The Center for Public Integrity released a post yesterday that has me questioning their economics integrity. In the post, the Center describes how broadband providers avoid competition by arguing that the “Internet service grew out of the old telephone and cable TV systems, where only two companies owned direct lines to U.S. households.” Sorry, but that’s only half the story. As I shared in my comments on the post:
“Advocates for competition in the broadband access platform market need look no further than the localities that ensure that only the provider with the deepest pockets are able to get entry into a market. Onerous financial, regulatory, and technical barriers keep ouyt smaller players. Richard Bennett makes a powerful point about legacy carriers having no incentives to go beyond service territories they negotiated for or acquired when initiating services.
In addition, there is too much emphasis on the “number of carriers” narrative. This is a capital intensive business and unless new players can muster up the cash, then you won’t see a third wireline carrier entering a market.
Finally, when will “competition proponents” come out and give a definitive number for the amount of carriers in a market necessary for a declaration of competition. Two, three, or four carriers still reflects an imperfect competitive market.”
Not only are Federal Communications Commission rules not promoting broadband deployment, but local government policies are adding to the hindrance. No one complains about whether Interstate 4 connecting Tampa and Orlando should have a duplicate interstate running along it. The concern is whether there is enough commerce running over the highway to spur economic growth and justify widening the existing lanes.
For example, according to comScore.com’s report , 2015 U.S. Digital Future in Focus”, in 2014, mobile app usage made up the majority of digital media activity. Traditional television ratings fell as more Americans obtained content from emerging online platforms. Seventy-five percent of all digital consumers over the age of 18 use desktop and mobile platforms to access Internet content.
Another sign of mobile’s encroachment on the desktop is growth in smartphone use. According to comScore, smartphone use increased 16% in 2014.
I just started watching “House of Cards” (Okay, I’m a late bloomer) so now I’m counted as one of 7 of 8 Americans watching video content online, with half of these consumers watching content online on a daily basis.
And about that commerce moving along the roadway? E-commerce grew 14% in 2014 with businesses raking in $268.5 billion.
All this content and e-commerce activity happening while consumers allegedly are “abused” by a lack of broadband access platform competition. Policy makers shouldn’t waste their time on making an oligopoly a larger oligopoly. The focus should be on clearing spectrum for greater use of the internet and ensuring that the provision of data, whether in the form of video or text, is not interfered with.