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NN's gross misrepresentation of FCC broadband competition data

The way many neutrality-ites take the FCC broadband competition data out of context reminds me of the classic book “How to Lie with Statistics.” The analysis below should be called “How to put the FCC Broadband Competition Report Data in Honest and Fair Context.” Or “Why the Broadband Duopoly Assertion is Superficial Misrepresentation.”

The first important context is the DIRECTION of broadband competition. It is critical to acknowledge that broadband is a new market that is largely replacing the monopoly dial-up market where consumers had virtually no choice. None of the FCC data suggest that this market is trending back to monopoly or getting less competitive than before. On the contrary, most every time series of data that matter show that the broadband market is becoming increasingly competitive. Is there perfect competition now everywhere? Of course not; that’s a red herring. The honest and fair question should be: is the competition policy that replaced monopoly policy working and resulting in increasing competition and consumer choice and deployment of new technologies? (i.e. the purpose of the 1996 Telecom Act) The answer to that fair question is yes! It is working and making steady and impressive progress over time for most all of America.

The second important context is TIME. The biggest misrepresentation in claiming there is a broadband duopoly -- is the implication that this is a static market that has always been, and always will be, the way it is right now. That is the foundation of their claim of market failure. When one looks at the broadband competition data over time one is struck by the direction and strength of increasing competition. To make the broadband duopoly assertion stick in an honest and fair way, the evidence needs to show that, over time and in the future, this market is not or cannot get more competitive. Without this proof, the broadband duopoly assertion is just bumper sticker blackmail.   

The third important context is GROWTH. The static market share assessment is highly misleading because it includes all the millions of new broadband subscribers (growth) that never had the benefit of broadband speed before, and all those who benefited from the lower prices of cable-DSL competition. Are all these new customers that enjoy all these benefits they did not have before -- somehow “harmed” by this alleged “broadband duopoly? Can neutrality-ites fairly claim that these millions of Americans are worse off, or going to be worse off, than they were before as they imply by using the perjorative and loaded duopoly term? 

The fourth important context is SUPPLY. One of the two cases the neutrality-ites must prove in order to prove market failure and hence consumer harm is to prove that DSL and cable are or able to constrain supply. Any honest and fair assessment of broadband supply, as defined by the FCC, would show that broadband supply is on the rise and not in decline. That’s because the same technology that has enabled affordable cable modems and DSL, i.e. faster cheaper computer chips, is making it increasingly economic and easy for wireless broadband, satellite broadband, WiFi, municipal WiFi, WiMax (Intel/Clearwire), and BPL to compete. Those that don’t believe in competition policy or market forces routinely create a straw man standard of competition (4-9 competitive commodity clones) that is neither realistic nor how markets work. Competition in new and emerging markets is characterized by differentiation, innovation, and consumer choice -- not commoditization.   

The fifth important context is PRICE/VALUE. The other case the neutrality-ites must make is that these alleged “broadband duopolists” have the market power to raise prices or diminish consumer value. What the evidence shows overwhelmingly is that there are more competitive price points (i.e.choices) than ever before and that there is more and more speed being provided at the same or lower price. The core value to consumers, price per unit of speed, is improving very favorably for consumers. When neutrality-ites acknowledge that these facts are true, they change the subject and say that other countries have even cheaper broadband. What they fail to tell you is that those countries are geographically dense and thus much easier and cheaper to deploy, and those countries have government subsidies that we do not. And of course they conveniently leave out the subsidy cost from the overall consumer cost to make their comparison look favorable.