Why Has San Francisco Allowed Comcast and AT&T to Dictate Its Broadband Future (Or Lack Thereof)?

By | May 16, 2019

American cities across the country face the same problem: major private Internet providers, facing little in the way of competition, refusing to invest and upgrade their networks to all residents. But not every city has gone through the trouble to analyze the problem, come up with a solution, and still done nothing like San Francisco.

For over a year, the city has sat on a fully vetted and ready to implement strategy to bring affordable high-speed broadband competition to all of its residents. According to the city’s own analysis, private providers will never address some of the most serious problems with the community’s infrastructure—such as the fact that 100,000 residents lack access to broadband, and 50,000 residents only have access to dial up speeds. Of the city’s public school students, 15 percent do not have access to the Internet, with that number rising to 30 percent for communities of color.

No Evidence That Private Competition Will Come to the Entire City

Within the city’s 195 page report on its options, the most important fact reported by the local government was that major private providers such as Comcast and AT&T (both strongly opposed the city’s effort) had absolutely no plans to compete with each other anywhere in the city. While certain parts of San Francisco’s market enjoy competition—usually driven by $40-gigabit fiber deployed by Sonic, a smaller regional ISP—many parts of the city do not.

The remedy to this problem is within reach: connecting every home and business with open access fiber. When the city invests in this infrastructure, it enables more private companies to compete in the market for Internet service. The model is proven to be successful internationally and even smaller, less well-financed communities in the United States such as Layton, Utah, are deploying open access fiber that delivers gigabit fiber services (with multiple ISPs competing) at an average of $50 a month. The city even has three qualified bidders ready to build the infrastructure if the city gives them the green light, and most importantly, the financial investment.

The $1.8 billion Universal High-Speed Fiber Network Will Benefit Residents for Decades

While the price tag may seem high, this is an infrastructure investment that will be used for generations, and will be able to affordably scale upwards in capacity as technology improves. In other words, the fiber won’t need replacing, only the electronics on either end. That’s much less expensive than upgrades that would require digging up streets. Many private ISPs have to answer to investors who expect a shorter turn around in profits, which is why projects like Verizon FiOS have been shut down for years. There is no feasible way to build a fiber infrastructure and expect a quick turnaround in profit. Rather, the right way to look at what is essentially 21st-century broadband infrastructure is to think long term over a multi-decade window.

If you live in San Francisco and are paying a lot already for broadband service (if you can get it at all), look at how much you are paying over just one year, and then over multiple years. When the total of paying for an uncompetitive service starts adding up to several thousands of dollars, then the city’s estimated $2000 per household for the entirety of the project starts to not look so bad. In fact, homes have an expected three percent increase in home value when connected to fiber, which averages out to be $5437 per household. Furthermore, it would not be any less expensive for a private provider to undertake this fiber project. And as noted by the city’s analysis, private sector investment can’t be relied on, because the private sector has made clear that, if they are focused on short-term returns, it does not intend to invest that kind of money.

Therefore, we must continue to push our local leaders to be bold, forward-thinking, and to stand up to the private incumbents, who are more than happy with the status quo. Otherwise, most residents within the city of San Francisco will have to accept the fact that they will miss out on broadband access, or be forced into subscribing to a high-speed broadband monopoly.

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