Favoring Competitors Only Undermines Competition

Last week, Google announced they would be bringing their high-speed Internet and television service, Google Fiber, to Austin, Texas. This comes on the heels of last year’ announcement that they would do the same in Kansas City, Missouri, making it the first city to get Google’s new fiber service. This new service promises 1 gigabit per second speeds, which is about 3 times the speed of anything that others currently offer. This is great news for those living in Austin, just as it was for those living in Kansas City. The economy of the future will undoubtedly hinge on these new services. One problem with these arrangements is the potential for anti-competitiveness, as we saw in Kansas City last year.

Literally hours after Google made their announcement, AT&T announced plans to do the same—if they were given the same deal that Austin and the state of Texas gave to Google. In a statement, AT&T said:

AT&T’s expanded fiber plans in Austin anticipate it will be granted the same terms and conditions as Google on issues such as geographic scope of offerings, rights of way, permitting, state licenses and any investment incentives.

This is important, because we know that in Kansas City, Google was given a preferential deal over other telecom providers. Google was given easier access to rights-of-way, given easier access to poles, provided city staff devoted to Google’s service, afforded fast-tracking of permits and faced very little build out restrictions, among many other advantages that most telecoms, like Comcast or Time Warner or AT&T, don’t get. The local government has provided an uneven playing field and set up an uncompetitive landscape. AT&T is rightly pointing out that reducing the regulations and barriers to entry, and providing the same terms to all parties involved, is better for consumers.

Thankfully in the Austin scenario, city officials have pledged to provide the same terms and deals that it offered to Google to anyone else who wants to provide the same service. But one analyst quoted in a Reuters story wonders that with Google now facing a potential competitor, whether they will even bother to come to Austin after all. Google has enjoyed almost zero competition in almost every facet of its business—having a strong competitor could make it bow out.

Telecom companies are made to jump through hoops to enter any new market, doing things like giving away free service to community centers, paying for light bulbs on street corners, planting trees or building community centers. In the case of Google in Kansas City, it appears the opposite was done.

As the Institute for Policy Innovation rightly points out, no matter how great the Investment Google is making, this is terrible policy—titling regulation in one way or the other to favor one company over the other. By cutting special side-deals, some city governments are creating a barrier to investment and inhibiting competition. That is the last thing you would want, assuming that further broadband build-out is the goal.

Zack Christenson writes on digital tech issues for the American Consumer Institute Center for Citizen Research.

 

FacebooktwitterredditlinkedinFacebooktwitterredditlinkedin