The 2016 Summer Olympics will be remembered for some dominating performances. From Simone Biles and Katie Ledecky, to Michael Phelps and Usain Bolt. While we saw many of the favorites run away with gold, at no point were we subjected to watching these athletes alone on the track or in the pool. After all, without competition, what fun would it be?
While at the Olympics, competition is everywhere, but for business data services it’s virtually non-existent. The FCC just conducted the most comprehensive data collection in its history, and the data shows overwhelmingly that purchasers of business data services lack real choice—77% of commercial locations have only one provider and 22% have only two providers.
{mosads}Lack of competition has made business data services a lot less fun for customers. Why? Service is slower, more expensive and there lacks any real incentive to improve—a result that spills over into the rest of the economy. This is because business data services are critical to the operation of nearly every business, anchor institution and carrier network. Businesses of all sizes use it to serve their customers, including for example, banks’ ATM machines, gas stations’ pumps, and retailers’ credit card machines. Schools, libraries, and universities use business data services for educational and research purposes, and hospitals and health care facilities use it to treat patients. Mobile wireless carriers purchase business data services to connect their wireless networks to the world, and competitive communications providers use business data services to link their customers to their fiber networks.
As a result, the lack of competition comes with a steep price. In fact, a leading consumer economist recently found that overcharges resulting from this market failure have cost consumers over $150 billion over the past five years. Whereas price reductions for these services would have a multiplier effect throughout the economy—one study shows price reduction for these services cause an annual increase in real GDP of 2.6 times the direct reduction in prices.
After a decade of delay, the FCC is committed to fix this broken market. That is because an even bigger race, the race for our businesses competing in a global economy, our nation’s leadership in 5G for mobile wireless technologies, and connecting our schools, libraries, and healthcare facilities to 1 Gig and above networks, is looming at America’s doorstep.
As the BDS market is critical for the entire economy, we can no longer afford to let the broken marketplace hold back billions in new private investment that is critical for building next generation wired and wireless networks and the infrastructure of the future.
In order to move the debate forward, INCOMPAS joined with a long-time rival, Verizon, to sit down together and hammer out a solution that sets the ground rules for the future of competition for business data services. We didn’t agree on everything, and compromise always comes with tough choices, but the Verizon/INCOMPAS framework does three important things.
First, it creates a competition test to help business data services customers in markets where they have only one or two choices.
Second, it provides immediate price relief and benefits to millions of customers who have been overcharged. This includes those businesses like mom and pop stores, branch office locations, ATM machines, gas pumps and start-ups.
Third, it incentivizes all network builders to invest and deploy better, faster networks. For example, by declaring that services above 1 Gig are competitive, there will be a wide-open race to build a “gigabit and beyond” infrastructure. In addition, it will promote our nation’s wireless carriers’ move to their fifth generation of networks which will require many more business data services connections than any previous wireless builds, and competitive communications providers will be able to connect more consumers to their own networks.
Yes, this Olympics belonged to Biles, Ledecky, and Phelps. But let’s not forget the names Sanne Wevers, Laurie Hernandez, and Joseph Schooling—athletes who actually bested these Olympic titans during the games and pushed the leaders to step up their own performance.
That’s the beauty, the power and the opportunity competition provides.
Let’s bring the same spirit of competition to business data services. Chairman Tom Wheeler and this FCC expressed a commitment to pro-consumer and pro-competition policy; reforming the broken business data services market could be consumers’ ticket to gold.
Chip Pickering is the CEO of INCOMPAS.
The views expressed by authors are their own and not the views of The Hill.