Comcast told investors that it costs under seven bucks a home to double the capacity of an entire neighborhood (I don’t mind paying an upfront cost of $7 to double my Internet speed for the rest of eternity!) and that “the hardware to provide 50-megabits-per-second service costs less than it had been paying for the equipment for 6 megabits per second.” (I don’t mind getting a free upgrade to 50 mbps Internet!) According to the same article, “JCom, the largest cable company in Japan, sells service as fast as 160 megabits per second for $60 a month.” The disparity is clear. The reason is exactly as the article claimed: The lack of competition.
Here in Berkeley, Comcast’s only competition is its lesser rival, DSL by AT&T, and the fastest plan the latter offers is 1.5 MBPS down (and much less up), so if customers are not satisfied with 1.5 MBPS, they have no other option. I have been waiting for Verizon to expand its FiOS coverage to Berkeley but alas, they are in no hurry to do so.
Verizon is used to being a monopoly. They are used to being at the top of the hill, fighting would-be competitors as they climb ever-steeper slopes against Verizon. They aren’t used to being the ones fighting an uphill battle against a monopolist, so they are taking their time. In fact, the slow pace may be a form of monopoly signaling–basically a way for AT&T and Verizon to have cartelization (by dividing up the market) unofficially to avoid FTC scrutiny. Although I am a strong believer in the right of natural monopolies to exist without competition (simply because it’s the most efficient and cost-effective arrangement), I understand that efficiency will not be impeded by wise government regulation of prices, just as we do for the utilities industry.
That’s exactly what we need: If companies refuse to compete with each other, the government must step in to impose a well-calibrated price ceiling on broadband access, simply because it is more efficient to do so in terms of aggregate social utility. Get to it–I want faster Internet, and I bet so do everyone else–for a price closer to what it costs Comcast.
So much for the plan to expand affordable broadband access nationwide!