Most Americans have several home internet service providers to choose from, but this competition masks their much more limited options for real high-speed connections, proponents say.
The big picture: Home internet connections have become even more essential during the pandemic, but there is still widespread disagreement among trade groups, consumer advocates and government agencies over the extent of competition in the broadband market.
State of play: According to most recent data from the Federal Communications Commission, more than 97% of Americans currently have access to home Internet service from three or more providers at speeds of 25/3 Mbps. (The first number represents the download speed and the second represents the download.)
- This speed is the FCC’s current benchmark for broadband Internet service. But there’s a growing consensus that it’s not fast enough to meet today’s digital demands.
- FCC Chairman Jessica Rosenworcel wants to raise the standard to 100/20 Mbps.
- According to FCC data, nearly 30% of Americans now have access to three or more providers at 100/10 Mbps speeds, and nearly 40% can purchase service at that speed from two companies.
To note : FCC figures include satellite Internet and fixed wireless service providers.
- These options have always been the choice of last resort in hard-to-serve rural areas. They have a reputation for sometimes being slow and unreliable, although technology is advancing.
The FCC Data shows that only about 56% of Americans have access to a wired home Internet connection – fiber, cable or DSL (which uses copper telephone wires) – from two or more providers at speeds of 25/3 Mbps.
- Only 11% of Americans have three or more options for a wired connection at this speed.
What they say : “Even three is really not enough,” Angie Kronenberg, chief and general counsel at competitive network commerce group INCOMPAS, told Axios. “It usually takes four or more for there to be really robust competition, where you see companies really competing on price, on customer service.”
- “You can’t say there’s national competition in every home for broadband,” Jonathan Schwantes, senior policy adviser for Consumer Reports, told Axios. “That’s just not true.
- A consumer reports investigation in 2021, 26% of Americans said they had only one choice for a wired home internet connection, 32% said there were two providers, and 16% said they had three options.
- The poll also found the cost of home internet decreases with the number of providers.
- The median cost of broadband service was $75 per month for Americans who say they have only one choice of provider, while those with four or more options pay a median of $67 per month, according to the study.
The other side: Trade associations for telecom and cable companies say competition has intensified in the broadband industry as companies have invested billions in their networks.
- Cable group NCTA pointed to FCC data that shows the percentage of Americans who can purchase services from multiple providers at 100/10 Mbps speeds nearly tripled between 2016 and 2020.
- USTelecom, another trade association, says prices have gone downspeeds have increased and companies continue to invest in their networks, all hallmarks of a competitive industry.
- “As we accelerate our rollout schedule to include tens of millions more homes with fiber, the competition will increase as we do so,” USTelecom President Jonathan Spalter told Axios.
Between the lines: Technological improvements are making fixed wireless, which provides high-speed connection to the home using wireless networks, a competitive threat.
- Verizon and T-Mobile offer 5G home internet service as an alternative to a wired connection, while new entrants like Starry also offer fixed wireless as their primary product.
- According a report of the Leichtman research group.
Meanwhile, SpaceX Starlink satellite internet service promises internet service in rural parts of the country at speeds far superior to previous generations of satellite internet.
- But the FCC questioned whether the service could deliver those speeds and denied the company nearly $900 million in funding to develop a service to rural America.
- “I see wireless and satellite as potential opportunities, but they have constraints,” Kronenberg, of INCOPAS, told Axios. “Whether or not they can really compete with cable, which is going to offer higher speeds and fiber to home providers, who can certainly offer higher speeds – I think that’s a big question mark.”
And after: The Infrastructure Investment and Jobs Act provides $42.5 billion in funding to build internet networks at 100/20 Mbps speeds.
- Consumer Reports’ Schwantes predicts that the greatest threat to competition will be in areas where the existing supplier, or incumbent, challenges a funding award to a new business wishing to build in the area.
- “Will these zones be owned by incumbent ISPs who have not served this market, but claim they will, cynically, to prevent competition?” asked Schwantes.