Wireline Duopoly Losing its Bite As Comcast and Verizon Carve Up Broadband Terrain, Say Workshop Panelists

WASHINGTON, October 9, 2009 – The Federal Communications Commission workshop on economic issues in broadband competition on October 9 brought together regulators and academics, who agreed that regulation of the broadband market would be difficult and different compared to old-style telecommunications.

Judith Chevalier of Yale University, explained that while economic models do exist and can be useful they are not perfect. “There are big gaps between these models and the world we see.”

She said that there are too many variables for a truly perfect model to be created. Hence one must look at the market to predict the outcome of any regulation – and not just rely on a result from an econometric model. Echoing a refrain of almost every workshop, Chevalier said that in order to create a better model, “we need more and better data”.

In answer to the question of whether “there a duopoly in the broadband market,” almost everyone said yes.

However this duopoly in the wireline market may soon be losing its bite, as incumbent telecommunications carriers begin to compete more aggressively with cable companies. Additionally, panelists said, mobile broadband is becoming more of a substitute than a complement to the wireline options.

Looking at the expansion of Verizon Communications’s fiber optic service (FiOS), the cable industry’s DOCSIS 3.0 and AT&T U-verse broadband product, panelists noted that such upgrade efforts are happening in the locations where the others already are. In other words, Comcast is launching its DOCSIS 3.0 first in markets where FiOS already is available.

Professor Marious Schwartz of Georgetown University said that mobile broadband would expand to become a viable competitor to wireline over the next few years.

He compared the service to that of mobile phones versus landlines telephones. While at first there were limitations on mobile phones which made them appear to simply be a complement, as the market matured they eventually became a viable substitute.

Mobile broadband network providers such as Verizon and Sprint have already been delving into the “home” market with their MiFi products. He warned that regulators must look to the future and imagine a market where individuals have three different broadband connection options: cable, mobile and digital subscriber line or fiber-optic.

Workshop presentations and video.

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