Susan Crawford recently received the OneCommunity Broadband Hero Award for being a “tireless advocate for 21st century high capacity network access.” In her recent debate with Geoffrey Manne and Berin Szoka, she emphasized that there is little competition in broadband or between cable broadband and wireless, asserting that the main players have effectively divided the markets. As a result, she argues (as she did here at 17:29) that broadband and wireless providers “are deciding not to invest in the very expensive infrastructure because they are very happy with the profits they are getting now.” In the debate, Manne countered by pointing to substantial investment and innovation in both the wired and wireless broadband marketplaces, and arguing that this is not something monopolists insulated from competition do. So, who’s right?
The recently released 2013 Progressive Policy Institute Report, U.S. Investment Heroes of 2013: The Companies Betting on America’s Future, has two useful little tables that lend support to Manne’s counterargument.
The first shows the top 25 investors that are nonfinancial companies, and guess who comes in 1st, 2nd, 10th, 13th, and 17th place? None other than AT&T, Verizon Communications, Comcast, Sprint Nextel, and Time Warner, respectively.
And when the table is adjusted by removing non-energy companies, the ranks become 1st, 2nd, 5th, 6th, and 9th. In fact, cable and telecom combined to invest over $50.5 billion in 2012.
This high level of investment by supposed monopolists is not a new development. The Progressive Policy Institute’s 2012 Report, Investment Heroes: Who’s Betting on America’s Future? indicates that the same main players have been investing heavily for years. Since 1996, the cable industry has invested over $200 billion into infrastructure alone. These investments have allowed 99.5% of Americans to have access to broadband – via landline, wireless, or both – as of the end of 2012.
There’s more. Not only has there been substantial investment that has increased access, but the speeds of service have increased dramatically over the past few years. The National Broadband Map data show that by the end of 2012:
- Landline service ≧ 25 megabits per second download available to 81.7% of households, up from 72.9% at the end of 2011 and 58.4% at the end of 2010
- Landline service ≧ 100 megabits per second download available to 51.5% of households, up from 43.4% at the end of 2011 and only 12.9% at the end of 2010
- ≧ 1 gigabit per second download available to 6.8% of households, predominantly via fiber
- Fiber at any speed was available to 22.9% of households, up from 16.8% at the end of 2011 and 14.8% at the end of 2010
- Landline broadband service at the 3 megabits / 768 kilobits threshold available to 93.4% of households, up from 92.8% at the end of 2011
- Mobile wireless broadband at the 3 megabits / 768 kilobits threshold available to 94.1% of households , up from 75.8% at the end of 2011
- Access to mobile wireless broadband providing ≧ 10 megabits per second download has grown to 87%, up from 70.6 percent at the end of 2011 and 8.9 percent at the end of 2010
- Landline broadband ≧ 10 megabits download was available to 91.1% of households
This leaves only one question: Will the real broadband heroes please stand up?
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This is a perfect example of a problem created by Statists and there solution is more government control to fix the problem they created. This problem started with the regulation of the telephone companies. The supposed deregulation of the communication network in the 1990s was actually not deregulation, but a complicated set of rules regulating communication network companies. Then the Statists destroy the ability of start-ups to get access to capital with the passage of Sarbanes Oxley and destroy the Patent System, so start-ups cannot obtain property rights in inventions. Not to mention, tax us, tell us who we can employ, what insurance we must have, whether we can sell sugared drinks, and on and on and on. Then they wonder why no companies have sprung up to compete with the present Broadband Providers.
My argument with this article is that the US is falling behind in Broadband Access and Cell Phone Networks and these companies do enjoy a cozy market (They are not Heroes). The Statists have identified a real problem, but their solution is completely wrong. What we need is a truly deregulated market in Broad Band. We need a completely deregulated (ruled only by common law) financial market and we need a Government that protects the property rights of inventors. If we do that we will see an explosion in competitors in Broad Band and an explosion in the quality and variety of services provided. All you have to do is look at the Internet in 1990s to see what is possible.
I don’t disagree with anything you said. But, the debate about Net Neutrality, Internet speeds, access reminds me of this (SFW-version) gem by Louis C.K.: http://www.youtube.com/watch?v=9pYOJsPOcVA.
Yes, agreed on Net Neutrality. It is a “solution” looking for a problem. Thanks for keeping us up to date on that issue.
Net Neutrality is clearly the FCCs attempt to extend the Fairness Doctrine to the Internet.
Dale: All true. Take the point of Ben’s post as relative, though — within the given regulatory, protectionist parameters (some of which are of the telco’s own making, of course) the telcos are still making massive investments and still innovating. Take another example: With Comcast’s announcement yesterday (I think it was) that it would be increasing top residential broadband download speeds to 505Mbps, it noted that this was its 12th speed increase in 11 years. Could the world be better with a different regulatory regime? Sure. But when allegedly protected monopolists are investing this kind of money and making these kinds of improvements (remember your not-so-old 56k modem?), it’s completely baseless to claim that there is no innovation, no incentive to invest, nothing but cozy monopolists resting in their sinecures — even given the regulatory environment. Add to that the ridiculous claim that the way to get more investment/innovation is to increase government’s role, and Ben’s point is important and strong. Before we get anywhere near less regulation, we’re going to have to fight back the loud, popular voices urging more regulation.
I worry that we get so caught up in winning the present battles that we fail to think enough about how to win the war.