October 3, 2024 by Joe Ross
While the BEAD program is designed to achieve “broadband” service at all serviceable locations, it will do little to address the weak state of competition. In fact, the current competitive broadband environment suggests that there are many parts of the country with opportunities for ISPs. Fewer than 60 percent of nationwide locations had competition as of the end of 2023 where providers offered better than 100/20 Mbps. This is up from slightly more than 45 percent two years earlier – a sizeable improvement. But competition at 100/100 Mbps and higher is only 15 percent of all locations, up from fewer than 5 percent in June 2022. This is largely due to the current state of the cable broadband industry. Because most of the locations served with cable technology do not exceed 100 Mbps upload speeds, locations with both fiber and cable do not achieve this threshold due to current limitations of cable technology. Additionally, most wireless providers offer peak speeds of only 100/20 Mbps. Over the next few years, where cable-based providers upgrade their infrastructure, we will see the 100/100, 500/500, and 1/1 Gbps competition levels improve dramatically.
However, the nationwide view of competition is misleading. There are significant differences in competition levels in each county. Nearly one-third of all nationwide counties have 100/20 Mbps competition at less than 20 percent of their serviceable locations. More than three-quarters of all counties have competition at fewer than 60 percent of their locations, the nationwide average. Those counties with limited competition are not likely to dramatically improve due to the BEAD funding eligibility requirements. The BEAD grant, by definition, will fund only locations without 100/20 Mbps service (with some exceptions). In other words, BEAD will not fix broadband competition.
Cable upgrades will also not solve this issue. Taking a closer look at the breakdown underlying the lack of competition, nationwide, over 90 percent of all serviceable locations have cable or fiber service. However, only 55 percent have competition among cable and fiber providers. The remaining five percent, bringing the total to 60 percent nationally, is created due to wireless broadband services. The locations without cable/fiber competition are predominately in rural America. This is not surprising as internet providers are likely to choose to invest in a competitive offering based on the projected return on investment. And, in less dense geographic areas, the capital cost to serve each location is much higher. Of the nearly 2,600 counties with population densities lower than 200 per square mile, only five counties have competition at more than 60 percent of their locations at the 100/20 Mbps service level or higher.
The map of counties nationwide below clearly shows the connection between density and competition levels at 100/20 Mbps with metro areas having a high degree of competition while rural areas generally have low levels of competition.
Lower density means more expensive infrastructure build costs per household or business, so it’s not surprising that rural counties, in general, have limited competition. The higher cost to construct in lower density populated rural areas means it’s more challenging to deliver a return on investment for ISPs. However, the Televate Broadband Reports uncover densely populated counties (and county equivalents) with very limited competition. There are millions of serviceable locations without broadband competition in densely populated areas, presenting clear opportunities for ISPs. In my next blog, I’ll highlight concentrations of these non-competitive areas within densely populated areas.
The latest national report is available here. You can also order a standard report here.