progress for the latter would look like. In other words, the move would shrink the onus on internet providers to provide customers with the best possible service—and rural communities will have the most to lose before they get a chance to gain.