Americans are left with limited choices amongst providers of high-speed internet services, with less than one in four homes having access to two or more providers of broadband speeds are now quickly turning into “table stakes” in the world of modern communication, the Federal Communications Commission (FCC) said on Thursday.
FCC Chairman, Tom Wheeler, said in a discourse that the FCC wanted to push more decisions and secure rivalry, on the grounds that an absence of satisfactory customer decision hinders development, investment and financial profits.
“There is an inverse relationship between competition and the kind of broadband performance that consumers are increasingly demanding,” Mr. Wheeler said. “This is not tolerable.”
While around 80 percent of U.S. homes have access to a wired broadband connection that imparts service at 25 megabits for every second or more, a majority of those consumers have no choice among suppliers on the grounds that there is only one or two in their area, Wheeler said, referring to statistics from the Commerce Department's State Broadband Initiative.
Indeed that exaggerates the level of rivalry in light of the fact that “users cannot respond by easily switching providers,” Mr. Wheeler said. “Once consumers choose a broadband provider, they face high switching costs that include early-termination fees and equipment rental fees. And, if those disincentives to competition weren’t enough, the media is full of stories of consumers’ struggles to get I.S.P.s to allow them to drop service.”
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Wheeler said the FCC would protect rivalry where it existed and encourage more prominent rivalry where it could exist. That incorporates protecting “that the Internet remains free of barriers erected by last-mile providers,” the companies like Comcast and Verizon that provide the connection between a consumer’s home and the Internet writ large.
Those comments could hold significant implications for Comcast, which is trying to gain approval from regulators to buy Time Warner Cable. They do not compete in any markets, but eliminating an independent operator could adversely affect future competition.
Those remarks could hold critical ramifications for Comcast, which is currently seeking approval for the merger. Comcast and Time Warner Cable don't compete in any business sectors, so the merger would not diminish rivalry, the companies argue. Nonetheless providing with an autonomous service that could later grow its service into contending markets could destructively influence future rivalry.
Wheeler referred to the existence of long-distance market of the 1990s, when consumers could without much of a stretch switch from one carrier onto the next, as “what a truly competitive telecommunications marketplace looks like.”
Wheeler’s observation is more or less true. For example, after the announcement of Google Fiber ‘s high-speed fiber networks in Kansas City, Kansas, Austin and Texas, competitors to Google’s internet service have multiplied two-fold and have even upgraded their own services to stay dominant in the market. In fact, when Google announced that it shall set up Google Fiber is more than two dozen communities; AT&T quickly announced that it would be doing the same in those same areas.