A Policymaker’s Guide to Broadband Competition

Competition is a crucial component of broadband policy in that it pressures providers to be efficient and innovative. Whether any given market has adequate competition is a key underpinning question for the regulatory structure of broadband networks. However, broadband competition is not always analyzed directly. How much competition is enough, and is more always better? Many seem to believe the United States needs more broadband competition. Some even see competition as a universal elixir, fixing any and all broadband woes, real or imagined—simply add more competitors and broadband service will improve. For them, any additional—and even excess—costs are borne by providers (especially their shareholders), and all benefits are reaped by consumers.

The task for policymakers is not to be swayed by advocates who see more broadband competition as the key to all broadband challenges, whether they be prices, coverage, or net neutrality, and who look to government to spur more entrants, including government providers. Instead, policy should be pragmatic and recognize the unique economics of broadband: high fixed costs, spillover effects, and modularity, along with rapid technological change. The policy goal cannot be to simply maximize the number of competitors in a market; rather, policymakers should recognize each specific geographic area’s cost structure and existing infrastructure and work incrementally to produce superior outcomes for users. In addition, policymakers should not force square pegs into round holes by relentlessly pushing for ever-more wired broadband providers into particular places. They should, however, enable the emergence of new technology competitors.