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 and consumer-unfriendly practices, such as data caps and lower speeds than necessary, are prevalent. While many Americans struggled during the pandemic, 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. While that has generated great buzz, Starlink will not likely be a real threat to cable Internet providers anytime soon. New Street Research recently released an analysis that presented the four true threats to cable companies, the first of which 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 that combine internet, TV streaming services, cellular, and more.

Competition Beyond 5G Wireless

However, residential customers dropping wirelines for wireless Internet services is not the only challenge cable companies will face. Fixed wireless broadband is becoming widely available. While it is often framed as a solution for rural customers, it can also be a major player in urban centers. Fiber-optic services also continue to expand, 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 but was traditionally used to serve rural homes and businesses that could not otherwise get Internet service. However, technology is advancing at a rapid pace, and major players, such as AT&T, Spectrum, and Verizon, 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 compete directly with each other, but the cable companies have not yet really felt that threat. That has a lot to do with the cost and time-consuming nature of installing fiber-optic lines. But there is a snowball effect at work here, and big companies like AT&T will expand their 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 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. However, regulation could 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 major changes, which 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 broadband internet options, which can only be a good thing.