Highway Robbery for High-Speed Internet
If you're one of those Northeastern elitists who reads The New York Times, you turned to the last page of the front section Friday and saw an op-ed from a Verizon executive making the case that "the United States has gained a global leadership position in the marketplace for broadband," and don't let anyone tell you different. "Hey," you might have said. "Didn't I read an almost identical op-ed in the Times just five days ago?" Indeed you did, though that one came not from a telecom executive but from a researcher at a telecom-funded think-tank. And if you live in Philadelphia, your paper recently featured this piece from a top executive at Comcast, explaining how, yes, American broadband is the bee's knees.
That smells an awful lot like a concerted campaign to convince Americans not to demand better from their broadband providers. Perhaps they're trying to influence the new chairman of the Federal Communications Commission, who has been named by President Obama but not yet confirmed (they probably don't have to worry; the nominee, Tom Wheeler, is a former lobbyist for telecom companies). Or perhaps they just want to make sure the public isn't overly affected by the public-interest groups that for years have been complaining that compared to other advanced countries, the broadband Americans have is spotty, slow, and absurdly overpriced.
The telecoms are right about one thing: In the last few years, broadband speeds have improved. Instead of being ranked in the 20s or 30s when it comes to the average speed of their internet, America by at least one measure has cracked the top ten. We still trail Japan and Hong Kong and Switzerland and Latvia and South Korea and … well, you get the idea. But it has gotten better.
But we're paying for what we get—oh boy, are we ever paying.
There is blazing fast internet available in America—if you live in the right place. According to the National Telecommunications and Information Administration, around half of Americans have access to service with download speeds over 100 megabytes per second. That's a big increase over just a few years ago; in 2010, only one in 10 Americans could access those speeds. But access is all but meaningless if the service is so outrageously expensive that only a few people can afford it. Last year, Comcast debuted its "Xfinity Platinum" service, delivering 300 megabytes per second—for an unbelievable $300 a month. Verizon's Fios Quantum gives the same speed for a mere $200 a month. If you're in Hong Kong, you can get 1 gigabit service—over three times as fast—for less than $50.
Many consumers today get their internet, TV, and phone services bundled together, and there the story looks just the same: better service than it used to be, but at a high price. According to a report issued last year by the New America Foundation, If you lived in Seoul or Paris, you could get a "triple play" bundle with 100 meg download speeds for around $35 a month. But if you're in Washington or New York, that triple play will not only cost you three times as much, your internet with be only one-quarter as fast.
How did it come to this? The telecoms will point out that unlike someplace like South Korea, America is a geographically large country with a dispersed population. It costs much more to run fiber or cable to 10,000 people spread out over hundreds of square miles than to the same number of people living in high-rises on a couple of square blocks downtown. But we can't get that cheap, fast service even in our most densely populated cities. The real reason companies like Time Warner and Comcast charge so much for internet access is simple: Because they can.
Why is that? Susan Crawford, a Harvard professor and author of Captive Audience: The Telecom Industry and Monopoly Power In the New Gilded Age, puts the blame on the situation that the cable and telecom companies have so purposefully engineered. "As things stand," she has written, "the U.S. has the worst of both worlds: no competition and no regulation." With the extraordinary profits they pull in—Comcast made $12.2 billion in profits in 2012, while Time Warner netted $4.5 billion—they have plenty of money to invest in lobbying at both the federal and state level. The state lobbying is particularly important; the telecoms have managed to convince legislatures in 19 states to pass laws restricting the ability of local governments to launch their own municipal internet providers, or making it outright illegal (though one such proposed ban was recently defeated in the Georgia legislature). Market competition is all well and good—so long as there are only one or two competitors (This story from Bloomberg Businessweek details how the telecoms and the conservative American Legislative Exchange Council, or ALEC, team up to crush municipalities even thinking of establishing municipal broadband).
In many places, the local cable monopoly is the only realistic choice you have for internet service, particularly since fiber is available only in a few places. So cable companies are increasingly becoming the default internet provider. Do you trust your local cable monopoly to give you good service at reasonable prices? There's a reason Comcast and Time Warner, the two biggest cable companies, are consistently ranked among the corporations Americans hate most. It reminds me of the routine Lily Tomlin did back in the 1970s, when there was only one phone company. "The next time you complain about your phone service," she'd say, playing a dismissive operator, "why don't you try using two Dixie cups with a string? We don't care. We don't have to. We're the phone company." Lots of customers feel their cable company takes roughly the same attitude toward them.
With growing demand for video, online games, and other bandwidth-sucking uses, ISPs have no choice but to keep increasing the speed of their service. But they're in a position to make sure that we keep paying through the nose for it. In other countries, costs have been kept down in large part because they treat broadband like a utility. We have special rules for things like water and electricity, both because they are absolutely vital to modern existence and because of the impracticality of having too many competing providers in any one geographical area. But in exchange for their monopoly position, companies like Pepco or Con Edison are subject to tight regulation to make sure they don't gouge their customers. Today's cable companies, on the other hand, enjoy all the benefits of their monopolies (or in some places, duopolies), with little of the regulatory oversight. As long as that's true, broadband won't get any cheaper.
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