Federal Communications Commission Chairman Tom Wheeler says broadband competition is seriously lacking in the US, and he outlined on Thursday a set of policies designed to fix the problem.

CNET/Marguerite Reardon

During a speech at a Washington, DC-based startup incubator, Wheeler said, "meaningful competition for high-speed wired broadband is lacking and Americans need more-competitive choices for faster and better Internet connections," adding later that "three-quarters of American homes have no competitive choice for the essential infrastructure for 21st century economics and democracy."

Wheeler outlined how the FCC plans to protect competition where it already exists, as well as encourage competition where it doesn't. Specifically, he said the FCC will block mergers that reduce competition; implement regulation that supports a free and open Internet; encourage access for all providers to wireless spectrum in upcoming FCC auctions; preempt state laws that prohibit cities from offering their own broadband services to citizens; and redirect universal service funds to ensure that rural Americans get the same access to high-speed broadband as urban Americans do.

The broad policy stance could ruffle the feathers of some providers, such as Comcast, which is trying to push through a $45.2 billion merger with Time Warner Cable -- a deal that would combine the largest cable broadband provider in the US with the second-largest cable broadband provider. The commission's stance could also trouble phone companies such as AT&T and Verizon Wireless, which have sought more-favorable rules in an upcoming wireless-spectrum auction and are concerned about municipalities building out their own broadband networks.

Large communications companies like AT&T, Comcast and Verizon Communications have consistently argued for a light regulatory touch from the FCC on all of these issues, saying there's plenty of competition in both the wireless and wired broadband markets. But Wheeler refuted such claims in his remarks, especially when it comes to wired broadband. Instead, he made it clear that when comparing broadband services, particularly on the wireline side, speed matters.

Comparing cable broadband speeds to DSL service, which often provides much slower speeds, is not an apples-to-apples comparison. Wheeler pointed out that the FCC's current definition of high-speed broadband -- 4Mbps service -- is not sufficient to keep up with consumer demand for more data-intensive applications on the Net, such as video. He called 4Mbps service "yesterday's broadband."

"Four megabits per second isn't adequate when a single HD video delivered to home or classroom requires 5Mbps of capacity," Wheeler said. "This is why we have proposed updating the broadband speed required for universal service support to 10Mbps."

Wheeler said that not even 10Mbps service will be enough in the future to support the demand for new services. He noted that it's not uncommon for a typical US household to have six or more connected devices on a single Internet connection, and he added that more than 60 percent of the data on the Net during peak times is video and audio downloads. Wheeler continued, saying that the need for even more capacity will increase, as our health care and educational systems begin leveraging high-speed broadband to reach patients and students remotely. In the not-so-distant-future, 25Mbps connections will become "table stakes" in 21st century communications. Today, 80 percent of Americans have access to 25Mbps speeds or higher. But he said that's still not enough.

"At 25Mbps, there is simply no competitive choice for most Americans," he said. "Stop and let that sink in...three-quarters of American homes have no competitive choice for the essential infrastructure for 21st century economics and democracy. Included in that is almost 20 percent who have no service at all."

He applauded the efforts of companies such as Google to deliver 1Gbps broadband in a handful of cities. And he said he's pleased to see AT&T promising similarly fast speeds in 21 new markets -- but he noted that many of these markets are in places where Google Fiber has been announced.

"Clearly," he said, "the infrastructure companies are voting with their checkbooks to say that competition and investment not only can coexist, but also that they can drive each other to produce both profit and progress."