Will there be a return to broadband duopoly competition?

For the last twenty years, the industry has talked about broadband in cities as a duopoly, meaning there was competition between cable and telecom companies – competition between cable modem broadband and DSL broadband. Whether coordinated by backroom deals or by listening to smart advisors, both industries have given up trying to compete on price. By the time cable modem speeds hit 30 Mbps speeds, the market competition was over, and cable clearly won the price war. I would argue that’s the duopoly died when faster DSL was a flop because telecom companies stopped raising rates and were content serving the third of the public who cared more about price than speed. Even today, most people who stick with DSL hate the speeds and performance but don’t want to pay the price for cable modem broadband that is approaching twice the price as DSL. There are a lot of plans by ISPs to build fiber in the coming few years. But much of this building is by the big telcos. While some think that it's going to bring new price competition, it’s more likely that the new fiber builders will piggyback on the already-high rates of the cable companies. If history is our guide, we’ll see three or four years of loud advertising after fiber is introduced into a market. But then, both sides will likely grow comfortable with the adjusted market share, and we’ll have revived the duopoly again.

[Doug Dawson is President of CCG Consulting.]