California’s broadband competition outlook dims as telcos head for the exit

by Steve Blum • , , , ,

The market for high speed, residential broadband service is not competitive in California, and the problem might be getting worse rather than better. That’s one of the conclusions of a draft decision prepared by an administrative law judge for consideration by the California Public Utilities Commission.

Although a typical household might have access to more than one kind of service, most have no choice – or no availability – when it comes to getting Internet access at 25 Mbps download and 3 Mbps upload speeds. That’s the level that the Federal Communications Commission considers the minimum necessary to enjoy the full benefit of the online opportunities and services that are available today.

According to the draft decision…

From the perspective of the average California end-user, the threshold choice is between three different types of last-mile channels to connect to the larger network: the legacy telephone carrier’s wire (copper or fiber); coaxial cable from a cable provider; and a wireless transmission path (or paths) to a cellular antenna (radio frequency or spectrum). For roughly half or more of California customers, the choice for residential high-speed broadband at 25/3 Mbps benchmark narrows to one provider or none at all.

It’s a problem that seems likely to get worse, rather than better, because traditional phone companies, like AT&T, seem to be walking away from the table…

Indeed, there is some reason to question whether the traditional telephone utilities are leaving the high-speed, residential broadband market to the cable companies. Verizon first halted the development of its fiber (FIOS) plant, and then sold its entire California local wireline network to Frontier. We also observe the increasing market share of the cable carriers.

The draft makes a direct connection between competition and better service – where Google Fiber has entered the market, incumbents have upped their game, for example. And there’s an equally clear divide between lucrative urban areas, which maintain a higher level of both competition and service, and not so rich rural areas, which do not.

The draft is light on remedies – mostly, it calls for better data collection and analysis – but if adopted it would lay the groundwork for more aggressive intervention by the CPUC in the future, including pro-competitive policies such as making middle mile connectivity and last mile poles and conduit accessible to new providers on an open and transparent basis.

Proposed decision analyzing the california telecommunications market and directing staff to continue data gathering, monitoring and reporting on the market