Internet service in the United States is just plain bad. That’s a fact. Compared to consumers in most other industrialized countries, Americans pay more money for slower access. The question then is how to do we make our internet better, and on Monday, AT&T gave us an answer: more competition.
The internet provider announced that it would match Google Fiber’s hyper-high-speed internet service in Kansas City. Under AT&T’s newly announced plan, users can get up to one gigabit per second for $70 a month, and that same speed plus cable TV for $120. That’s the same price Google offers for equivalent service, and a significant speed boost over what was previously available to local AT&T customers.
The move confirms what many analysts have long said about internet service. Namely, that when it comes to giving consumers what they really care about—how well their favorite sites perform—the only sure fix is to make companies fight over your business. In Kansas City, AT&T may have been able to provide better service, but it saw no reason to make the effort until another company’s offering threatened to siphon away paying customers.
Unfortunately for the rest of us, most of the country still lacks a competitive broadband market. Google Fiber has improved service in markets where it appears, but Fiber covers just three cities, with four more listed as “upcoming.” FCC data from 2013 shows 55% of American households have no choice in their broadband provider, and the agency has said Comcast will be the only broadband provider for nearly two-thirds of consumers if the company is allowed to merge with Time Warner Cable.
The Obama administration has taken steps to improve broadband competition, but the results are mixed. The president recently announced programs aimed at encouraging cities to develop their own broadband infrastructure and provide a sort of public option for the internet. This initiative, if embraced by local governments, has the potential to significantly improve competition and lower broadband prices.
However, another administration-led initiative, new “net neutrality” rules for broadband providers, represents a missed opportunity to immediately improve broadband competition in one fell swoop.
The proposed regulations, announced by Federal Communications Commission chairman Tom Wheeler, would reclassify broadband to regulate it more like a utility and restrict internet service providers from artificially degrading access to certain sites. But in reclassifying broadband, the FCC declined to force existing broadband companies lease their infrastructure to competing providers. This requirement, known as “last-mile unbundling,” has been widely used outside the U.S. to lower the barrier to entry for new broadband providers and create a more competitive market.
In rejecting an unbundling rule, the FCC has essentially left the task of expanding available broadband options to municipal networks and the very few private companies large enough to take on Big Cable.
For the average internet user, this means two things. If you live in a Google Fiber city, your service will continue to get better as broadband providers fight for your business. Conversely, if you don’t have Google Fiber in your area and your city won’t invest in its own high speed network, don’t expect your internet service provider to make any massive upgrades anytime soon.
A previous version of this article said a Comcast/Time Warner Cable merger would increase the number of consumers with no choice in broadband providers to two-thirds of Americans. The FCC says a merger would indeed result in two-thirds of U.S. households having only one broadband provider, but this is not likely to be an increase.