Broadband Monopolies Are Acting Like Old Phone Monopolies. Good Thing Solutions to That Problem Already Exist

The future of competition in high-speed broadband access looks bleak. A vast majority of homes only have their cable monopoly as their choice for speeds in excess of 100 mbps and small ISPs and local governments are carrying the heavy load of deploying fiber networks that surpass gigabit cable networks. Research now shows that these new monopolies have striking similarities to the telephone monopolies of old. But we don’t have to repeat the past; we’ve already seen how laws can promoted competition and broke monopolies.

In the United States, high-speed fiber deployment is low and slow. EFF decided to look into this problem, and we now have a research report by the Samuelson-Glushko Technology Law & Policy Clinic (TLPC) on behalf of EFF that details the history of our telecom competition policies, why they came into existence with the passage of the 1996 Telecommunications Act, and the FCC’s mistakes—starting in 2005—that eroded the law and has given us a high-speed broadband access monopoly that disproportionately impacts low income and rural Americans.

The full report is available online, but here are some striking takeaways.

Americans Have Been Here Before 

AT&T’s telephone monopoly lasted for generations because states and the federal government both allowed and tolerated it. Prior to government intervention, private industry failed to challenge the dominance of AT&T because the incumbent monopoly regularly took extraordinary steps to cut off competitors. The tide began to shift once states, the FCC, the courts, the president, and eventually Congress took dramatic steps to end the monopolization of telecom services.

Many of the provisions in the 1996 Telecom Act that exist now come from solutions tailored by the litigation, regulatory, and state efforts to promote competition among phone companies. For example, it was California and New York states’ efforts to open up competion in local phone calls that inspired Congress to adopt a federal approach of “unbundled network elements (UNEs)” requirements. And those rules—with roots in fighting anticompetitiveness in phones—have helped create several small ISPs that exist today. The requirement for networks to “interconnect” under federal law stemmed from a Department of Justice antitrust action to mandated interconnection decades earlier. These and other federal provisions in law are still disliked by the major incumbent ISPs as AT&T and Verizon are actively asking the FCC today to eliminate UNEs and Comcast is suing California’s net neutrality law because of its interconnection provisions.

This is why the major ISPs have waged such a long war against net neutrality, because all of the federal provisions that involve curtailing the power of monopoly by promoting competition also empower the FCC to enforce net neutrality. Provisions that, again, have their roots in phone monopolies. Provisions that worked. This is also why the competitors to the major ISPs regularly support efforts to restore Title II regulation of the industry, because the 1996 Act’s point was to codify competition as law and helped enable their entry. 

The FCC Kept Getting What Would Happen Without Laws and Rules Wrong

Starting in 2005, the FCC began to classify broadband companies as Title I “information services” instead of Title II “telecommunications services” and no longer subjected them to competition law on the premise that broadband options would flourish and telephone would deploy fiber to the home (FTTH). Today, we know none of that happened, but what is striking about the TLPC paper’s historical analysis is the fact that every justification the FCC premised its abandonment of competition law have not panned out.

The FCC thought that wireless companies, satellite companies, and broadband over powerline companies would be hot competition for the telephone and cable industry. But wireless technologies are not able to substitute for wireline broadband services in higher speeds. Even 5G is not competitive with gigabit cable systems, and most people have probably never heard of broadband over powerline today. The reality is a duopoly had persisted for years. Now that many have abandoned FTTH, cable has monopolized high-speed Internet service. The superior position of the incumbents are not easily surpassed much in the same way the original AT&T monopoly’s dominance was not simply displaced by private actors and people voting with their dollars. 

The FCC also thought that your cable companies would be opening up their own networks in the absence of a mandate to give you several options, but we only know what it is like when your broadband choices are Comcast and only Comcast when you have to do things like pretend to cancel your cable service to get overbilled a little less. And probably central to the argument by major ISPs to have competition law removed was it would spur them to invest heavily in their networks all across the country, but other than hyping 5G while avoiding direct competition with cable, they are not investing at levels that will cover the entire nation. 

We Do Not Have to Repeat History

 The data we currently have shows the future for a majority of Americans, particularly low income and rural Americans, is a monopoly for high-speed broadband access. This is why EFF has called for policymakers and regulators to begin addressing this problem now while it is still early with a call for plans that would promote gigabit fiber to all people including local community broadband efforts like San Francisco’s fiber project. This is why EFF will fight to preserve state authority over ISPs so they can promote competition like in California today. And this is why EFF full heartedly supports enactment of the recently House passed Save the Net Act, which restores the key federal provisions needed to promote competition (and why ISP talking points about “outdated” laws are really just arguments against its anti-monopoly provisions). A broadband monopoly future can be stopped because we have done it already and history yields all the lessons we need in how to get it done. 

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Author: Ernesto Falcon

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