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Competition, Net Neutrality Paint Current Telecom Landscape

May 19, 2016





The telecom industry is a lot more complicated than it used to be. We’ve moved far beyond wired telephones and overpriced long distance bills.  Instead of a handful of telecom providers, the Internet has paved the way for a crowded market. Service providers are a dime a dozen, spanning from free Internet calls to inexpensive business systems, all of which rely on a broadband connection. Of course, a crowded market means stiff competition, which has led to a consolidation in the form of mergers and acquisitions. Even still, competition and Net Neutrality is painting the current telecom landscape, and the picture is a bit complicated.

Net Neutrality is the principle that individuals should be free to access all content and applications equally, regardless of the source, without Internet service providers discriminating against specific online services or websites.  In other words, it is the principle that the company that connects you to the Internet does not get to control what you do on the Internet.

The debate about whether all Web traffic should be treated equally has become a hot issue because of disputes between network operators and bandwidth-hungry services, such as Google's YouTube (News - Alert) and Netflix, and attempts by some telecom and cable companies to block services like Skype and file-sharing software Bit torrent.

The "Open Internet Order" passed in 2015, prohibits broadband providers from blocking lawful Internet traffic on the basis of content. It also bans "paid prioritization," which would favor some traffic or create paid Internet "fast lanes."

The classification of the Internet as a public utility was also passed under Title II authority.

FCC Chairman Tom Wheeler (News - Alert), who publicly championed Net Neutrality, said that the agency faces a challenge in encouraging investment in broadband while promoting open Internet.

Of course, these rules ruffled the feathers of telecom providers; lawsuits argue that the FCC has invoked excessive regulatory power in its new rules. Providers like Verizon and AT&T (News - Alert) criticize the commission’s decision to regulate Internet providers as public utilities like phone companies. 

In terms of competition, it doesn’t take an experienced analyst to see that the market is changing drastically. While Verizon and AT&T have dominated the mobile market, companies like T-Mobile (News - Alert) have lowered their price points to lure customers away from the big guns.

Nevertheless, it was earlier this year that the FCC stopped short of calling today’s wireless market a competitive one.

“Given the complexity of the various inter-related segments and services within the mobile wireless ecosystem, any single conclusion regarding the effectiveness of competition would be incomplete and possibly misleading in light of the complexities we observe,” the FCC (News - Alert) wrote in its eighteenth report on wireless competition.

Despite compelling data points, the Commission in its last four reports on the state of mobile wireless competition has declined to determine whether or not the wireless marketplace is effectively competitive.

Wireless carriers today are competing vigorously on a wide array of fronts, and competition means prices are driven down with more attractive data packages and features.




Edited by Rory J. Thompson
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