4 Reasons Why Your Internet Access Is Expensive And Slow... And Could Get A Lot Worse

Your Internet service is more expensive and slower than necessary. You're probably thinking,  "Really? That can't be. We Americans invented the Internet." Yes, we did. And now, we Americans enjoy second-class Internet service. How did that happen?

Bill Moyers discussed this issue recently during an interview with Susan Crawford, consumer advocate and author of, "Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age:"

"... many other countries offer their citizens faster and cheaper access than [in the USA]. The faster high-speed access comes through fiber optic lines that transmit data in bursts of laser light, but many of us are still hooked up to broadband connections that squeeze digital information through copper wire. We’re stuck with this old-fashioned technology because, as Susan Crawford explains, our government has allowed a few giant conglomerates to rig the rules, raise prices, and stifle competition..."

You're probably thinking,"This can't be. We are the USA. We are number one." Well, we aren't when it comes to Internet access (emphasis added):

"For 19 million Americans, many in rural areas, you can't get access to a high speed connection at any price, it's just not there. For a third of Americans, they don't subscribe often because it's too expensive... It's fair to say that the U.S. at the best is in the middle of the pack when it comes to both the speed and cost of high speed internet access connections. So in Hong Kong right now you can get a 500 megabit symmetric connection that's unimaginably fast from our standpoint for about 25 bucks a month. In Seoul, for $30 you get three choices of different providers of fiber in your apartment... In New York City there's only one choice, and it's 200 bucks a month for a similar service. And you can't get that kind of fiber connection outside of New York City in many parts of the country. Verizon's only serving about 10 percent of Americans..."

And, your wireless phone service should be cheaper, too:

"In Europe you can get unlimited texting and voice calls and data for about $30 a month, similar service from Verizon costs $90 a month..."

Meanwhile, back in the United States:

"... according to numbers released by the Department of Commerce, only four out of ten households with annual household incomes below $25,000 reported having wired internet access at home compared with 93 percent of households with incomes exceeding $100,000..."

So how did things get like this? How did service in the United States become second rate? Moyers and Crawford discussed four reasons:

1. In most areas, there isn't real competition because there is only one high-speed Internet provider
2. In many areas, the providers lobbied governments to prohibit local towns and cities from installing high-speed fiber on their own
3. Internet service providers put their profits ahead of the greater social good, which has widened the digital divide between people who have and don't have Internet access
4. Many people believe that government intervention is bad, and that the magic of the marketplace would provide competition, low prices, and good services

Crawford explained why the promises of competition and benefits to consumers never happened:

"... because it's so much cheaper to upgrade the cable line than it is to dig up the copper and replace it with fiber. The competition evaporated because Wall Street said to the phone companies, "Don't do this, don't be in this business." So you may think of Verizon and AT&T as wired phone companies, they're not. They've gone into an entirely separate market which is wireless. They're the monsters on the wireless side that control two thirds of that market. So there's been a division. Cable takes wired, Verizon/AT&T take wireless. They're actually cooperating. There's a federally blessed non-compete in the form of a joint marketing agreement between Comcast and Verizon..."

The city where I live, Boston, is a good example. We have a new Mayor, and a lot of city pride (e.g., "Boston Strong"). We want to remain a world-class city, but you can't get fiber Internet access (e.g., Verizon FiOS) in Boston. Comcast is the cable provider for high-speed Internet access. You may have seen television commercials with a well-known actor standing in Boston promoting fiber Internet access. You simply can't be a world-class city without fiber Internet. Period.

Boston is not alone in this situation. According to Crawford, Manhattan (New York City) is serviced by Time Warner Cable. Crawford summarized the mess, which I call collusion:

"[High-speed Internet Service Providers] clustered their operations. It makes sense from their standpoint. “You take San Francisco, I'll take Sacramento. You take Chicago, I'll take Boston.” And so Comcast and Time Warner are these giants that never enter each other's territories."

Wouldn't it be great to have cheap, affordable fiber Internet access everywhere in your town or city? Everyone needs it.

Students need it to learn, do homework, and prepare for jobs in a digital age. Entrepreneurs need it to start up and grown their businesses. Consumers need it to shop, bank, do business, work from home or tele-commute, stay current with news, and enjoy entertainment (e.g., online gaming, television, music, etc.).

It's fair to ask: how many more jobs and new businesses would have been created in your state (or city) if it had fiber Internet access everywhere? Some local towns tried and got squashed:

"In North Carolina a couple of years ago lobbyists for Time Warner persuaded the state legislature to make it almost impossible, virtually impossible for municipalities to get their own utility... And so now North Carolina, after being beaten up by the incumbents is at the near the bottom of broadband rankings for the United States... All those students in North Carolina, all those businesses that otherwise would be forming, they don't have adequate connections in their towns to allow this to happen..."

