'Robust' broadband choice squashes need for regulation, says trade group'Robust' broadband choice squashes need for regulation, says trade group
Study from ACA Connects argues that the case for new regulations has 'vanished' amid 'robust' broadband growth and competition.
June 23, 2022
A new study from ACA Connects (ACAC) makes the case that years of investment in the US broadband market and new funding commitments from the federal government have created "robust" competition in the industry, thereby eliminating the need for additional regulations on providers.
Specifically, the dual-pronged approach of encouraging market entry in a "light-touch" regulatory environment and subsidizing areas where the economics are too challenging is working, says ACAC, an industry group representing small- and medium-sized broadband providers.
"Despite the success of this approach, there have been recent calls for the federal government to abandon its light-touch regulatory treatment of broadband service and replace it with more heavy-handed common-carrier-style regulation," says the report, referring to policy that would control broadband pricing.
"Such a reversal is not only unwarranted but would be counterproductive, as it would yield few tangible benefits while discouraging entry, investment and innovation, to the detriment of consumers," it adds.
The report comes as the federal government readies itself to spend tens of billions of dollars subsidizing broadband network builds in unserved areas in the coming years. It also rebuts arguments from consumer groups like Free Press and others that the Federal Communications Commission (FCC) should renew ISPs' classification as a Title II service, which would restore net neutrality rules and could open service providers up to rate regulation.
To support its argument, ACAC points to increased competition in the industry since 2014, as well as growth forecasts for the next several years.
For instance, the group points out that, between 2014 and 2020, the percentage of US households with access to at least one provider offering service of 100/20 Mbit/s, and at least one provider offering service of 25/3 Mbit/s, doubled from 32% to 84%.
In that time period, it says, the percentage of households with access to two providers offering 100/20 Mbit/s tripled, going from 17% to 58%.
The group adds that based on current trends and projected fiber build-outs with grants from the $42.45 billion Broadband, Equity, Access and Deployment (BEAD) program, a larger majority of households will have access to two high-speed broadband providers in the next few years.
"Taking these already-announced plans for accelerated investments in fiber into account, we project that approximately 84% of all households will have access to at least two providers both offering 100/20+ service by December 2025," says the report.
In addition to increased choice, ACAC says that many areas of the country will be served by government-subsidized providers that are already subject to rate regulations tied to their funding, further decreasing the need for additional stipulations.
Figure 2: Projection #1: Based on historic trends. Projection #2: Accounts for "announced plans of major incumbent telecommunications providers to dramatically increase the rate at which they invest in new fiber."
(Source: ACA Connects)
Notably, the ACAC study relies on existing Form 477 broadband data from the FCC (which the trade group acknowledges is flawed). The FCC is set to release revised broadband data this fall, as mandated by the 2020 Broadband Data Act. The new maps will be used to determine how much funding each state gets allocated from the BEAD program.
According to modeling from CostQuest, the company that is producing the FCC's broadband serviceable location fabric, there are still roughly 25 million unserved and underserved homes and businesses in the US, a number that exceeds the FCC's most recent estimate (released in 2020) of 14.5 million.
Regulate large ISPs if you must
While ACAC's study argues for no additional regulation on broadband providers, it also makes the point that if regulation is a must, then it should only apply to large providers.
The group argues that small ISPs don't have the financial means to keep up with additional regulations. Plus, it says regulating large providers would impact how the small ones operate anyway.
According to the report, "if common-carrier-style regulation were applied only to larger providers, regulatory pressure would still be placed on smaller providers to the extent that they serve an area that is also served by a larger provider and thus would have to compete for customers with the larger regulated provider."
Meanwhile, the likelihood of getting meaningful broadband regulation from the FCC seems slimmer every day. The Commission is still deadlocked with two Democrats and two Republicans, as the US Senate has neglected to confirm President Biden's pick for FCC Commissioner Gigi Sohn. Sohn, a Democrat, has said she supports Title II regulations but would prefer Congress act on the issue, which is also not set to happen.
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