Let’s start with a quick show of hands. Who among you hates Comcast? Is there anyone here who’s a customer of a major telecom provider and truly satisfied with their broadband service?
The American Broadband market is a mess. It’s no secret. Major ISPs like Comcast haven’t seen real competition in decades, and as a result, they pretty much do whatever they want.
And what they want is to gouge consumers as much as humanly possible. From Comcast’s absurd $30 unlimited data fee to Time Warner’s horrible reliability and poor service, you don’t have to look far to find evidence of these businesses behaving badly. It’s one of the main reasons people are so excited about initiatives like Google Fiber - it’s like a breath of fresh air amidst a smog cloud of anti-consumerism.
But how exactly did it get this bad in the first place? Why do ISPs hold so much sway over their customers, and why can’t anyone challenge the market leaders? After all, it’s not like people wouldn’t welcome an alternative.
The answer to those questions is a lot more complex than you’d expect, and takes us way back to the years before the Internet rose to prominence, back in the 80s.
It all started with the cable companies - many of which became the ISPs of today. Back when cable TV was a relatively new technology, the industry was growing like wildfire. It was, as new industries so often are, a mess - businesses regularly rose and fell, and the government got involved in a desperate attempt to regulate the growth.
The legislation that emerged from that mess was the Cable Communications Act of 1984.
“The full text of the act is a lot of dense legalese, but the important thing for our purposes is that it clearly delineated who has the authority to license cable operations - and that power went to the municipal level,” reads a piece on The Consumerist. This led to scores of small-scale cable providers only able to operate within the boundaries of their city. And that’s where our troubles really started.
See, the cable companies decided that it’d be more efficient - and more cost-effective - to consolidate. Regulators simply stood back and let this happen, perhaps not realizing what was to come. I’m sure you can see where this is going.
In the 90s, there existed more than forty regional cable providers, all of which consolidated into four major conglomerates by 2013: Time Warner Cable, Cox, Comcast, and Charter. Due to the nature of the mergers, each of these conglomerates covers a different region - and they’ve taken great pains to ensure that they’re the only major player in their respective region. Not that they had to work hard; building a network is extremely expensive, and due to a lack of incentives, few businesses are willing to make the commitment.
Worse still, the high profits generated over the years have allowed these businesses to effectively buy their own politicians, pushing through legislation that actively prevents new municipal networks. Add in the fact that regulatory agencies are still struggling to adapt to the legislative challenges represented by the Internet, and you’ve got a pretty good idea of the modern broadband market. Sucks, doesn’t it?
The good news is that this landscape can’t last much longer. Having already tackled the issue of net neutrality, the FCC is looking into regulating cable and broadband prices - and the chair, Tom Wheeler, seems to be genuinely interested in making a change, this in spite of his own background in the industry. Plus, competition is very slowly brewing in the form of initiatives like Google Fiber.
The bad news is that none of these movements will likely see returns for some years - and in the meantime, all we can really do is grin and bear it.
Amy Medeiros is the Marketing Manager at BroadbandSearch.net, a database of Internet and TV service providers and plans