Can Abilene, Lubbock, and Wichita Falls, Texas support multiple WiMAX providers, not to mention competing wireline broadband services? We’re about to find out. When Clearwire announced their expansion into ten new markets, the list included Abilene, Lubbock, and Wichita Falls, Texas.
Problem is, as Information Week points out, those tier two markets are already served by Xanadoo, a smaller WiMAX service provider. This should make for an interesting competitive laboratory. The marketing departments of these various broadband providers will be earning their pay over the next few months and years. Who will win?
This scenario is illustrative of an interesting issue – how many broadband providers can smaller markets support? It’s a question that has more relevance these days as programs like the universal service fund and the rural utilities service wrestle with competitive implications. Should small markets have multiple competitors, when the market size may only justify one or two? Should broadband policy promote, and maybe even artificially support, multiple broadband competitors in small and rural markets?
These policy debates probably don’t apply in markets like Lubbock and Abilene. I suspect market factors will determine long term winners there. But in smaller markets, there is considerable debate about how similar competitive laboratories are forming.
The mroe competition you have, the better. If there's too much competition, market forces will force some competitors out of business. That's just the way it goes.
Also, when you look at it there isn't *that* much competition in the areas mentioned. Typically, an area will have Suddenlink for cable, AT&T for DSL (no U-Verse, and in many places no speeds higher than 1.5 Mbit/s), Xanadoo for wireless and Clear for WiMAX.
Let's look at the options more closely:
Suddenlink – Fastest downloads in the region (8-20 Mbps depending on the area), uploads are 512-1024 kbps for residential connections. Commercial connections are prohibitively expensive beyond DSL speeds. Suddenlink has rolled out DOCSIS 3 in a hanful of areas, but only offers a 20 Mbps down, 1 Mbps up tier over that infrastructure. No usage caps.
AT&T – There are a few places with U-Verse, but in the more rural areas U-Verse probably won't ever happen, leaving customers with DSL that tops out at 6 Mbps down, 512 kbps up at most. More than likely speeds are less, clocking in at 3 Mbps or 1.5 Mbps. No usage caps…yet.
Xanadoo – Their plans are aimed at the lower-end segment, with 128k internet available for $15 per month. The top end of service availability is 512k symmetric or 1.5 Mbps down and 384k up, comparable to (or worse than) DSL for a similar price. The real kicker though is the cap: 10GB of usage per month.
Clear WiMAX – Though Clear's upload capacity isn't more than 500-1000k in real world situations, downloads can reach 10-12 Mbps and their service is available at prices comparable to DSL. Business plans are reasonably priced, and outrun every alternative except the more expensive cable packages. All services can be ordered with no data transfer caps, a big plus over Xanadoo.
So, in my opinion, while Clear's entrance into these markets might upset the apple cart a bit, their addition of competition is a very good thing for the markets where they've decided to provide service.
Personally, I can't wait until they come into my area; San Antonio and Austin look to be slated for a Q4 release, and I'm in between those two cities. Sprint was the first provider to give us 3G, so I'm betting 4G gets here before AT&T gets HSPA up and running (they've been putting that off for awhile).
Great points Ian. I agree with you. Generally speaking, competition is a good thing and market forces determine winners and losers. One of the points I was trying to make is that there are more rural markets (not the ones discussed in this post) where a debate is occurring about competition.
Competitors in some of these markets are receiving subsidies (USF as an example), that absent those subsidies, wouldn't be able to stay in business. You have markets where multiple companies are receiving these subsidies. So it begs the question, if one company needs subsidies to survive, should policy dictate that multiple companies receive subsidies, for the sake of competition?
It's a tough question, with valid arguments on both sides.
Thanks for the clarification. However I'm curious as to which markets you're talking about and, more importantly, which companies. In my area (Hill Country, TX) the typical situation is that there's one phone company, one cable company and the "big four" wireless options (AT&T bought Dobson CellOne bought CellOne Hill Country awhile back), plus one or two privately-financed wireless ISPs utilizing 802.11 based gear. There's also a local cellular company that used to be a joint project between several local telephone companies in the area, but is now "freestanding" with cellular as their main product. Correct me if I'm wrong, but the only companies out of all of those who receive the USF are the ILECs (Verizon, Guadalupe Valley Telecom Co-op, Hill Country Telephone Co-op depending on your location).
Now if multiple companies are receiving BTOP or RUS funding, that's a different deal. However to my knowledge none of the networks built now or being built later are taking advantage of this money, around here at least. I know in some situations this isn't the case (for example, areas served by Stelera Wireless are powered by RUS loans) but I'm unclear on what markets you're referencing where there are two USF recipients.
Thanks for your prompt reply by the way!
Can't speak to your specific market, but in many rural markets across the U.S., multiple carriers receive USF support. You are right that historically, the incumbent ILEC was the main benefactor. But in the past few years, we've had the phenomenon of the competitive eligible telecommunications carrier (CETC). CETCs are usually wireless carriers, and receive similar subsidies to the incumbent LEC.
It's stirred up an ongoing debate with both state and federal regulators. Stay tuned!
Interesting; I didn't know about the CETC provisions. Any examples? Thanks!
Check out
http://www.universalservice.org/about/governance/…
Not surprising given the flat terrain of West Texas that makes it far more suitable for wireless broadband.than many areas of the U.S.
There are multiple CETCs in the Texas Hill Country area, including the wireless company that used to be owned by multiple telephone companies. Additionally, there are many others in the Verizon areas of the Texas Hill Country.
Interesting. Care to share a link to where that data came from? I don't doubt it, but I'd like to see who all are the CETCs. Wonder if AT&T technically is, since they bought the company that bought the company with the A band cellular license here.