January 27, 2023

The Past, Present and Future of Broadband Competition

By Brian Hurley, ACA Connects Chief Regulatory Counsel

In late December, the FCC released its biennial Communications Marketplace Report, which provides estimates of broadband deployment and competition based on Form 477 data that is current as of December 2021.  The Report confirms the key findings and predictions of ACA Connects’ July 2022 Competition White Paper, namely that broadband competition is intense, is increasing rapidly, and will continue to increase rapidly in the years ahead.  In fact, as we noted in a September 2022 blog post, actual growth in broadband competition appears to be exceeding our predictions.  For instance, the White Paper projected that the increase in the share of households with access to at least two providers offering speeds of at least 100/20 would increase by 3.9 percentage points between December 2020 and December 2021.  According to the data presented in the Report, the actual level of increase was 6.8 percentage points.

The Report accurately portrays the broadband marketplace as dynamic and increasingly competitive, but the underlying data is already stale – more than one year old.  Because broadband data collection and reporting is a complex, multi-step process, it is impossible for the FCC – or anyone – to produce a “snapshot” of broadband deployment and competition that is perfectly accurate and up-to-date at the time of publication.  And even if this feat could be accomplished, the success would be short-lived. Today’s map would fail to account for new builds that occur tomorrow, next week, or next month.

Fortunately, using the best available evidence and a sound methodology, we can estimate what the data would show if it were completely up to date.  And using these same tools, we can make predictions about the state of competition six months, one year, or five years from now.

While we recognize that projecting far into the future produces more uncertain results, making reasoned predictions is critical for policymakers when considering whether to intervene in the market and adopt regulations, such as intrusive common carrier regulation, that will be in effect for years to come.  This is particularly crucial when the market, as with broadband, is dynamic, and investment plans are made far in advance.  Taking drastic and potentially counterproductive measures based only on a “current” snapshot of the market will inevitably lead to poor policy outcomes.  With broadband competition growing markedly every year – and all signs indicating that this trend will continue – new, intrusive regulations are likely to miss their mark, producing more harm than good.    

In sum, any analysis of state of competition in fixed broadband markets must look to trends over time and the rationale for these trends.  By examining a historical time series of data for a number of past years and making informed assumptions, one can generate reasonable predictions about the levels of competition and competitive growth we can expect to see in future years.  These predictions will never be perfect, but they are an essential ingredient of sound policymaking, particularly when it comes to broadband regulation.  Without them, policymakers will be left at sea, lacking the data they need to assess the potential effects of various policy options and make prudent, well-informed decisions.