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This article originally appeared on Billboard.
Many people in the US music industry have thrown their support behind net neutrality. If the goal is to ensure a healthy digital music business, efforts to provide better, cheaper broadband service may deserve support, too.
President Obama this week added broadband service to the growing list of initiatives he's supporting in his final two years in office. During a speech in Cedar Falls, IA, a model for local government-built broadband infrastructure, Obama called high-speed broadband "a necessity" that will fuel innovation and help keep America competitive. And while he noted his goal is not to improve the Netflix experience, his proposals have implications for entertainment companies.
A definition of high-speed broadband is warranted here. The current definition puts broadband at speeds up to four megabits per second. That used to be considered fast. But the Federal Communications Commission is now considering changing the definition to 10 Mbps or maybe 25 Mbps. A broadband speed of four Mbps is seen as insufficient for the needs of today's online services.
The main problem: America lacks the competition that would drive down prices and improve services.
Most Americans lack high-speed broadband options. About three in four consumers have one of fewer options broadband speeds from 10 Mbps to 25 Mbps, according to the FCC and National Telecommunications and Information Administration. About 85 percent have two or fewer options for providers of 4 Mbps or less.
Americans also pay more. A New American Foundation study cited in the White House white paper shows Americans often pay 50 percent more than the rest of the world for similar service. For example, for speeds of 16 megabits to 30 megabits, Americans pay a media monthly price of $75.24 while consumers in other countries pay a media monthly price of $46.39.
Obama wants to kill laws that limit broadband competition. He want to encourage community-based broadband – like the one that's transformed Chattanooga – to improve competition and consumer choice. (High-speed broadband built by the City of Chattanooga costs $70 a month and allows a person to download a two-hour, high-definition movie in 33 seconds.) He wants to provide grants and loans for rural broadband providers.
These efforts could have a tangible impact on the future music business.
Greater adoption of high-def streaming services
Better, cheaper high-speed internet would make high-definition streaming audio more plausible. As a result, subscription services could better segment the market: free listening for low-value users, premium service for medium-value users, and a high definion service for higher value users. This is the tact being taken by Deezer in the United States: high-definition audio, at a premium price, is being marketed to in-home audio enthusiasts.
Better adoption of digital services in rural areas
Whereas 94 percent of consumers in urban areas have access to broadband speeds up to 25 Mbps, only 47 percent of rural consumers do. A similar disparity exists at higher speeds.
Greater adoption of music services via smartphone
Obama is also concerned about mobile broadband competition, pricing, and speed. The smartphone is the most sensible entry point for connecting with listeners and is already vital to digital music services. Pandora gets about 84 percent of its listening from mobile devices. Spotify gets over half its traffic from mobile. Better mobile broadband could bring more listeners to these services.
Enablement of next-generation entertainment services like virtual reality
A recent Pew Internet report titled "Killer Apps in the Gigabit Age" provides an overview of expert predictions of internet services that will be enabled by broadband speeds of one gigabit, or 1,000 megabits, per second: simulated environments, documentation of real-life events, and face-to-face collaboration. The possibilities for live music and artist-fan interaction are incredible.
The move from CD to digital download required an improvement from the slow dial-up speeds of early internet service providers. A step forward to high-definition streaming services – currently offered by a handful of companies – requires even better download speeds. Whatever comes next will require a giant leap in download speed.
Glenn Peoples is the senior editorial analyst at Billboard.
