Gigabit or Bust: The Mirage of Insufficient Broadband Competition
Regulators keep searching for a simple test to declare broadband markets “competitive.” The California Public Utilities Commission’s Public Advocates Office (Cal Advocates) thinks it found one: count gigabit networks. If a market lacks multiple overlapping gigabit-capable systems, Cal Advocates suggests in a report released last month, regulators should treat it as effectively noncompetitive.
That framing misses how competition actually operates. The report centers on premium gigabit speeds, even though most households neither need nor choose to buy them. Consumers typically prefer cheaper, sub-gigabit tiers that easily satisfy standard broadband definitions and common uses like streaming, videoconferencing, and gaming.
The pricing analysis compounds the problem. The study compares average prices for the lower-speed tiers in competitive markets to the highest-priced gigabit tiers in markets with only one gigabit provider, while assuming consumers in the latter subscribe to premium plans. In practice, the plans most households actually purchase—lower-speed tiers—show relatively stable pricing, regardless of gigabit overlap.
Even so, the report illustrates a broader regulatory trend: advocates increasingly rely on artificially high speed thresholds to label markets uncompetitive. That label often supports utility-style regulation and opposition to mergers, despite the basic economics of network industries. The enormous fixed costs of broadband infrastructure naturally limit how many terrestrial networks a single market can sustain.
At the same time, competition does not depend solely on duplicate fiber lines. Fiber, fixed wireless, and satellite technologies now discipline pricing and expand consumer choice. Prices have trended downward as these alternatives spread.
Policies built on flawed competitive benchmarks carry risks. If regulators suppress prices or block efficiency-enhancing consolidation based on mismeasured competition, providers lose the expected returns needed to finance upgrades and rural deployment. The result would slow investment, weaken network expansion, and harm the very consumers the policies aim to protect.