It takes only two steps to get your home internet speed speeded up and your monthly internet charges cut in half: 1) Get Google to announce that it’s bringing Google Fiber to your city and then watch your local internet service duopolists scramble to increase your speed at a lower cost OR 2) Move to Atlanta, Raleigh, Charlotte, Kansas City, Austin, Provo, Salt Lake City, San Antonio or Nashville. As of September 2015, Google is talking about possibly bringing Google Fiber to San Diego! And it may actually happen; in June 2016, Google announced the purchase of a major fiber network that offers service in San Diego. Either of these steps will result in much higher and better internet service at must lower costs. Why? One word: competition. If you don’t believe us, just ask the folks in Charlotte, North Carolina, where incumbent cable operator Time Warner Cable is trying to hold onto customers by dramatically increasing Internet speeds at no extra charge. Unfortunately, in October 2016, Google announced that it is scaling back its fiber network deployment and, instead, will be focusing upon a wireless alternative to cable company service.
Nonetheless, Google Fiber is set to take effect in Charlotte, the incumbent duopolist Time Warner (TWC) announced that this summer, it will hike its internet speeds six-fold. For example, customers who previously got15Mbps, will now receive up to 50Mbps, while customers who had 30Mbps speeds will now receive up to 200Mbps. The change is coming almost overnight. TWC also announced improvements to its TV service, including 1TB of storage for recorded programs, double the previous amount.
And if you don’t believe the Charlotte folk, check in with customers in Austin, Texas where Time Warner Cable upgraded its 100Mbps Internet plan to 300Mbps after Google decided to offer service there. TWC’s prices in Austin dropped to $65 a month for 50Mbps download speeds and 5Mbps upload. Google Fiber costs $70 per month for gigabit speed (1000Mbps) both upstream and downstream.
TWC is not the only company to boost service in order to fend off a challenge from Google Fiber. “Most of us live in monopoly, or at best duopoly, territory for broadband providers,” the website Consumerist reported. “But when Google announces plans to expand into a new market, competitors either strive to dive in first, like Comcast in Atlanta, or drop prices to match, like AT&T in Austin and Kansas City.” Back in February, AT&T began offering Kansas City internet subscribers up to one gigabit per second for $70 a month, essentially duplicating Google Fiber’s price and level of service. Time Warner Cable also increased speeds in Kansas City following Google’s arrival.
Pity the poor people who live in high-end Cupertino, California where AT&T just launched gigabit fiber. It doesn’t have any competition, so it set the price for its service at $110 a month. In fact, pity any consumer who lives anywhere else in the US where the broadband duopolists control the market.
The “Google Fiber Effect” would seem to confirm what some experts have said for a while: The only way to improve America’s internet service, which lags badly behind other industrialized countries, is through increased competition. And right now, competition is sorely lacking in the broadband space. In an op-ed written by NYU professor Chris Sprigman for Bloomberg, the educator noted that the market for broadband access just isn’t competitive. He points out that: “High-speed access in the U.S. costs, on average, almost three times as much as in the U.K. and France, and more than five times as much as in South Korea. Most Americans get broadband Internet access from their local cable company. The competition from DSL—digital subscriber line service, provided by telephone companies over copper wires—is fading. And satellite Internet, which suffers from crippling speed issues and usage caps, is relevant only in rural areas with no cable service. The lack of competition has allowed providers like Comcast and Verizon to rake in billions of dollars more from consumers vs. what they could charge in a competitive market.”
Sprigman is correct and Google Fiber is proving his point in a most dramatic fashion. Sprigman’s take is that the FCC should focus less on Net Neutrality and more on injecting competition. His prioritization is wrong; the FCC must do both. But the latter will prove to be far more difficult. Few companies, other than Google, have the capital or chutzpah to take on the internet duopolists. And Google isn’t interested in becoming a competitor as much as showcasing how faster, cheaper broadband can make some of its own Net initiatives work.
However, Sprigman gets how tough it is to take on the duopolists. So joins the chorus of other experts who recommend that the FCC mandate local loop unbundling. That is a policy that would force the cable companies to lease access, for a price determined by the FCC, to what’s known as the last-mile connection: the copper and fiber-optic cable, switches, and local offices that connect the main arteries of the Internet to individual homes and buildings. A large cross-section of commentators have urged this step, from techie Ars Technica to liberal magazine Mother Jones to a large number of European countries. In theory, we’d get competition in one stroke, as new entrants would vie to provide broadband access. That competition could lower prices, improve service, and also ease the concerns about discrimination that provoked the FCC’s net neutrality mandate in the first place.
But it isn’t an easy proposition, as noted by a number of authors who have studied this. American laws and the financial power of the entrenched internet duopolists would make this a long, tough, legal battle. Nor are the experts all of one mind about how it could be done. It is unlikely that the Obama Administration has the political muscle to get it past the current Congress. So it is more likely going to be pushed off to the next presidential administration. And no one has effectively worked past the duopolists’ counter strategy of integrating content into their service. A big bottleneck is in the deals made between cable of the content makers. The cable duopoly operates as a go between much in the same way the insurer stands between the patient and the doctor. If you open the door to new entrants, they may not have access to much content….at least not initially.
Local loop unbundling may well unfold….but it’ll likely take a victory by the Democrats at the national level and a more aggressive Internet service deployment (wireless or fiber) by Google to make it happen. AT&T’s announced takeover of Time Warner isn’t going to help matters.