On a recent visit to a Spectrum cable TV store in Manhattan, I experienced an emotion that one does not tend to connect with cable TV and internet service: delight.
The price of my service dropped by $10 a month. Besides alerting me to that happy news, the representative sent me home with the latest modem, which she told me can handle the faster internet speeds that Spectrum now delivers in my neighborhood. And she displayed a willingness to accommodate me whether I decided to change (or even abandon) service.
The experience left me feeling as if I had received an unexpected gift. (To be sure, a gift that costs the recipient about $120 a month. A few days later, the reason for the friendliness revealed itself.
It seems the owner of the apartment complex where I live, as part of a push to offer amenities that might lure prospective tenants, had invited Verizon to offer a competing internet service. Contractors for the company scurry throughout the buildings installing equipment that will carry strands of fiber optic cable to each of our apartments.
The left side of the staircase that serves my unit now holds risers for Verizon. The right side houses coaxial cable that belongs to Spectrum. The services parallel each other en route to every unit.
While Verizon is installing the connections, a representative for Spectrum, dressed in a blue polo shirt, is making the rounds, leaving his card at the doors of apartments that have yet to sign up. “Great offer, call me,” the rep jotted on a business card left on a neighbor’s door.
As both the anecdote and economics suggest, when competition arrives, consumers come out winners.
Such competition is a rarity. Just over a third (36%) of urban census blocks in the U.S. had two or more broadband providers at the end of 2015, according to data compiled by the Federal Communications. (The percentage fell to six percent in rural areas.)
As Jonathan Sallet, a former general counsel of the FCC who represented the agency in court battles over broadband policy has observed:
“[W]hen the FCC looked at the use of municipal broadband… it set out evidence showing that the presence of an additional broadband provider pushes down the prices and increases the quality of both new and incumbent providers.
In other words, such competition is ‘win-win.’ It benefits those consumers who switch and even those that do not but who gain from faster download speeds resulting from the incumbent’s response to competitive pressures.”
Sallet notes that in one city, the incumbent cable company reduced its prices when facing the prospect of a new broadband competitor and increased the top speed of its broadband service to 105 megabytes per second (mbps) from 8 mbps.
Though Verizon has yet to connect its service, the prospect of its arrival has spurred Spectrum to lower prices and up its game.