High-Speed Internet Growth in Colorado: A Complex Dance of Competition and Regulation

Strategic Insights -

Colorado homes and small businesses have seen a surge in high-speed Internet lines, with a 46% increase in 2004, outpacing the national average. This growth is largely attributed to price wars between service providers, with Comcast and Qwest offering deals as low as $19.99 a month for the first few months of service. However, a recent U.S. Supreme Court ruling may change the dynamics of the industry, potentially leading to a duopoly controlled by Comcast and Qwest. Industry officials and consumer activists are debating the impact of this decision, with some arguing that it will limit competition and others believing it will spur growth.

Key Takeaways:

  • The U.S. Supreme Court's decision to exempt cable companies from sharing their lines with rival Internet service providers may lead to a duopoly controlled by Comcast and Qwest in Colorado.
  • Industry officials argue that this decision will maintain the momentum for high-speed Internet growth in the United States, while consumer watchdogs are concerned that it will limit competition and favor larger providers.
  • Qwest has increased its DSL coverage area by 60% in the past three years, but its own senior vice president, Steve Davis, acknowledges that the company should give adequate notice to competitors before offering new DSL service.
  • Cable modem service controls more than 55% of the market nationwide, with 332,927 lines in service in Colorado as of Dec. 31, 2004, compared to 248,285 DSL lines.
  • Consumer activists, such as Mark Cooper of the Consumer Federation of America, believe that rival Internet providers will have a hard time getting access to certain services from the Bells or will have to pay exorbitant prices to do so.
  • Independent ISPs, such as Peak to Peak Internet Services, worry that the loss of regulation will harm consumer interests by severely limiting their choices.
  • Qwest and Comcast claim that loosening regulations will not have a significant impact on ISPs in their territories, but experts like Tom Friedberg argue that it will spur the development of the broadband market.

Statistics:

  • High-speed Internet lines surged 46% in Colorado in 2004, outpacing the national average.
  • Cable modem service controls more than 55% of the market nationwide.
  • As of Dec. 31, 2004, 332,927 cable modem lines were in service in Colorado, compared to 248,285 DSL lines.
  • Qwest increased its DSL coverage area by 60% in the past three years.
  • Qwest signed a three-year, DSL line-sharing agreement with Covad Communications last year.
  • Qwest lists 88 ISPs in Colorado on its Web site.
  • Comcast is offering high-speed Internet service for as low as $19.99 a month for six months, then $42.95 a month thereafter.
  • Qwest is offering DSL high-speed Internet service with MSN for as low as $19.99 a month for 12 months.

Sources:

  • The Rocky Mountain News
  • National Cable & Telecommunications Association vs. Brand X Internet Services
  • The Wall Street Journal
  • Consumer Federation of America
  • Peak to Peak Internet Services
  • Qwest Communications
  • Comcast Corp.