Smaller ISPs Are Investing In Their Networks And Rolling Out Innovative Services, While Reducing Per Megabit Prices
For Immediate Release
Contact: Ted Hearn
PITTSBURGH, June 3, 2019 — In May 31 comments filed with the Federal Trade Commission (FTC) on Competition and Consumer Protection in Broadband Markets, ACA Connects – America’s Communications Association explained that, overall, broadband markets in the U.S. are working to the benefit of consumers – some 300 million of whom today have access to robust (100 Mbps) broadband service, most often from multiple Internet Service Providers (ISPs). ACA Connects’ view is supported by the fact that investment in broadband networks is enormous (many tens of billions annually), innovative services are continuously being deployed, prices are declining (on a per megabit basis), and competition is increasing.
“ACA Connects’ members, who are smaller ISPs, take great pride in their high-performance broadband networks and their robust broadband service offerings,” ACA Connects President and CEO Matthew M. Polka said. “Smaller ISPs understand that their customers rely on access to the Internet and to over-the-top video and other broadband content. Moreover, they understand their customers have a choice of ISPs.”
As a result, smaller ISPs are spending large amounts of capital annually to upgrade their networks with state-of-the-art DOCSIS and fiber technologies, which can provide reliable, high-quality, multi-hundred megabit and gigabit service. They also are expanding their network reach in rural, and even in previously unserved, areas to win over new consumers.
The ACA Connects’ comments explain that smaller ISPs differ from their larger counterparts in key aspects. Smaller ISPs largely operate in rural areas, where it usually costs more to build networks. In addition, they have fewer subscribers, often with less spending power, and they operate with less scale, which limits the efficiencies they can achieve. And, just like in the video programming market, they have no ability to leverage upstream providers and in fact may not be able to get the attention of edge providers to improve their customers’ experience.
Polka explained, “Even though broadband markets are working, the FTC and other government agencies may need to intervene to address market challenges faced by smaller ISPs and consumers in rural areas. However, in doing so, the FTC and other government agencies should, above all, do no harm and should refrain from imposing onerous regulations on smaller ISPs. Government agencies also should target their efforts toward increasing supply, including by removing public and private barriers that inhibit investment. Finally, in areas where it is uneconomical for ISPs to offer service, the government should award support using an efficient auction process open to all experienced providers.”
ACA Connects further responded to a series of questions posed by the FTC and noted:
· In fixed broadband downstream markets, ISPs using Fiber-to-the-Premises (FTTP) or DOCSIS 3.0/3.1 networks offer reasonably similar performance capabilities that make them competitive for all service tiers, including very high (gigabit) speed tiers. By contrast, DSL, fixed wireless, and satellite have lesser performance capabilities. That said, ISPs using these other technologies provide choice for consumers that only need low to mid-speed broadband service or do not want to pay for higher speed service. Thus, by being a sufficient choice for many, if not most, subscribers, ISPs using these other technologies constrain prices for services offered by FTTP/DOCSIS providers and drive them to respond by offering innovative services and investing in network upgrades.
· The technology in upstream markets has evolved, largely in response to consumers wanting to experience video without buffering and with high reliability. As a result, content providers are locating caching servers closer to consumers and are creating multiple paths to send their transmissions. Today, these technology trends primarily benefit larger ISPs; smaller ISPs largely need to use and pay transit providers to reach Internet Exchange Points.
· In examining market power in broadband markets, the FTC should recognize that, unlike the traditional local telephone sector, no ISP was given, or has, an exclusive right to provide broadband service. With limited exception, ISPs have invested private capital to deploy their networks with no assurance of a return. Moreover, there are no or relatively few barriers to entry, and, in most markets, there are multiple providers.
· The FTC should be concerned about the potential for anticompetitive conduct when a ISP vertically integrates with an over-the-top content provider, especially one that owns or controls a service, application, or content that can be deemed effectively essential for an ISP’s subscribers to access. In such instances, the vertically integrated ISP/edge provider has an incentive to increase the price for a competing ISP or its subscribers to access the content – or even withhold the content entirely.
· The FTC should be concerned with government regulations that either skew the marketplace or act as barriers to competition and innovation. For instance, while local governments should be able to impose reasonable fees for access to public rights-of-way, they should not be permitted to charge: additional fees where ISPs do not make additional use of, or otherwise additionally burden, the rights-of-way; or fees that are market-based.
· The FTC should rely upon the broadband measurement metrics in the FCC’s Measuring Broadband America (MBA) program to assess speed and other broadband performance claims. The FTC should further recognize that because smaller ISPs may not have the resources to participate in the MBA program, the FCC permits them in their Transparency Rule disclosures of actual speeds to use either the MBA methodology or a similar or well recognized industry test. By contrast, the FTC should be wary of relying on publicly available speed tests, which consumers often use, because they will not accurately measure the speed of an ISP’s service unless the test is conducted from the ISP’s side of the modem to the ISP’s side of the point of interconnection with an upstream provider (e.g., a transit provider).
About ACA Connects: America’s Communications Association – Based in Pittsburgh, ACA Connects is a trade organization representing more than 700 smaller and medium-sized, independent companies that provide broadband, phone and video services to nearly 8 million customers primarily located in rural and smaller suburban markets across America. Through active participation in the regulatory and legislative process in Washington, D.C., ACA Connects’ members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business. For more information, visit: https://acaconnects.org