by Bill Snyder

How the lack of U.S. broadband competition costs you every time you use an ATM

Jul 14, 2015
Consumer Electronics

The feeble state of broadband competition in the United States leads to costly services and even increased ATM fees. The Competify coalition wants to change the landscape, and it's petitioning the FCC for help.

By now, you’ve likely heard at least a few consumer advocates, maybe even me, blame the paucity of broadband alternatives in the United States on a woeful lack of competition. You’ve probably also heard similar complaints about wireless service.

What you might not have heard is that the two are closely related. The near-monopoly AT&T, Verizon and a few other giant carriers hold over the landlines that connect cell phone towers to their networks is a key reason why U.S. wireless services and fixed broadband are so expensive. Today, a coalition of consumer and industry groups is petitioning the FCC to open up that market.

Before I get into details about the coalition, here’s how the connection between the two services works. When you make a cell phone call, the signal moves through the air to a nearby cellular tower. The signal then moves from the tower over wires until it gets to a carrier’s network. It then is transferred to another tower, via more wires, and it’s sent wirelessly to its destination. (Cell phone calls also use physical connections, and that’s why floods and hurricanes often knock out wireless service.)

The companies that own all this associated infrastructure charge others to use it. The vast majority of it is owned by just a handful of companies, according to Maura Corbett, spokeswoman for the Competify coalition, so they can basically charge as much as they want. “Not only are those rates not regulated, they’re not even reported to the FCC,” Corbett says.

Competify’s members include Public Knowledge, a consumer advocacy group; a number of industry associations and Internet backbone providers; and Sprint, which believes it pays its rivals too much to use their infrastructure.

If those fees were smaller, Sprint and T-Mobile — which is not a member of Competify — could pass the savings on to customers or use them to improve their networks. In either case, consumers would win.

Competition not only about costs of broadband

There are also other hidden costs passed on to consumers due to the lack of competition for what the industry calls “special access.” ATM fees, for example, “increase to make up for the hefty rates banks must pay to gain access to broadband lines. The same goes for credit card readers — every time you use a credit card, that cost is passed on to you,” Competify says.

Competify posted a petition asking the FCC “to restore broadband competition by fixing the broken market for high-capacity broadband lines.” The group correctly points out that 75 percent of U.S. residents have only one — and sometimes not even one — broadband provider.

Public pressure makes a difference. The millions of comments left by consumers and businesses that opposed the Comcast and Time Warner Cable merger helped torpedo the deal.

Competition is equally impactful. Google fiber, a relatively cheap service that offers fast 1Gbps connections, is available in select areas, for example, and the major carriers are offering their own ultra-high speed services.

Sprint and some of the other Competify members aren’t always looking out for consumers, but in this case, their interest in better access coincides with consumer interests.