Relax: Broadband Competition Will Thrive Without Net Neutrality - SCKIPIO - The Leader in G.fast Ultrafast Broadband Modems
This article discusses the alternative views around Net Neutrality
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Sckipio, Gfast, Net Neutrality

Relax: Broadband Competition Will Thrive Without Net Neutrality

There’s a lot of consternation around the changes to net neutrality laws. But the core issue, which is monopolistic access to broadband subscribers, is going away – regardless of net neutrality or no net neutrality. The good news is no matter what, greater openness and competition is on the way.

When the net neutrality law was put into place, the main thesis was that Internet Service Providers (ISPs) had exclusive access to subscribers who wanted high-speed Internet. As a result, regulators (and others) speculated that this perceived monopolistic control created an incentive for ISPs to charge a toll for access to those subscribers. Some argued that creating net neutrality would create more competition in the access network and reduce this risk. Yet, this ignored the fundamental reality that the ISP who owns the wire running the broadband service owns the subscriber. Nothing in the net neutrality laws changed the ownership of the wire. Therefore, on this matter, since the net neutrality law didn’t fix the problem, the removal of net neutrality won’t have any negative impact either.

THE INSIDER SECRET: IT’S THE WIRE, STUPID. 

Why is the wire important? Delivering ultrafast broadband access to subscribers requires the use of wires (coaxial, twisted pair phone wires, or fiber). Own the wire and you own the subscriber. It’s that simple. That’s the secret the industry understands, but the FCC and consumers don’t.

Also, the path forward is more nuanced. Google has killed the idea that bypassing existing copper wires with fiber will open up the market. What Google learned the hard way was that deploying fiber is too expensive and challenging to deploy. After five years of investing in fiber, the company had only 200k subscribers instead of its projected 5 million. ISPs already knew this fiber ROI problem.

Wireless won’t solve the problem and open up access either. There is a lot of hype around 5G, but what most people don’t realize is that deploying 5G requires ultrafast backhaul of the traffic. This means even if the ISP uses cellular technology, it requires more ultrafast wires to connect those wireless services to the core of the Internet. Plus, the cost to deliver ultra fast broadband through cellular is exorbitant in comparison to using wires for broadband. That’s why cellular has lower data caps than wired services – it’s simply too expensive.

The reality has set in: only twisted pair and cable wires will dominate for the near to mid term.

Now, cable companies own the coax to most subscribers and the telcos own the twisted pair phone wires to most customers. This is exactly the source of competitive differentiation between ISPs. Thus, the only way to create competition is to make sure both sets of wires can deliver ultrafast speeds. Historically, the cable speeds have outperformed the telco speeds. That’s why there is a perceived lack of competition. To create competition, telcos need a technical alternative to fiber to economically compete with the cable operators on performance. Those choices are not driven by net neutrality, but by access technology itself.

COMPETITION IS THE INDEPENDENT VARIABLE

Irrespective to what was going on with net neutrality, a bigger, longer-term competitive game has been under foot.

Behind the telcos and the cable companies selling broadband services are the underlying technologies used to enable those services over those specific wire types. In the case of cable, they use a technology called DOCSIS. This technology delivers ultrafast speeds and in the next coming 5 to 10 years will be able to deliver up to 10Gbps over existing coaxial wires. In order to compete with that performance, the telcos invented a new technology to match these speeds.

The new technology they invented is called Gfast. This new broadband technology runs over either twisted pair phone wires or on coaxial cable used in the delivery of satellite services. This new Gfast technology delivers tremendous performance for telcos and gives them the ability to compete directly with cable operators. Gfast eliminates the lock-in to a single ISP and eliminates the potential for controlling the access to the subscriber. So, the fundamental risk net neutrality aimed to fix is gone.

How fast is Gfast? Very. Today, the first generation of Gfast delivers residential broadband access speeds from 300Mbps to over 1Gbps in most use cases. AT&T, for example is offering 500/100 Mbps speeds. A second generation of Gfast that will be deployed in 2018 that can deliver over 1Gbps to most subscribers – over existing phone wires. Beyond that, even higher speeds are coming. Sckipio, the leader in Gfast technology, has already demonstrated 4 gigabits per second and a new technology called MGfast should deliver as much as 10 Gbps to match the DOCSIS speeds in the coming years.

REAL WORLD IMPLICATIONS

One hidden piece of consumer broadband good news that came out in 2017, was the announcement that AT&T would start offering Gfast-based broadband access services over its DIRECTV infrastructure —offering 500 Mbps ultrafast broadband to 22 markets where AT&T has not historically sold broadband service. This means that AT&T is bringing competition into new markets with an ultrafast broadband speed that exceeds the speeds of most cable operators. This is possible because AT&T has existing coax wires in these markets.

So competition is coming, but not because of net neutrality. Net neutrality pressure or regulations didn’t force AT&T to innovate, market pressure did. Pure and simple. The difference was not the introduction of net neutrality, but the introduction of Gfast, which enabled AT&T to create constructive competition.

TYING IT ALL TOGETHER

There are two underlying premises inside the net neutrality rules: limited broadband capacity will cause the need to prioritize/throttle traffic and limited competition will give them the opportunity. In the past, because DSL had limited bandwidth and fiber deployments turned out to be very expensive and slow to rollout, it was challenging for telcos to deliver more competitive ultrafast broadband access to consumers. Moreover, narrow broadband capacity, combined with delivering every-increasing high-bandwidth services clearly created capacity issues. Yet, if you look at the increase in capacity that is coming down the road with Gfast, where ISPs will deliver one gigabit per second next year and up to 10Gbps a few years later, it stretches the imagination of what will hold back availability of content. Will there need to be a fast lane when all the lanes are already insanely fast? If you have big enough pipes, there will be no capacity issues. Therefore, net neutrality worries are unwarranted.

When telcos and cable companies can effectively compete with each other in a competitive market environment, the ability for one company to hold the Internet industry hostage shrinks. Supercharging the performance over twisted pair will fundamentally change the market forces within the broadband access industry and will open up the market and the consumer experiences.