Internet Providers Starting To Get Challenged By New Competition

A common complaint among home Internet subscribers in America is the absence of competition. High prices are prevalent as are consumer-unfriendly practices, such as data caps and lower speeds than are necessary. While many Americans struggled during the pandemic, the cable internet providers flourished, but there are now new threats on the horizon that could change the game.

New Threats to Cable Internet providers

Already in a successful beta, SpaceX will soon go live with the fastest satellite-based internet ever, and while that has generated a great deal of buzz, Starlink is not likely to be a real threat to cable Internet providers anytime soon. New Street Research recently released an analysis in which it presented the four true threats to cable companies, and the first of those is 5G. Thus far, 5G has not lived up to the hype, but by mid-2022, the Amazon-powered Dish offering will be available, and T-Mobile should be up to speed as well. Cable companies could lose customers to packages combining internet, TV streaming services, cellular and more.

Competition Beyond 5G Wireless

But residential customers dropping wireline for wireless Internet services is not the only challenge cable companies will have to deal with. Fixed wireless broadband is fast becoming widely available, and while it is often framed as a solution for rural customers, it can be a major player in urban centers as well. Fiber-optic services continue to expand as well, and a recent influx of government funding could speed up that expansion. Finally, there is the increased threat of regulatory pressure. The nationwide lockdowns illuminated numerous Internet problems and in turn motivated politicians.

Fixed Wireless Internet

Fixed wireless Internet for the home transmits and receives radio waves from a cell tower. This approach has been available for decades now but was traditionally used to serve rural homes and businesses that could not otherwise get Internet service. But the technology is advancing at a great rate, and there are major players involved, such as AT&T, Spectrum, and Verizon, that now view it as an opportunity to compete in dense markets where the cable companies previously held de-facto monopolies.

Fiber-Optic Internet

Fiber and cable internet are similar products that should provide direct competition to each other, but the cable companies have not yet really felt that threat. That has a lot to do with the nature of installing fiber-optic lines, which is both expensive and time-consuming. But there is a snowball effect at work here, and the big companies like AT&T will expand its offerings considerably over the next several years.

Government Regulation

According to some industry analysts, potential government regulation is a far bigger threat to cable companies than either fiber optic or fixed wireless. Much of it hinges on who the new FCC chair will be. The first order of business is expected to be the restoration of net neutrality regulation. But regulation could eventually extend far beyond that, and many feel the Internet should be governed like a utility.

The Road Ahead

This is an exciting time for the home internet customer. We are on the cusp of some major changes, and these may result in a market environment that could dwarf the telecom wars. At the very least, well before the end of the decade, more than 70 percent of Americans should have two or more viable options for broadband internet, and that can only be a good thing.