The FCC is once again trying to make the market for broadband sound like a failure to push for greater oversight and regulation of Internet service providers. In conjunction with their campaign to collect information about consumers’ Internet speeds, yesterday the Federal Communications Commission released a survey that found four out of five Americans aren’t aware of their broadband speed. Their consumer affairs chief said that “people need to know if the advertised speed is the real speed that they're going to get” (despite the many websites for consumers to check themselves). Yet, buried deeper in the report is a more important statistic: 91% of Americans are happy with their broadband connection.
The FCC’s obsession with knowing the speed above the satisfaction highlights exactly why the FCC does not understand how markets work. In a free-market, people pay for a service based on the value of what they get. If someone only checks their email and reads the news, they certainly don’t need 30 mbps speed. Then again, if someone is streaming Hulu videos and downloading all 9 seasons of the X-Files, they will obviously demand higher speeds. Neither party necessarily needs to know the exact speed they're getting, as long as their service meets their demands. If it doesn’t, they’ll opt for higher speeds.
FCC Chairman Genachowski claims that “the more broadband subscribers know…what speeds they get, the more they can make the market work and push faster speeds over broadband networks.” First, as Michael Turk at Digital Society has previously pointed out, “most people will pay the minimum that affords them a good experience.” That means people who only check email and buy 50 mpbs speed are likely to switch to slower, not faster speeds, if they find out. Additionally, while 50 mbps instead of 10 mbps may sound fantastic, it is unnecessary to pray on people’s whimsical desire for the next cool thing if people are overwhelmingly satisfied. The government has no place artificially steering the market or drumming up reasons for more unnecessary oversight or regulation.