[Davisgig] Fwd: Here's What Happens When Internet Providers Have Zero Competition

[Robert Nickerson]

-------- Forwarded Message --------
Subject: 	Here's What Happens When Internet Providers Have Zero Competition
Date: 	Wed, 1 Apr 2015 10:46:24 -0700
From: 	Eric Thompson <elt at pacbell.net>
To: 	Eric Thompson <ericthom at mac.com>



Here's What Happens When Internet Providers Have Zero Competition
FYI Eric T.
http://www.huffingtonpost.com/2015/03/31/internet-providers-competition_n_6980292.html?ncid=txtlnkusaolp00000592


  Here's What Happens When Internet Providers Have Zero Competition

It’s basic economics: Competition drives down prices.

So it’s no surprise that AT&T is charging way more for its highest-speed 
Internet service 
<http://arstechnica.com/business/2015/03/atts-newest-fiber-customers-to-pay-40-more-than-google-fiber-users/> 
in Cupertino, California, where it’s the only provider of superfast 
gigabit speeds, than in cities where it has a competitor.

AT&T’s pricing power in the small and expensive enclave of Silicon 
Valley illustrates the state of broadband in the U.S. Because of the 
huge infrastructure costs of deploying a network, there is very little 
competition -- nearly 75 percent of households in the U.S. have one or 
no options for broadband Internet 
<https://apps.fcc.gov/edocs_public/attachmatch/DOC-329161A1.pdf>, 
according to the FCC. And as speeds go up, competition goes down.

AT&T’s GigaPower Internet service, which launched in Cupertino on Monday 
<http://about.att.com/story/uverse_with_gigapower_launches_in_cupertino.html>, 
will cost consumers $110 per month if they want the top speed of up to 
1,000 megabits (one gigabit) per second for downloads. That’s $40 more 
per month than AT&T charges in other cities where it offers the service, 
like Austin and Kansas City, Ars Technica’s Jon Brodkin reports 
<http://arstechnica.com/business/2015/03/atts-newest-fiber-customers-to-pay-40-more-than-google-fiber-users/>.

The difference is that in Austin and Kansas City, AT&T competes with 
Google Fiber 
<http://www.wsj.com/articles/google-pressures-at-ts-broadband-prices-1427760612>, 
the search giant’s own superfast Internet network. In those places, both 
Google Fiber and AT&T offer gigabit service starting at $70 per month.

/AT&T GigaPower Pricing In Austin, Texas:/
att austin

/And in Cupertino, California:/
att cupertino

AT&T's price is contingent upon giving the company access 
<http://www.att.com/esupport/article.jsp?sid=KB421828&cv=812> to your 
browsing information and what you search for online, so AT&T can better 
target ads to you -- you have to pay more if you opt out.

The company declined to comment about the price discrepancies in its 
GigaPower service. In a statement, it said, “We’re excited to offer the 
fastest high-speed Internet in Cupertino at a price that is competitive 
for the market.”

Competition appears to have prompted AT&T to cut prices before. Earlier 
this month, it dropped the price of its GigaPower service in Raleigh and 
Durham, North Carolina, after Google said it was planning to launch its 
network there 
<http://www.dslreports.com/shownews/Thanks-Google-Fiber-ATT-Drops-Gigapower-Prices-in-Raleigh-133040>. 


Cupertino, which is home to Apple, is among the most expensive places to 
live in the U.S. 
<http://www.businessinsider.com/most-expensive-zip-codes-in-silicon-valley-2015-1?utm_content=buffer31f4b&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer>, 
so AT&T can get away with charging people a premium for the service.

"We'd love to see other companies come in and offer competitive speeds 
to what AT&T now offers," said Rick Kitson, a spokesperson for city of 
Cupertino. "Everyone needs the speed and the access that's now certainly 
possible but still isn't universally available."

broadband
/This chart from the FCC 
<https://apps.fcc.gov/edocs_public/attachmatch/DOC-329161A1.pdf> shows 
how few Internet options most people have./

Karl Bode, a technology writer and the editor of the industry site 
DSLReports <http://www.dslreports.com/>, said that inexpensive access to 
broadband in the U.S. is a much bigger issue than the current deployment 
of gigabit networks, which he says is “overhyped.” After all, gigabit 
service is only available to 3 percent of the entire U.S. population 
<https://www.techdirt.com/blog/netneutrality/articles/20141217/10125929466/commerce-department-study-reveals-theres-almost-no-competition-if-you-want-real-broadband.shtml>.

“So while gigabit is great if you can get it, a far more important 
conversation to be having is in regards to price -- and how the general 
lack of competition in the majority of markets has people paying an arm 
and a leg not just for slow service, but some of the worst customer 
support in any industry,” Bode wrote in an email. “There's still a 
pretty notable digital divide and competitive shortfall, and deploying 
gigabit services to select portions of a small number of cities isn't 
doing much so far to seriously impact this.”






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