Rob Pegoraro is nostalgic for the days when getting good Internet access was easier because there were more providers from which to choose (he suggested fourteen years ago and seven years ago as benchmarks). OK Rob, let’s reflect on exactly how easy it was in the good old days. I happen to remember those days pretty well, and yes, there were many providers of dial-up access service fourteen years ago. To the degree that some of those providers offered value-added services, I would agree that they were beneficial for consumers, but the fact is that scenario was extremely unusual. The vast majority of dial-up services were not differentiated in meaningful ways for consumers. In other words, dial-up was a commodity service. The only differentiator for most people was price, and as can be expected under those circumstances, only the most efficient providers can survive.
Of course, we now know that is exactly what happened. Moreover, as I recall, the typical Internet service at that time offered speeds of 28.8 or 33.6 kbps. Yes, those were the days of the “World Wide Wait.” This NY Times article from that timeframe shows how entrepreneurs from startups like Freeloader and Pointcast helped people avoid the on-line wait by caching websites on a user’s PC. They were pretty creative services, but they were no substitute for an on-line interactive experience.
Jumping forward to seven years ago, Rob says we were enjoying Internet access service from a variety of DSL providers, but again, there wasn’t meaningful differentiation among providers. I was there in those days at Bell Atlantic. It was true there were many competitors due to government mandated access requirements. There were multiple, independent players but they were all using Bell Atlantic’s lines. They were not building their own networks and it was complex to get services synchronized to provide DSL. If things broke it was very difficult to figure out where the problem resided (the copper line? The DSL wholesale unit? The ISP? The DSLAM? The customer DSL modem?) DSL service was very shaky and quality even worse. It is far different today.
Enough nostalgia. Let's talk about the broadband environment today. For starters, the days of the World Wide Wait are over. Today we have platform competition, and the vast majority of Americans do benefit from real competition among multiple facilities-based providers. According to the National Broadband Plan, 290 million Americans -- 95% of the U.S. population-- have access to terrestrial broadband capable of supporting download speeds of at least 4 Mbps. 82 % of U.S. homes have a choice of at least two broadband technologies, and that competition encourages infrastructure investment. FiOS Internet service, which delivers speeds up to 50 Mbps today is and capable of delivering much higher speeds, is the perfect example of the benefits of investment resulting from platform competition. Indeed, the Broadband Plan acknowledges that platform competition has induced network providers to invest in network upgrades while new choices for broadband are becoming available via 4G wireless and satellite service not to mention the fact that three or more 3G wireless service providers serve 77% of the U.S. population.
Rob uncharacteristically sees the glass as being “half or more empty” and focuses on service problems with Internet access. Yet, the FCCs own consumer survey (see here and here) conducted in October/November of last year found that 92 percent of those online are somewhat or very satisfied with their current Internet service at home. So in addition to having choices in today’s broadband market as I argue above, it appears that the market is driving providers to offer services that are generally working well for most consumers.
As a sign that the market in broadband is not working, Rob suggests that Verizon’s deployment of its FiOS technology is ending and that this suggests that another “bright light is dimming.” What? Verizon has multi-year projects currently underway to deploy FiOS in major urban markets such as New York City, Washington, D.C., Pittsburgh, and Philadelphia. In NYC, we are the only provider committed to reaching all 5 boroughs. We have the people in place and the resources committed to finish the job in these cities.
So we continue to build out our network in many areas. Yes, over time, the operational focus will shift from “building-out” networks to “signing-up” customers. But this means the work moves from laying fiber down the streets to literally going “door to door” to win new customers. The challenge will be to sign-up new customers and do the installation from their homes to the FiOS network. A greater emphasis will be place in marketing and sales efforts to take market share from our competitors in those FiOS communities. But fiber will continue to be needed to connect to the lines or nodes along the streets.
Further, Verizon’s deployment of fiber to the home technology has clearly helped spur cable companies to upgrade their networks using DOCSIS 3.0 technology. Smaller telcos are in many places deploying fiber as well so the U. S. today leads Europe in total number of homes passed by fiber technology. In its National Broadband Plan, the FCC found that within two years, it is probable that at least 50 million homes will be able to receive peak download speeds of 18 Mbps or more from their telephone company. This includes Verizon’s FiOS deployment (which offers speeds as high as 50 Mbps already) and upgrades from other companies. It also found that over the next 2-3 years cable companies will upgrade their networks to DOCSIS 3.0 technology, which is capable of maximum download speeds of more than 50 Mbps. One analyst predicts that by 2013, leading cable companies will cover 100% of the homes they pass with DOCSIS 3.0.
The top five cable companies currently pass 103 million housing units, or more than 80% of the country’s homes. So it appears large portions of America will have very capable broadband network technologies and many already do.
Rob suggests his concerns with competition in broadband are related to the recent court decision in the Comcast case. He says that the court left the Federal Communications Commission without the authority to oversee the broadband industry and the issue is serious because “It's about ensuring that the one or two Internet providers in town can't limit what you do on the Internet.”
Rob’s own paper, the Washington Post, opined on the issue over the weekend and the title of its editorial says it all: “Internet Oversight is Needed, but Not in the Form of FCC Regulation.” The Post goes on to suggest that transparency in network management practices for example is important but it also notes that any oversight should “recognize the interests of companies to run businesses in which they have invested billions of dollars.” It concludes by saying that Congress needs to step in to set policy and get the “right balance.” Our own Tom Tauke made a similar point in a recent speech before the New Democrats Network.
So Rob, I encourage you to not be nostalgic for the Internet access experience we had in 1996 or 2003. Thankfully, we have advanced, and our broadband connections are more robust than ever. We are much, much better off today, and the future looks even better, both with regard to continuing advances in broadband networks and choice, and achieving the right policy balance.
*I want to acknowledge the good work of Paul Brigner on my staff both in helping to write this piece and in doing important research to support its conclusions.
UPDATE 4/20/10: Rob has responded to this post; you can read it here. Link continues the conversation via video, embedded below and on PolicyBlogTV.