Broadband Cable Not Immune to Market Pressures

by Mike Wendy on January 4, 2013

Some on the “progressive” Left, such as Internet activist Susan Crawford, propound the notion that the broadband market is broken, it being dominated by an oligarchy of greedy cable providers, which are the only ones able to deliver truly speedy broadband to Americans.

Well, this story, “Speedier Internet Rivals Push Past Cable,” puts paid to that assertion.

Notes the article:

Steady growth in broadband revenue has helped cable operators offset a stagnant pay-TV market in recent years. But now, the industry is resisting pressure from local governments, businesses and universities to offer ultrafast Internet service, opening the door to new competitors… (Emphasis added)

Yes, some of this “competition” is from municipalities instead of purely private plays.  But the larger point here is that cable companies, as good as their speedy infrastructure presently is, cannot simply rest on their laurels.  Competition in this market is dynamic.  If the marketplace determines that their services do not serve consumers, substitutes will emerge.

Thus, sitting in the technological catbird seat remains a challenge for even the most savvy of companies.

There is of course a subtext running beneath this and similar “gigabit stories” being published of late – that is, Americans are somehow being cheated by cable companies because those companies, ostensibly indentured servants, are not making gigabit services available when they could “easily” sink billions into the endeavor.

Who says the broadband spigot must look like a fire hose for Americans to benefit from broadband?  Anti-market activists like Crawford do.  For her and her ilk, it’s gigabit or nothing.  All other options harm Americans.

But as Scott Cleland recently explains (in the video below), this arbitrary framing sits fundamentally at odds with market realities:

A competitive free market responds to individuals’ needs.  It responds to opportunities and it provides for those niche needs.  It realizes everybody doesn’t need a Cadillac version or a Rolls Royce version of a technology.  That sometimes you might need the bicycle version or a cheap car version.  And so different people have different priorities of where they want to spend their money.  So this one size fits all is an elitist notion of forced equality.  And what it does is it’s about as anti-innovation as you can imagine because everybody’s going to have the least common denominator result.

Arbitrary standards, though aspirational, are no substitutes for the hard and risky work that the marketplace does to properly serve consumers. Thankfully, it pays little heed to elitist ideas of what it “must” look like, turning a deaf ear to those myopic entreaties because it knows better.

If the article states nothing else, it says that when all players are ready to deliver and receive gigabit service, it will happen.  This is in sharp contrast to the not-so-long ago, heavily regulated monopoly past – one much advocated by Crawford et al – which would have likely prevented, or strictly delimited, today’s dynamic outcome.

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