Gigbit Squared

Breaking cable's broadband monopoly, one market at a time

November 1, 2013: 4:18 PM ET

Rather than improving its service or cutting prices, Comcast has spent big to unseat the mayor of Seattle, who is bringing a city-sponsored high-speed broadband network to his city.

131101161217-seattle-mayor-mike-mcginn-620xaFORTUNE -- When challenged, monopolists, particularly in the communications industry, often tend to work harder to protect their monopolies than they do to improve their services or cut prices (or simply limit price increases). An excellent example of this can be found in an article today by the Washington Post's Andrea Peterson.

Comcast (CMCSA) has donated thousands of dollars to political action committees that back Washington state Sen. Ed Murray, who is challenging Seattle Mayor Mike McGinn in next week's election. The mayor has worked to bring better, faster, cheaper broadband Internet service to his city. Comcast says the donations have nothing to do with the city's plans, but as Peterson meticulously reports, much of the money Comcast had donated has come through PACs, such as the Broadband Communications Association of Washington, that are specifically devoted to influencing broadband policy.

McGinn initially wanted the city to provide high-speed broadband service on its own, like a public utility. The expense finally persuaded him, along with the University of Washington, to seek out a private-sector partner. The city is close to finalizing a deal with Gigabit Squared, based in Washington, D.C.

That company says it will offer 100 Mbps service for $45 a month, and 1 Gbps service for $80. Comcast, a major provider of broadband in Seattle, offers 105 Mbps service for $114.

MORE: What FCC's Wheeler will do about net neutrality is anybody's guess

People clearly want faster Internet, better service, and lower prices. Gigabit Squared reportedly received 10,000 requests for service from Seattleites even before the company announced its pricing plans. More than 1,000 communities around the country competed three years ago to become the first to get Google's (GOOG) high-speed, fiber-optic Internet service. Kansas City won, spurring Time Warner Cable (TWC) to improve its service. Google Fiber's presence in Austin, Texas similarly spurred AT&T (T) to begin offering high-speed service in that city. People are clamoring for it.

But none of that stopped Comcast executive David L. Cohen from writing an op-ed in June arguing basically that the demand for high-speed service (particularly speeds of 1 gigabit or more) just isn't there. Even if that were so, it could hardly be argued that people don't want lower prices and at least a minimally acceptable level of customer service. Those things come only with competition.

In the absence of any federal action to spur competition in the broadband market, competition seems to be happening so far in single cities, through sheer force of will -- usually governmental will, or the will of companies like Google, as well as that of upstarts like Gigabit Squared and Sonic, a DSL provider in Northern California that is offering competitively high speeds through phone lines.

The monopoly might be broken up, but it might have to happen one market at a time. That will take a while.

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