2015 has been a banner year for pro-innovation telecom policy. First, the FCC established strong net neutrality rules that will help prevent ISPs from exploiting their gatekeeper power to harm startups. Then came the collapse of the Comcast-Time Warner merger, a proposed combination of the two largest broadband provider that would have given a single mega-corporation control over nearly 50 percent of broadband subscriptions in America.

While these were important victories, they didn’t really do anything to remedy the real black eye of American telecom policy: a stunning lack of competition and competitive choice in broadband providers. Sure, the failure of the Comcast merger will prevent the situation from getting worse, but it won’t in and of itself produce any new competitive options for Internet access. Evidence of the harm from inadequate broadband competition is already abundant. A recent study placed the U.S. 26th out of 29 countries in terms of mobile broadband speed, and the U.S. lags well behind international peers in the deployment of fiber optic lines. If these trends continue, America’s could lose its place as the world’s center for innovation.


If American consumers want access to fast, affordable, reliable networks, the solution is simple: more competition. The market has proven that competition between broadband providers improves services and lowers prices. For example, in 2013, after Google Fiber launched in Kansas City, Time Warner—the only other high-speed provider in Kansas City—immediately offered faster connections (doubling the speed it offered anywhere else) and cut prices.

The benefits that competition will provide extend far beyond better prices and speeds for consumers. Having access to better, faster, more reliable networks will fuel massive growth in the startup sector. And, because startups are responsible for all new net job growth in America, the economy will boom as well. New, high-speed, high-capacity networks will spur consumer demand for more and more startup services, driving investment to the sector, and opening up entirely new industries. Perhaps more importantly, startups will be able to leverage the faster networks to lower the cost of launching their businesses by relying on cloud-based services rather than shelling out large shares of seed money for internal hardware and software. Lower startup costs will lead to more startups, more jobs, and more innovation.

Of course, generating more competition in broadband markets isn’t an easy task. Opportunities to promote significant broadband competition through federal policy don’t arise very often. Yet, we have just such an opportunity in the FCC’s upcoming spectrum incentive auction. To keep up with exponential growth in mobile data consumption, the FCC has been tasked with finding ways of freeing up more spectrum for broadband use, including conducting an auction to transfer licenses for valuable “low band” spectrum from TV broadcasters to mobile broadband providers. Because low-band spectrum is uniquely suited to mobile broadband use, having access to this valuable, finite commodity will be necessary for any company hoping to compete with AT&T and Verizon - which already control 66% of all wireless subscriptions and hold over 73% of all low-band spectrum.

But, unless the FCC establishes adequate safeguards to encourage competition, the auction could actually make the mobile broadband market less competitive. AT&T and Verizon—the two dominant players in the mobile market—have the financial ability and incentive to win every license available in the upcoming auction. If allowed to do so, the mobile broadband market would quickly become a permanent duopoly. For startups that depend on consumers’ ability to access data-intensive services at fast speeds, such an outcome would be disastrous.

The good news is, to help promote competition in the auction, the FCC has instituted a spectrum reserve—essentially a limit on how much spectrum AT&T and Verizon can buy. But, as currently constructed, the spectrum reserve is too small to support more than one new nationwide competitor to AT&T and Verizon. To ensure that the auction promotes competition, the FCC should increase the spectrum reserve to at least 40 MHz, which would effectively double the number of competitive, nationwide mobile broadband providers.

The economic and social potential of mobile innovation is limited only by the strength of our networks, and the strength of our networks is dictated most directly by the amount of competition between mobile carriers. The FCC’s incentive auction is a unique chance to generate competition in U.S. broadband. But failure to ensure competitive results could end up making a Comcast-Time Warner merger seem innocuous in comparison.

Engstrom is policy director for Engine, a voice for the U.S. startup community.