The Pew Internet Project came out with a fascinating report this week about broadband usage in America. According to their most recent survey, the number of Americans with broadband access at home has soared by 40 percent in the past year (growing from 60 million in March 2005 to 84 million in March of 2006). And the growth wasn’t just among the well-to-do: some of the biggest growth rates were among African-Americans and those with less thatn a high school education).
Much of this growth is no doubt due to dropping broadband prices. Pew found the average month broadband rate dropped from $39 in February 2004 to $36 last December. Interestingly, all of this decrease was from DSL, which decreased from $41 to $32, with cable modem prices holding steady.
These findings are especially interesting in light of the current debate in Congress over neutrality regulation. The case for regulation rests, in large part, on an assumption that their is no competition in broadband. Instead, the market is said to be “a cozy duopoly”. But, Economics 101 tells us monopolists (and duopolists) restrict supply and maximize prices. Pew’s numbers show things going in the opposite direction.
Of course none of this proves that competition is working. And Pew did note that some people don’t currently have a choice of broadband provider (although regulation would make it less–not more–likely they will ever get a choice). Moreover, the report didn’t compare what prices and access rates might have been under alternative industry structures.
Still, this has got to be bad news for those arguing that the broadband market needs regulation. And, if I were an aspiring duopolist, I’d be unhappy too–this industry doesn’t sound all that cozy.
As a consumer, though, I see Pew’s report as pretty good news. Now only if Congress doesn’t muck it up.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.
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