High prices for broadband, contestability, and Google Fiber

Here is a potential new development:

Verizon is adding more antennas to its network, forming smaller wireless cells with stronger coverage and rolling out service on new segments of the wireless spectrum, the digital equivalent of opening new lanes for traffic. Sprint is introducing a service called Sprint Spark that increases access speeds if customers have devices that can use multiple wireless frequencies at once.

If pCell works as promised, Mr. Perlman’s technology could result in much bigger gains in wireless speeds. In traditional cellular networks, antennas placed around a city transmit wireless signals to all of the mobile devices within their area. As more people enter an area, they share the wireless network with everyone else there, resulting in slower speeds. Wireless carriers cannot simply solve the problem by putting antennas everywhere because their signals can be disrupted if they are too close together.

With a network of pCell antennas, someone with a mobile device will get access to the full wireless data speed in the area, regardless of how many other people are sharing that network, Mr. Perlman said.

There is also this:

The plan is to bring Google Fiber to 34 cities and see how that goes.

Here are various satellite video streaming services.

I do not feel I can judge the prospects for these developments.  The point, however, is this.  Improving connectivity is an extremely dynamic market sector.  A high mark-up on cable internet connectivity, as might be applied by say a Comcast monopolist, is also creating a “prize” for further innovation in the sector.  Admittedly one does not prefer to have this prize funded by deadweight loss (less broadband consumption) but virtually all prizes are funded by deadweight loss in some manner rather than by lump sum taxation.

When people claim “the current mark-up is too high,” that is an entirely reasonable stance.  But when you rewrite it as “the current innovation prize, funded out of deadweight loss” is too high, that reframing brings some clarity, some moderation, and I think also induces some more agnosticism about the costs of the current semi-monopoly.  For similar reasons I don’t worry about monopoly in the eBook market and the like and there the case for simply ignoring the problem is much stronger because the options and cheapness have exploded so radically and so quickly.

So I don’t see the current cable semi-monopoly as lasting that long.  And its current cost cannot be that much higher than the cost of sending a disc in the mail, otherwise the disc would be sent.  Alternatively, most communities have public libraries which offer pretty good and pretty free internet connections, including video streaming of course.  If the argument is simply “this prize, for future connectivity innovation, cannot be funded from deadweight loss because it means that in the meantime some poorer people will have to wait to get their discs in the mail and make too many trips to the public library”…well, I guess I’m not that impressed this is a major public policy problem.

The longer and more you regulate cable prices, the longer it will take this sector to reach a more competitive equilibrium.

By the way, dear reader, I am not clever enough to use Netflix streaming, as I find the TV menu confusing.  So I still get the discs in the mail.


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