Despite Gigabit Hype, Comcast Is Facing Less Broadband Competition Than Ever

from the ma-bell,-ill-communication dept

Despite the rise of heavily-hyped-but-highly-scattered gigabit deployments, the broadband industry is actually seeing less competition than ever before across huge swaths of the country. Once upon a time, broadband "competition" consisted of an equally matched telco going head to head with the incumbent cable provider (if you were lucky). These days, most phone companies lack the finances or competitive motivation to improve lagging DSL speeds across their footprints -- speeds that don't even meet the FCC's base definition of broadband (25 mbps).

That's resulting in a growing monopoly for the nation's cable broadband providers, who have quietly been absolutely butchering phone companies over the last several years. Just take a look at the latest data from Leichtman Research, which notes that while cable broadband providers collectively added 2.7 million net additional high-speed Internet subscribers last year, phone companies collectively shed roughly 600,000 broadband users.

That's the most net additions the cable sector has seen in any year since 2007. And the 122% 2016 net additions are a notable bump up from the 106% of net additions seen by cable providers in 2015, and 89% of net additions seen in 2014. It paints a rather clear picture of a broadband industry that, frankly, is even less competitive than public wisdom dictates (and most of us already knew it's one of the least competitive sectors in technology):

In countless markets, phone companies like AT&T and Verizon are simply giving up on unwanted DSL users, quite happily driving them to cable via the one-two punch of price hikes or apathy (their focus now is more expensive wireless, and gobbling up various media companies). Elsewhere, smaller telcos (Windstream, Centurylink, Frontier) have saddled themselves with so much debt by gobbling up AT&T and Verizon's aging copper customers, they're incapable (or unwilling) to invest in necessary broadband upgrades en masse.

Many of these companies quite simply don't even want to be in the residential broadband business, resulting in a palpable, active disdain by many of these phone companies for their own paying customers. The residential broadband industry simply isn't profitable enough, quickly enough for modern investors, so most of these companies have shifted their entire focus elsewhere. For smaller telcos like Windstream, it's gobbling up companies like Earthlink to expand a focus on enterprise customers. For AT&T and Verizon, it's gobbling up media empires in the quest to be millennial ad juggernauts.

All of this is wonderful news for companies like Charter and Comcast. This reduction in overall competition is eroding the resistance to the rise of completely unnecessary and arbitrary usage caps, meaning broadband (and competing streaming) services are getting more expensive than ever before. And remember, most of these companies have written and successfully lobbied for state bills preventing your town or city from doing much about it. As icing on the cable cake, new Ajit Pai-run FCC has made it clear that nibbling these companies' earlobes is going to pass for regulatory policy for the foreseeable future.

All of this tends to get overshadowed each time an ISP proudly announces the expansion of expensive gigabit broadband lines in highly-selective areas. But for the countless markets in the States, phone companies have effectively given up -- resigning consumers to at least a decade of higher prices and the cable industry's particular knack for atrocious customer service.

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Filed Under: broadband, competition, gigabit fiber, monopoly

Companies: at&t, comcast, verizon