The half a dozen or so large telecom companies that provide internet service to most homes and businesses in the U.S. today have for years “cherry-picked” neighborhoods to maximize their profits. Although they’re returning record dividends to investors, they’ve also been helping themselves to billions from the feds over the years. And what does the taxpayer get in return? The U.S. still lags behind other countries in Europe and Asia in broadband deployment. Talk about a “risky” investment of taxpayer dollars! This has led to market failure as most localities in the U.S. are served by monopolies or duopolies.
https://www.sltrib.com/opinion/commentary/2021/07/15/roger-timmerman-open/
Market failure in advanced telecom infrastructure is baked in because of high cost barriers to competitor entry and first mover advantage. As such, as Mr. Timmerman writes, it tends toward monopoly -- or duopoly at best. It's thus unreasonable to expect any meaningful degree of competition.
Public policymakers should think twice before describing public and consumer cooperative owned telecom infrastructure as envisioned in the Biden administration's American Jobs Plan as enhancing competition. Its essential purpose is to provide a public option to counter private market failure that exists in a natural monopoly market in order to ensure access and affordability.
Investor owned legacy telephone and cable companies complain public option infrastructure represents unfair competition. But as discussed, it is not intended to take market share from them. That's market competition. The better term is disruption of the status quo with only about a third of all American homes having access to modern fiber connections. And the disruptive goal is to ensure all Americans have affordable access when due to structural market issues that result in monopoly or duopoly, competitive market forces cannot.
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