The result: higher cable and Internet prices. That's great for the service providers; bad for consumers. There is no sugar-coating this, folks. You are seeing monopoly power at work, and it must be stopped.

What's the solution? First, Internet access should be treated like a utility, as water and electricity are. Second:

"... we have to separate out content from conduit. It should not be possible for a local cable actor or any distributor to withhold programming based on volume. That's what's going on... That should not be legal. Everybody should get access to the same stuff at the same price and they should be announced prices."

Third, break up the buddy-buddy closeness between the Federal Communications Commission (FCC) and industry. This problem is intertwined with net neutrality;  without which you can expect higher prices and even worse Internet access service.

Fourth, the FCC must operate with broader oversight:

"Just yesterday the former chief of staff of the F.C.C. left to be the general counsel of a regulated company. It happens all the time. And so in order to change this you'd have to make regulation of this area not be carried out by such a focused agency. Right now, the F.C.C.'s asymmetry of information is striking. They only talk to the industry. The community is all so close. In order to break that up you'd have to make sure you had a broad based agency seeing lots of different industries."

Fifth, change will happen only when citizens demand it. Contact your elected officials today and demand faster, cheaper Internet access. Demand that they stop the Comcast's acquisition of Time Warner Cable, too. Tell them that industry consolidation will make the situation worse for consumers, not better. Tell them the U.S. Postal Service should be part of the Internet access solution, too -- especially for rural residents.

Therer are some online petitions. Sign them if you want, but I believe it is always best to directly contact your elected officials.

Crawford's book is available online at Amazon.com and Barnes & Noble.

Comments

[Ellen]

Bravo! A disgusting situation, and well summarized. Yes, internet access =should= be a public utility! It's a disgrace.

[Matt Belge]

Hi, George,
Great post! Thanks for educating us.

[Chanson de Roland]

it is perfectly clear what Comcast is doing.  Once it has merged with Time Warner Cable (TWC), it will, after waiting for a discrete period, raise the price of broadband to be equal to or just slightly less than a Cable TV subscription, so that, whether you want cable or not, you'll be forced to pay a cable subscription fee just to get broadband.  And, as Ms. Crawford explained on Moyer's, the broadband that you get will have the dual virtues of being both more expensive and slower than what most Western Europeans get.

To stop that the anticompetitive conduct and rapacity of the Cable TV and integrated phone companies, we need competition in broadband, and we need to restructure the broadband industry. The U.S. Post Office can be one source of competition. Congress, pursuant to its constitutional Commerce Clause authority and its constitutional authority to establish post offices and post roads (U.S. Const, Art. I, Sec. 8), can and should pass law that authorizes and funds the U.S. Post Office to become a broadband ISP. After the U.S. provided the initial capital investment, the U.S. Post Office/ISP would have to operate as a profitable going concern, but with the mandate to expand broadband to everywhere that it could do so profitably, while Congress would provide subsidies to provide broadband service to the remainder of Americans, where providing that service isn't profitable. That would not only rescue the U.S. Post Office by bringing it into the 21st Century of electronic communications instead of being restricted to dying snail mail; it would also institute more competition in the market for ISP services.

To provide another source of competition, Congress should pass a law, pursuant to its Commerce Clause authority, that authorizes both local and state government to build their own broadband services, overriding and preempting state laws to the contrary.

And finally, Congress should pass law disaggregating the Cable TV providers, so that providing broadband service is an independent business that is separate and apart from distributing television programing and/or other content. If, as a result, the creators of content decided that that the cable TV side of the business had no value for them as a middleman without its current lock on broadband service and, thus, set up their own websites and networks for distribution of their content over broadband to sell directly to consumers, putting the cable TV business out of business, as far as I am concerned, that would be just the proper outcome of a fully competitive markets for broadband service and distribution of content. Because, under antitrust precedent which dates back as much as seventy years--movie studios owning theaters was held to be an anticompetitive combination; and tying, here broadband to cable TV to charge the same price for each, regardless of costs, is also a per se violation of antitrust; and, as Mr. Jenkins notes, supra, Cable TV and phone companies have colluded in restraint of competition by dividing the nation into regional oligopolies to avoid competing with each other (citations omitted)--Cable TV companies should never have been allowed to be both providers of broadband and distributors of content.

Though the head of the DOJ's Antitrust Divisions knows the antitrust law quite well, because his specialty as a private lawyer, who represented the Cable TV industry, was antitrust law, don't hold your breath waiting for him, FCC Chairman Wheeler, who represented the Cable TV industry as a lobbyist, U.S. Attorney General Eric Holder, or their Harvard Law-trained boss, President Obama, to do any of the above, even the stuff that they could do without Congress' assent, such as disapproving the Comcast/TWC merger and/or suing to breakup and separate the cable TV business from the broadband business.

[Rob]

A British man invented the Internet, Americans are always taking credit for other people's work.