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CenterFuse Broadband Feasibility Report • The Gap in Broadband Speeds. How the broadband speeds in Ellensburg compare to other communities. • The Gap in Broadband Availability. How many homes can buy broadband? • The Gap in Broadband Affordability. In every community there are households that don't subscribe to broadband because of the cost. • The Gap in Computer Ownership. There are households that don't subscribe to broadband because they can't afford a computer. • The Gap in Broadband Skills. There are citizens who don't buy broadband because they lack the skills needed to operate in the digital age. • Future Broadband Gaps. Even where there is adequate broadband today, we can look forward to the natural progression of technology that will create new broadband gaps that don't exist today. After describing the different broadband gaps, this report will look at the consequence of the broadband gaps and will ask the question if there are any practical solutions to the broadband gaps that the CenterFuse of the community could facilitate. The Gap in Broadband Speeds Duopoly Competition Any discussion of a broadband gap in a city the size of Ellensburg has to begin with a discussion of duopoly competition. Duopoly competition refers to a market with only two primary competitors. In broadband, markets that are divided between a telephone company and a cable company meets the classic definition of a duopoly. A duopoly market often shares a lot of the same characteristics of a monopoly market. In duopoly markets the two competitors rarely compete on price, with the result being high prices from both competitors and good margins for both providers. Duopoly providers generally don't concentrate on customer service since customers only have two choices. If you look back to 2000, there was true duopoly competition in every city. At that time, the telephone company DSL and cable company modem service were similar in capability and it was hard for a customer to distinguish one service from the other. The two competitors mostly advertised about how their broadband was superior to its competitor, but there were no major price wars where telcos or cable companies dropped prices to try to win a share of the market. In most places in the US the telephone companies hit the broadband market first, and in the early days the telcos had more broadband customers than cable companies. However, over time, the cable broadband products improved faster than telephone company DSL. Cable companies currently offer speeds as high as one gigabit and the base broadband product is usually between 100 Mbps and 200 Mbps. DSL has improved since 2000, but the fastest DSL today in most Page 33