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The United States: First World Country, Third World Broadband

-- By EdwardBontkowski - 12 Nov 2009

A Disturbing Revelation

Back when I was in middle school, I was an avid online video game player, playing mostly MMORPG’s and first-person shooters. Playing online games on a dial-up connection was mostly an exercise in futility. However, in 1998 cable broadband internet became available in our neighborhood. After a few years with cable internet, I started to notice something rather disturbing. My bandwidth speeds weren’t getting any faster, yet the bandwidth speeds of online friends (that I had met through gaming) from Europe (especially Scandinavian countries) and Korea had home access to bandwidth speeds that put mine to shame. And to top it all off, they were paying a fraction of what I was paying.

When I attended college in 2003, I finally had access to similar speed broadband that my European and Korean friends had been having delivered to their homes for the past 2 years. In an ironic twist of fate, though, I learned that my university was imposing a cumulative upload and download limit of a paltry 500MB per day. In any case, I was in the same situation I was in before—bandwidth that significantly lagged behind my European and Asian friends.

American Broadband Speeds Are Second Rate

In Japan, broadband service is available at speeds up to 150 Mbps for only $60 a month. In the U.S., the fastest commercially available broadband is 50 Mbps and it costs $90-150 a month. In London, 8 Mbps speed can be bought for $9 dollars a month, whereas in New York 1 Mbps speed costs over twice that much. The average broadband speed in Japan is 16.7 Mbps. The average in Sweden was 8.8 Mbps. The average in the United States was a relatively snail-paced 5.2 Mbps. http://bits.blogs.nytimes.com/2009/03/10/the-broadband-gap-why-is-theirs-faster/

So how is it that the United States, a country once at the forefront of the high-speed internet movement, has fallen so far behind the rest of the world? For sure, one significant factor that explains the speed disparity is population density. With over half of Korea’s population living in incredibly dense apartment complexes, Korean ISPs do not have to provide connections to an incredibly large geographic area like U.S. ISPs have to. However, as big of a factor as population density may be, it does not account for the lack of Japanese-equivalent speeds in population dense areas of the United States such as New York City. The real reason we don’t have such types of speed is because our government is unwilling to engage in the amount of public investment towards broadband infrastructure that European countries have engaged in. Instead, the government has chosen incredibly capitalistic regulatory policies (purportedly to create “open competition” which have definitely failed in that respect) which result in diseconomies of scale and disincentives to create infrastructures similar to those that exist in Europe and Asia.

American Broadband Is A Ripoff

Even more troublesome than our lack of bandwidth speed, however, is the price we pay for our second rate bandwidth. As seen in the section above, a small portion of the difference can be explained by the population density problem the United States faces. However, the true culprit for the United States’ overpriced bandwidth is, of course, the lack of competition that exists in the United States as opposed to Europe.

While the majority of broadband in Europe is provided via DSL which are owned by telephone monopolies, various European countries have essentially forced competition by requiring these monopolies to share lines and provide local loop unbundling. Ironically enough, this is very similar to the type of regulation structure seemingly intended by the United States Telecommunications Act of 1996, but which never came to fruition because of certain rules that never really allowed competitive wholesale prices to exist in the first place. While Europe diligently maintained the regulation of these telecoms, the United States quickly abandoned any true intentions of competition within the broadband market.

The results of this abandonment are exactly as one might expect. While Europe experienced a decline in average revenue per broadband connection between 2006 and 2007, the average revenue per connection in the United States continued to increase. This increase was directly the result of the typical duopoly in the United States comprised of the local cable operators and local phone operators. Such existence of a duopoly allows for minimal competition in the United States and places American broadband companies in a position that makes it far easier to maintain or increase prices than it is for their European counterparts.

The Potential of an Accessible and Affordable Pipeline

Ultimately, unless the United States government makes a massive overhaul of the current telecommunications regulation infrastructure, the existing duopolies will continue to crush any sense of actual competition within the United States. We will continue to fall even further behind to Europe and Asia with respect to speed, cost, and penetration. The effect that a regulation overhaul would have is enormous. Currently in the United States, over 10 million homes remain unserved, another 50 million are able to subscribe but choose not to because of cost concerns or speed concerns, and the 50 million that are subscribed are stuck with only duopoly choices. With proper regulation, affordable internet connections could reach millions of children, resulting in millions of brains, previously on the other side of the digital divide, to be reached and finally be given one of the greatest learning tools on the planet. Anarchistic distribution channels would become far more efficient and numerous. Broadband penetration would become so high that ideas like high speed wireless networks built solely from personal Wi-Fi connections could become a reality and rid us of the need for giant telecommunication companies to provide our cell phone service.

Once we make the internet affordable (and hopefully eventually free) for every person in the United States, the walls of capitalism will begin to crumble and the changes we have discussed in class will come like a freight train. It all starts with making the pipeline free and accessible.

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