There are two things every bureaucrat knows. First, bad news should be announced at the end of the week. It’s less likely to receive coverage, and there’s more time for it to be bumped from media attention by other events. And, second, the only thing better than announcing bad news late in the week is to announce it right before – or even during – a holiday.
It is curious, then, that the FCC waited until December 30 — the deadest media week of the year — to release its 2015 Measuring Fixed Broadband Report (0). This is when bureaucrats bury reports they really don’t want anyone to read. This is surprising because the report is full of good news. But what’s good news for the American consumer may be seen as bad news for the FCC and its aggressive broadband agenda.
Report findings: Consumers have access to higher-speed broadband, and ISPs over-deliver on their promises
The 2015 report contains much overwhelmingly positive data. One top result is that ISPs in the United States deliver better average performance than advertised: that is, you pay for 20 Mbps per month, and your ISP gives you speeds of 25, 30, or even 50 Mbps instead. That’s a nice surprise for consumers — and it’s one that contradicts the pervasive perception that ISPs under-deliver on promised service.
This is also dramatically different than the experience of consumers elsewhere in the world. Just two months ago, the European Commission released a study of its own (1), which found European consumers receive only 76 percent of ISPs’ advertised speeds. These results are particularly important when we consider that most studies of the price of Internet service rely on advertised prices and speeds (see, for example, OTI’s Cost of Connectivity (2), OECD studies (3), and the European Commission’s recent report (4)). In other words, all of these studies — which proponents of FCC regulation rely on to justify greater government intervention in the US broadband market — overstate both the price of Internet access in the United States and the speeds in other countries.
And there’s more good news. The most commonly cited finding in the FCC’s report will likely be that average download speeds more than tripled (5) between 2011 and 2014. And, since the data used in the report ended in September 2014 — more than a year ago — things have only improved (6) since then.
The report also contains interesting data on “customer migration” — the percentage of consumers who moved up in tiers of service between 2013 and 2014. The report shows that relatively few consumers with moderate-speed Internet service (i.e., 3–15 Mbps) upgraded, but that a relatively large portion of consumers with mid-tier Internet service (i.e., 15–30 Mbps) upgraded to higher-speed tiers. We need to be cautious about reading too much into these data, because they do not measure why consumers upgraded, or what alternatives were available to them. But we do know that a large portion of those upgrading from mid-tier service were upgraded automatically, for free, by their ISPs as part of ongoing upgrades to their network infrastructure. More interesting, the low numbers of consumers upgrading from the lower-speed tiers suggests that there is only modest demand among those consumers for higher-speed access. While some consumers may stick with lower-speed Internet service due to lack of options, others may simply be content with those speeds.
Why the FCC wants to bury the good news
All of this tends to contradict the concerns used to justify the FCC’s recent interventionist agenda. Chairman Wheeler’s aggressive plans are built on fears that the broadband market offers too few consumers too few options of too little quality for too much money. This report paints a very different picture: the market is consistently giving consumers increasingly better service at ever-lower prices. Importantly, the data for this report are from September 2014, so they predate the FCC’s recent efforts to “protect and promote” competition. Indeed, one of the most important — and underreported — developments in 2015 was AT&T’s deployment (7) of 75 Mbps DSL service to its U-Verse customers in 70 markets around the country.
Competition, it seems, is alive and well in the broadband market. Perhaps this is why the FCC chose to release last week’s report on one of the slowest news days of the year. While the report is great news for the American consumer, it may not be so welcome for the FCC.
Bonus fact: In related news, on Monday, December 21 (one of the best days for getting media attention), Pew released its latest study on broadband adoption (8). Cribbing Pew’s headline, Pew found that “The share of Americans with broadband at home has plateaued, and more rely only on their smartphones for online access.” The most remarkable finding of the Pew study may well be that a significant portion of cord-cutters are foregoing wired Internet access at home (9), relying instead on their mobile phones entirely for their Internet access — including for television and other video content. Once again, the FCC may have a vision for how people should use the Internet, but consumers may have different ideas about how they actually want to use it.