The Broadband Revolution Is Not Nigh

Is America on the cusp of a broadband revolution? You might get that impression from AT&T’s announcement on Monday that it is considering providing Internet service of up to 1 gigabit, or 1 billion bits, a second to 21 metropolitan areas including Atlanta, Chicago, Los Angeles and San Francisco.

The company’s plans sound impressive and ambitious. But if you happen to live in the cities AT&T is talking about, you might want to keep your Champagne on ice. Even if the company were ready to start laying new fiber-optic lines tomorrow, it would take many months of digging before it would be in a position to provide super-fast broadband connections.

A better way to understand what AT&T is doing is to look at it as a salvo in the company’s war of words with Google, which in February announced that it was considering expanding its high-speed Fiber service to nine metro areas. Last year, Google said it would provide gigabit services in Austin, which is just a three-hour drive from AT&T’s Dallas headquarters. AT&T then pledged to do the same.

Neither company will necessarily get around to expanding in all of these cities, however.  AT&T has been adding broadband subscribers at a slow pace and Google’s service is only available in parts of the Kansas City region (both Kansas and Missouri) and Provo, Utah.

Meanwhile, cable companies have been trying to consolidate control of the market. Comcast, the largest cable company, is offering $45 billion to acquire Time Warner Cable, the second largest firm in the industry. If regulators approve the deal, Comcast alone would account for nearly 40 percent of all broadband subscribers in the country.

Most Americans currently have few choices for high-capacity Internet service; nearly 60 percent of households buy broadband from their local cable companies, according to the Leichtman Research Group.

It would be great if competition between Google Fiber and AT&T ended up providing Americans with more choices. But it would be naïve to believe that a broadband revolution is coming as long as a handful of cable companies dominate this important market.