One of the issues that comes up in the Net Neutrality discussion is people’s perception that there is a monopoly or duopoly on broadband providers. Ok, for folks outside the U.S. this is going to be a very U.S.-centric discussion because I know so little about how it works elsewhere. Just be forewarned. But is there a monopoly/duopoly, and if so how did we get here?
In Urban and Suburban U.S. just about everyone has access to two wired broadband offerings. One from the old telephone companies and one from a cable TV company. Why only two? Because government granted a monopoly to one company from each category to operate within their jurisdiction. The creation of the telephone system predates me of course, but I lived through the evolution of Cable from pretty early on. A city, town, or county would open up a competition to give a charter to one cable company which would be the exclusive cable company allowed in that jurisdiction. The cable companies would then bid, offering things like community access channels, to get the charter. Thus when broadband came around there were two types of companies with already built out networks, Phone and Cable.
ADSL let the phone companies offer broadband over existing “last mile” copper cables into homes. Cable companies responded with a number of efforts, with DOCSIS being the most notable, giving them the same capability to leverage their existing plant. Over time various parts of this infrastructure have been updated or replaced, but this is mostly an incremental effort. With so much existing plant in place, no new player could (with limited exception) create an alternate wired broadband offering. And so most of the U.S. lives with a wired broadband duopoly.
It doesn’t really matter that many small cable companies have been swallowed up into a few giants, you had ONE before and you have ONE now. You may have liked the little local guy better than you like Comcast, but it’s not like you had a choice before. Years ago when I lived with a little local cable company I was thrilled that a bigger company bought them. The little local cable company was not investing in digital TV or broadband. The big company came in and immediately started doing an upgrade to their latest service capabilities. I lost on customer service, but won out big time on capabilities I desperately desired. This was in fact my first broadband service.
But having a wired broadband duopoly is not the same thing as having an actual duopoly, because we also now have wireless and (finally decent) satellite broadband offerings. I live out in the sticks with no cable service. I live at the maximum distance for a DSL line, with a maximum 1.5 Mb/s available and frequent issues cutting that in half. Neighbors north or east of me don’t even have the DSL option. Yet we do have a wealth of broadband options, they all just have one or another tradeoff. We have at least two fourth generation satellite broadband options (Hughesnet Gen4 and Excede) and a fixed WiMax wireless offering from a local ISP (which is actually the preferred option for most of us). Then there is Verizon’s HomeFusion LTE offering, the most serious modern option I’ve seen from a wireless company. It uses an antenna mounted outside your house connected to a router inside.
Sprint, which long ago pioneered Fixed Wireless, is in the process of getting back into this business as well. It currently offers the Netgear LTE Gateway 6100D. This won’t work for me because I need an external antenna to get sufficient signal strength in the house, but it would work for many of my neighbors. Or in my barn (which has an office and a lounge for people, in case you were wondering what horses would do with Internet access) which doesn’t have a bluff interfering with wireless signals. In addition Sprint is working with DISH to build out a Fixed Wireless network in Corpus Christi Texas. This is the real replacement for its old Broadband Direct service, and if successful could see Sprint and DISH blanket the country with a Fixed Wireless offering.
Neither AT&T nor T-Mobile have specific home wireless offerings that I know of, though of course you could (as with Verizon and Sprint) use their mobile hotspot offerings to cover an apartment. For a while I used a Cradlepoint router with an AT&T 4G USB Modem to bring broadband into our barn.
Jumping back to the satellite options, I currently use Hughesnet Gen4 as a backup connection to our local WiMax ISP. The performance of Gen4 is on par with the ISP, with better peak data transfer rates, though very long latencies impact some applications. I use a load balancing router (with a couple of latency-sensitive things locked to the WiMax connection) and just about can never tell if my traffic is going over WiMax or Gen4. Satellite used to be a poor connection of last resort, but the latest generation elevates its standing. Peak throughput is better than Verizon’s HomeFusion, at least until Verizon moves to LTE Advanced. But Verizon is half the price and doesn’t have satellite’s latency problem (bouncing a signal off a geosynchronous satellite takes time). Tradeoffs, tradeoffs.
The problem with all of the wireless technologies, except for my local WiMax ISP, is that they are metered connections. Essentially you pay by the gigabyte. But as we’ve seen with the T-Mobile initiated price wars, higher capacities at lower prices are becoming the norm from the mobile carriers. How long this trend continues depends on efforts to free up additional spectrum and to make more effective use of existing spectrum. Hughesnet is rumored to be considering a (probably very expensive) unlimited plan, which would be a very interesting option for many more people when latency isn’t an issue.
So how much of a monopoly on broadband is there really? Not much of one. Here in my rural area my neighbors and I have 8 choices, although not every choice is available to every home. In a typical suburban neighborhood anywhere in the U.S. you have as many as 10 choices when you throw in the 2 wired providers, 4 nationwide mobile providers, 2 satellite providers, and 1 or more fixed wireless or regional mobile providers. Urban dwellers probably can’t do satellite, but are more likely to have additional wireless options.
All of us would probably like 1GB to the home with no capacity limits, 20ms latency, and low low prices. Ok, we aren’t there and may never get there (especially the low low price part). But it’s a fallacy to claim that broadband is a monopoly or duopoly.