ACA Connects Plea – Don’t Regulate Us

I’m starting to wonder if big cable companies and telcos are assuming that a fifth FCC Commissioner will soon be seated because the lobbying arms of these companies have been publishing documents that are an open plea to not regulate them. The latest comes in the form of a whitepaper from ACA Connects, which represents the mid-sized ISPs like Cable ONE, WOW! Internet, Mediacom, TDS, Armstrong, Hotwire, and ISPs of a similar size.

You might recall that the giant ISPs put out a whitepaper through USTelecom that made the silly argument that broadband is getting cheaper, with the punch line being, “Don’t regulate us”. The ACA paper takes a different tactic and argues that most of the country already is, or will soon have competition, with the same punch line. It’s important to understand that these papers are not written for the general public so much as for the politicians in Washington D.C. The average consumer knows that broadband is not getting cheaper, and most know they have only one realistic choice of fast ISP.

The opening sentence sums up the point of the whitepaper clearly: ACA Connects uses FCC data to demonstrate that fixed broadband competition is thriving in the United States and will become only more intense in the near future. Industry insiders instantly go on the alert with any statements drawn from the faulty FCC mapping data. It’s clear that data significantly overstates broadband speeds and availability in the country.

The paper then marches out arguments about the current effectiveness of competition. Let’s start with the facts touted in the paper. The whitepaper suggests the following statistics for June 2022:

  • 93.6% of homes have access today to at least two ISPs that offer speeds of 25/3. The key word in that definition is that the speeds are offered, which is far different than what is being delivered. We know there is still a huge amount of DSL and fixed wireless in the country that is reported to the FCC as capable of 25/3 Mbps but which delivers far slower speeds.
  • 91% of households today have one provider that offers speeds of at least 100/20 Mbps and another that offers 25/3 Mbps. The 100/20 provider in most markets is the cable company or a fiber provider. This conveniently doesn’t acknowledge that most cable subscribers don’t receive upload speeds of 20 Mbps.
  • 63.6% of homes today have at least two providers that offer speeds of at least 100/20 Mbps. For most of these homes, one provider is a cable company, and the other provider is either a fiber provider or an FWA wireless provider like T-Mobile, or a WISP offering fast speeds. I have no doubt that this is probably close to what the current FCC data shows. I just know that in every county where I’ve dug deeper, the FCC speeds and coverage are overexaggerated.

The whitepaper goes on to claim that the vast amounts of investments that are pouring into the industry are going to increase these numbers significantly. The paper says that the number of homes with one ISP offering at least 100/20 Mbps will grow to 95%, while the percentage of folks who will have two providers offering 100/20 Mbps will grow to 73.9%.

The timing was right to publish this paper now before we get new FCC maps. While I think the new maps might need a cycle or two to get rid of the worst exaggerations, it’s not going to produce nearly as high of numbers for 2022 as cited by the ACA.

There is one statement in the whitepaper that accidentally told the truth (oops). It says that ISPs have very powerful incentive to steal customers from one another, because almost all of the incremental revenue associated with a new customer is profit. This is something that industry insiders understood well but never say out loud. If a new customer is almost all profit, that means that existing ISP customers are also almost all profit. I don’t know that I’ve ever seen a trade association make such a strong case for price regulation.

One last argument made against regulation is that the ACP program is giving a $30 discount to low-income households, thus taking the pressure off of the big ISPs to have affordable rates.

I could write twenty pages commenting on the many things said in the whitepaper that stretch the truth a bit – but it seems unnecessary since the whole point of the paper is to plant that seed that ISPs are taking care of the business of broadband and don’t need to be regulated. The conclusion of the paper aimed at Washington D.C. is there is no need to impose additional heavy-handed common-carrier-style regulation on fixed broadband providers as a whole. Doing so would yield few, if any, tangible benefits while discouraging entry, investment, and innovations, to the detriment of consumers. Finally, a strong case can be made for exempting smaller providers from such regulation even if it were to be imposed on larger providers. I love the sentiment – the large carriers in ACA Connects are willing to throw Comcast, Charter, AT&T, and Verizon under the bus if needed.

2 thoughts on “ACA Connects Plea – Don’t Regulate Us

  1. After reviewing the article, “ACA Connects Plea – Don’t Regulate Us” by Doug Dawson about the ACA Connects Competition White Paper, we have several comments.

    First, in addition to a handful of mid-sized broadband providers, ACA Connects represents more than 500 broadband providers, most of whom have fewer than 1,000 subscribers and operate in smaller communities and rural areas.

    Second, in the paper, we acknowledge the data we used for the paper is limited and better data will be forthcoming once the FCC’s maps are more granular and accurate. However, we are confident that even with new data, it will be clear that fixed broadband competition is real and significant and the trend toward greater competition is inexorable.

    Third, even though the marginal cost of getting a broadband subscriber is low, providers still need to get a return on their fixed investment, which is substantial, otherwise the operator will not be viable.

    Fourth, the government’s ability to regulate rates is an enormous and very challenging undertaking, which comes with significant downsides for innovation and new entry.

    Finally, we urge you to correct a couple of typos in your piece about our numbers: (1) in the first bullet, instead of “6% of homes have access today to at least two ISPs that offer speeds of 25/3,” it should be “93.6% of homes” and (2) in the last bullet, instead of “6% of homes today have at least two providers that offer speeds of at least 100/20 Mbps,” it should be “63.6% of homes.

    Thanks,

    Ross Lieberman
    Senior Vice President of Government Affairs
    ACA Connects—America’s Communications Association

  2. After reviewing this piece (“ACA Connects Plea – Don’t Regulate Us”) about the ACA Connects Competition White Paper, we have several comments.

    First, in addition to a handful of mid-sized broadband providers, ACA Connects represents more than 500 broadband providers, most of whom have fewer than 1,000 subscribers and operate in smaller communities and rural areas.

    Second, in the paper, we acknowledge the data we used for the paper is limited and better data will be forthcoming once the FCC’s maps are more granular and accurate. However, we are confident that even with new data, it will be clear that fixed broadband competition is real and significant and the trend toward greater competition is inexorable.

    Third, even though the marginal cost of getting a broadband subscriber is low, providers still need to get a return on their fixed investment, which is substantial, otherwise the operator will not be viable.

    Fourth, the government’s ability to regulate rates is an enormous and very challenging undertaking, which comes with significant downsides for innovation and new entry.

    Finally, we encourage you to fix a couple of typos in your piece about our numbers: (1) in the first bullet, instead of “6% of homes have access today to at least two ISPs that offer speeds of 25/3,” it should be “93.6% of homes;” and (2) in the last bullet, instead of “6% of homes today have at least two providers that offer speeds of at least 100/20 Mbps,” it should be “63.6% of homes.”

    Thanks,

    Ross Lieberman
    Senior Vice President of Government Affairs
    ACA Connects — America’s Communications Association.

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