Look out cable operators: Most people only have two choices for broadband service — and when it comes to the speedy connections modern families need there’s “simply no competitive choice for most Americans,” FCC Chairman Tom Wheeler said today in a major speech. He wants to change that. And while he didn’t call for specific policy changes, he laid out a potential rationale for ambitious regulatory initiatives — a hot topic as the FCC considers ways to protect net neutrality, and deals for Comcast to buy Time Warner Cable and AT&T to buy DirecTV.
The FCC plans to boost its definition of “broadband” to services that offer download speeds of 10 Mbps, up from 4 Mbps. But Wheeler says that 25 Mbps “is fast becoming ‘table stakes’ in 21st century communications.” When families connect televisions, phones, computers, tablets and smartphones to the Web “it’s not hard to overwhelm 10 Mbps of bandwidth.”
Yet at 25 Mbps “three-quarters of American homes have no competitive choice for the essential infrastructure for 21st century economics and democracy. Included in that is almost 20% who have no service at all.” While most homes have access to 100 Mbps service, “it is not acceptable that more than 40% do not.”
What about phone company DSL services? They are “just not keeping up, and new DSL technologies, while helpful, are limited to short distances….Industry obervers believe cable’s advantage over DSL technololgies will continue for the foreseeable future.” Mobile also “is just not a full substitute for fixed broadband, especially given mobile pricing levels and limited data allowances.”
Wheeler says that the FCC will try to protect competition where it exists, and encourage it where it can. But it also will “shoulder the responsibility” to promote broadband competition where it “cannot be expected to exist.” He adds that “there is an inverse relationship between competition and the kind of broadband performance that consumers are increasingly demanding. This is not tolerable.”
That should justify a rejection of the Comcast-TWC deal, Consumers Union says. “Allowing Comcast to get even bigger and more powerful would chill the competition that the Chairman is seeking,” says Policy Counsel Delara Derakhshani. But BTIG’s Rich Greenfield says that the decision to define broadband at 10 Mbps instead of 25 Mbps “sounds positive for approval of Comcast/Time Warner Cable…..it does not sound like blocking the deal is a key part of the agenda.”
The National Cable & Telecommunications Association is more concerned that Wheeler might use today’s arguments to support reclassifying the Internet as a heavily regulated communications service instead of a lightly regulated information service. If he did that, then it would “stifle further competition and investment in the broadband marketplace…Under the light-touch regulatory regime that has been in place for almost two decades, the cable industry has invested over $210 billion since 1996 to build robust, next generation broadband networks that are available to 93% of American consumers.” The industry “is committed to meeting consumer demand for a world class Internet experience and competing in the marketplace with all wired and wireless Internet providers.”