Competition Emerges for Fastest Broadband

Verizon's announcement today that it was dramatically increasing its fiber-based FIOS service's speeds across all its tiered offerings is yet another sign that competition is finally coming for the broadband dollar--at least in large, metropolitan markets. Verizon now tops out at 50 Mbps downstream and 20 Mbps upstream up from 30/15 Mbps ($90 or $140 per month, depending on area, with annual contract), while its slowest speed is 10/2 Mbps up from 5/2 Mbps (under $50 per month). Existing subscribers can request the faster speeds, which are available in some cases at no extra cost; in others, the monthly fee is slightly higher.

Since the introducton in the mid-1990s of residential broadband--often used for small-office and home-office connections as well--most places in which wired digital service is available have had either one or two providers, typically the incumbent telephone company and the incumbent cable provider.

Both firms have protected monopolies over aspects of their services. Telephone companies face tariffs on phone calls and other offerings; cable companies must face local or state franchise boards to which they regularly reapply for the right to be television-by-wire provider in the market. (In some markets, franchise boards may approve multiple offerings.)

Since the mid-1990s, the information services both kinds of companies provide has been successfully unencumbered of regulation and tariffs, allowing these protected monopolies to use their status to compete against competitive service providers. You might recall that in the late 1990s, there were several DSL firms that competed in many markets or nationally. But the flaw in that arrangement was that the competitive DSL operators had to get local phone companies to install and maintain the wire to the customer premises. These firms all got out of the business, through bankruptcy or other means. (Covad went into bankruptcy, emerged, and refocused on being a middleman between telcos and companies like Speakeasy that handle the retail marketing and customer account management as a national DSL provider.)

Court decisions, FCC rulings, and actual statutes have further restricted entry into wired markets by competitors: the incumbent own their wires, is the consensus executive, legislative, and judicial opinion, and they don't have to share them nicely, or, with cable, at all.

It hasn't been surprising, therefore, that the US lags most nations in broadband availability in speed where we're otherwise comparable or better off in terms of wealth, employment, education, and infrastructure.

That's why Verizon's move is significant, especially when linked to Comcast's recent announcement about a slow rollout of faster cable service in test markets, Qwest's introduction of fiber-backed service in many of its spread-out Western cities, and the recent 700 MHz auction for large swaths of bandwidth useful for mobile broadband.

Competition, my friends, is coming. In two recent talks with reporters at local papers in two just-below-major cities, I found myself enumerating what a given town might see for true broadband speeds in the 1 to 4 year horizon: cable, fiber, and DSL; Clearwire/Sprint's WiMax; AT&T, Verizon, and T-Mobile's LTE (Long Term Evolution); and potentially regional players deploying WiMax or other wireless broadband. While WiMax might be 5 to 10 Mbps in its first incarnations later this year, LTE will likely hit 50 Mbps or faster within 2 to 4 years when it's rolled out.

All this to say: broadband speeds are going up; prices per MB are dropping; and faster speeds with lower base and per MB prices are still to come.