MESSAGE
| DATE | 2013-10-28 |
| FROM | Ruben Safir
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| SUBJECT | Subject: [NYLXS - HANGOUT] why we are screwed
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http://www.bbc.co.uk/news/magazine-24528383
Why is broadband more expensive in the US?
By Tom Geoghegan BBC News, Washington
Home broadband in the US costs far more than elsewhere. At high speeds,
it costs nearly three times as much as in the UK and France, and more
than five times as much as in South Korea. Why?
Men's haircuts, loaves of bread... it is surprising how much more
expensive some things are in the US than the UK. Now home broadband can
be added to that list.
The price of basic broadband, TV and phone packages - or bundles as they
are known - is much higher in American cities than elsewhere, suggests
the New America Foundation think tank, which compared hundreds of
available packages worldwide.
Looking at some of the cheaper ones available in certain cities, at
lower to mid download speeds, San Francisco ($99/£61), New York ($70)
and Washington DC ($68) dwarf London ($38), Paris ($35) and Seoul ($15).
This research echoes the findings of another report earlier in the
summer by the OECD, which compared countries in terms of their
broadband-only prices. Across all 10 download speeds and capacities, it
consistently ranked the US near the bottom.
For instance, at high speeds of 45 Mbps and over, the OECD report has
the US ranked 30th out of 33 countries, with an average price of $90 a
month. With phone and TV thrown in, plus some premium channels, these
packages often cost $200.
"Americans pay so much because they don't have a choice," says Susan
Crawford, a former special assistant to President Barack Obama on
science, technology and innovation policy.
Although there are several national companies, local markets tend to be
dominated by just one or two main providers.
"We deregulated high-speed internet access 10 years ago and since then
we've seen enormous consolidation and monopolies, so left to their own
devices, companies that supply internet access will charge high prices,
because they face neither competition nor oversight."
Two-thirds get their broadband via their television cables, she says,
because the DSL (digital subscriber line) service provided by phone
companies over copper lines can't compete with cable speeds, while
wireless and satellite services are subject to low usage caps.
San Francisco seems to be particularly expensive.
Mitch Evans pays $200 a month for internet, TV and unlimited voice phone
calls. "I guess I've just become used to it after 23 years here in the
Bay Area. I know the cost of living here is very high, but for me it's a
small price to pay for such a beautiful and wonderful place to call
home."
Buck Wallander, a recent arrival in the city, pays $120 a month for a
television and broadband package provided by Xfinity/Comcast, plus $7 a
month to "rent" the modem.
He says he had little choice in selecting a provider because the only
other cable television company was directv, which didn't offer any
internet service. His internet speed is "entry-level" with a cap on
usage. He says he's pretty satisfied with the service but resents
leasing the modem.
"That's like a rental car company charging customers an extra $7 fee per
month to include the steering wheel."
Elsewhere in the US, there is a patchwork of other options.
In Kansas City, Kansas, residents are enjoying a high-speed fibre
network, supplied by Google, at a price of $70 a month for a gigabit
(1,000 Mbps) internet-only service. And there's a slower 5 Mbps download
speed for free for seven years to those who pay $300 up front. Google
now has Austin, Texas, and Provo, Utah, in its sights, too. Verizon also
has a super fast fibre network, Fios, available to 10% of US households.
About 150 cities across the US have internet access supplied by public
utility companies. In Chattanooga, Tennessee, electricity company EPB
became an internet service provider four years ago. After expanding its
existing fibre network which it used to control the grid, it now offers
a one gigabit service for $70 a month.
These new services have had a positive impact on prices, says Chris
Mitchell, director of telecommunications at the Institute for Local
Self-Reliance.
"When a community builds its own network it enters the market with a
lower price than the incumbents had been offering. Often the incumbent
then lowers their price - often even further than the municipal network
is offering - so when a community starts offering a service the prices
typically drop."
In Lafayette, Louisiana, $35 can get you 15Mbps from the municipal
internet service. But only one in 10 US cities have public electricity
utilities and 19 states have discouraged or banned communities from
building these networks, says Mitchell.
For Susan Crawford, author of Captive Audience, higher prices have
created a digital divide which excludes poor Americans from quality
internet access. And there are economic implications too.
"The 2008 banking crisis demonstrated what happens when we allow banks
to act out of pure self interest. The communications crisis in America
is less visible but also destructive of America's ability to function on
the global stage."
Like electricity, she says, internet access should be available equally
to all at reasonable prices so that every other sector of US industry
and society can flourish.
Rick Karr, who made a PBS documentary in which he travelled to the UK to
find out why prices were lower, says that the critical moment came when
the British regulator Ofcom forced British Telecom to allow other
companies to use its copper telephone wires going to and from homes.
But US regulators took a different approach. Rather than encouraging
competition between operators using the same network, the US encouraged
competition between different infrastructure owners - big companies that
could afford to build their own networks.
Some believe that UK-style regulation is bad for competition and
innovation, however, and suggest that the US is already one of the world
leaders in broadband.
Several studies show the US with broadband speeds as good as anyone,
says Brian Dietz of the NCTA, the trade association for the US cable
companies. High performing states like Vermont, New Hampshire and
Delaware have faster average speeds than Japan, he says. And 96.3% of US
households have access to wired broadband.
It's also very difficult to fairly make international comparisons on
price, he says.
"Building broadband networks in a country with the sheer size and
diverse geography of the US is definitely a factor when comparing but
despite these challenges, the US is a leader in global broadband by any
objective measure."
The critics should take a broader view, says Scott Cleland, chairman of
NetCompetition, a pro-competition e-forum supported by broadband
interests.
In Europe, people are selling different capacities at different prices,
but the US encourages different technologies and a diversity of choice -
people can choose phone, cable, wireless or satellite, he says. And
suppliers can get a return from their investment which can be ploughed
back into improving the infrastructure - $1.2tn has been reinvested
since the mid 1990s.
But in Europe the funds aren't there, so it's Europe that is lagging
behind on 4G and fibre, Cleland argues. "We may be paying more in your
eyes today but we are building for tomorrow and the long-term."
The US is the only country in the world that provides a fast streaming
cable service to everyone, he says.
Moaning about it, he thinks, is like complaining you only have access to
a Rolls-Royce when you also have Fords, Chevys and Cadillacs to choose
from.
Follow -at-BBCNewsMagazine on Twitter and on Facebook
Are you in broadband heaven or hell? Tell us what it's like where you
live
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