White House report says lack of competition barrier to broadband adoption

Introduction

A group recently formed by President Barack Obama released a report today that asserted the high price of broadband, brought about by too few Internet service providers, is a major barrier to adoption that has left almost one-third of Americans unable to afford an Internet connection — findings that directly contradict assertions the telecommunication industry has made for years.

In its report, the Broadband Opportunity Council highlighted the inability of low-income families to afford the price of an Internet subscription as the primary reason that more than 25 percent of American households don’t have a broadband connection at home.

One of the primary reasons broadband prices are too expensive, the report notes, is because there is a lack of competition among Internet providers.

“Lowering barriers to deployment and fostering market competition can drive down price, increase speeds, and improve service and adoption rates across all markets,” according to the report.

The high-speed Internet market in the U.S. is dominated by Comcast Corp., AT&T Inc., Verizon Communications Inc., Time Warner Cable Corp. and a handful of others.

The council’s focus on income and competition contradicts reasons offered by the telecommunications industry and conservative think tanks — often financially supported by broadband companies — for why more than a quarter of American households still are not connected.

People choose not to pay for an Internet connection mostly because they don’t believe the information is relevant to them or they believe they don’t have the computer skills to navigate the Internet, industry and think tanks have argued. The report is important in that it doesn’t emphasize computer training or an effort to engage in widespread outreach to show the unconnected what the Internet offers — although it does mention these factors in the report — as the primary reasons for the digital divide.

In numerous investigations, the Center for Public Integrity found that U.S. broadband prices are higher than those in countries similar to the United States and that price, not a perception of relevance, influences the decision to buy an Internet subscription. And the reason for the high prices is the lack of competition.

The federal government, however, doesn’t have a lot of levers to pull to increase competition.

Among its key recommendations, the council advises agencies to rework programs, valued at about $10 billion, to include spending on expanding broadband as an eligible expenditure, including, for example, the Agriculture Department’s Community Facilities program, which will help communities connect health clinics and recreation centers.

The council also recommends streamlining program applications and broadband permitting to encourage and foster competition, cooperation and public-private partnerships, a common policy refrain.

But with the telecommunications industry having spent $78 billion on broadband infrastructure in 2014 alone, assigning a portion of $10 billion to broadband expansion may not be enough. A better way, broadband policy experts say, may be getting rid of laws that ban thousands of cities from building or expanding their own networks that compete with Internet providers.