Why American Internet Service Is Slow and Expensive

An anonymous reader writes "Reporter David Cay Johnston was interviewed recently for his new book, which touches on why America's Internet access is slow, expensive, and retarding economic growth. The main reason? Regulatory capture. It seems the telecommunication companies have rewritten the regulatory rules in their favor. In regards to the fees that were meant to build a fast Internet, Johnston speculates those fees went to build out cellular networks. 'The companies essentially have a business model that is antithetical to economic growth,' he says. 'Profits go up if they can provide slow Internet at super high prices.'"

Re:But calculate the same as the beer calculation

[bursch-X]

Then what about Japan? Yen is stronger, wages are higher yet fibre optic Internet access at 100 Mbps can be had for less money about anywhere in the country.

Re:The same reason our passenger rail system stink

[Scutter]

The country is big, with lots of low density areas. Thousands of miles of cable don't just pay for and install themselves, and the incentive to cover a lightly inhabited area just isn't there.

There were huge federal subsidies given to the telcos to build out internet infrastructure for exactly that reason. It was stolen and used to line the pockets of the telco investors instead.

Re:SOCIALIZE!

[Kiraxa]

Ignoring the fact that the USPS is only broke because Congress is trying to kill it by forcing them to pre-pay 75 years worth of pensions. Without the pre-paid 75 years worth of pensions, USPS is running at better margins than the publicly owned couriers.

People are talking about population density

[Picardo85]

Speaking as a Finn I find this ridiculous. We have a population density of 16/km2 or 41/sq mi for you who go by the imperial system, that is 201st in the world. The United states has 33.7/km2 or 87.4/sq mi.

In Finland we, in contrary to Sweden, have the industry building out the networks for their own money. Very little is subsidized unlike in Sweden. Still we are able to have really good internet connections. Currently we pay around 30-50euro/month for 24 / 2mbit ADSL (depending on where you live and ISP) in most places where fiber isn't avaliable but fibre is in general being expanded in most population centers and then some local areas such as small municipalities build their own fiber networks.

Where you can get access to fiber you pay the same for a significantly faster connection. I know for example that in my appartment building I would get 250mbit for 50/euro month.

As a matter of fact we are aiming at being able to provide 100mbit to everyone by 2015 source from the finnish broadcasting company [yle.fi]

It doesn't matter how you reason, there's absolutely no reason what so ever that the major population centers in the US wouldn't have high speed internet access for affordable prices except the telco cartels.

Re:SOCIALIZE!

[Z34107]

You picked a terrible example. The United States Post Office loses billions of dollars every quarter.

Your larger point is sound--government bureaucracy doesn't necessarily mean higher overhead. But, I would rather see the one-cable-co one-phone-co monopolies broken up. Arkansas of all places has terrific connectivity because the Comcasts of the world never bothered locking the market up [arstechnica.com].

Re:Because...

[englishknnigits]

The companies themselves don't write the regulations, they tell the regulatory bodies how to write them and fill the regulatory bodies with past and future employees. Ever heard of the revolving door?
If you wanted to regulate an industry, you would want to fill your regulatory body with people who are experts on the industry. Well, where do you think experts on an industry typically come from? From the industry itself.

Re:Does this figure in government subsidies?

[MtHuurne]

According to TFA, telecom companies received $3000 per household in subsidies over the years, so it's not like US internet is unsubsidized.

In my country (the Netherlands) local governments put coax in the ground in all non-rural areas for radio and TV. Then at the time of the dot-com boom, those coax networks were sold to telecom operators at ridiculously high prices. They financed that by issuing stocks, which lost most of their value when the bubble burst. So effectively it was the stock holders who bought overpriced telecom stocks who paid for the broadband infrastructure.

Re:SOCIALIZE!

[infinitelink]

You do realize that they prohibit the other carriers from delivering certain kinds of mail, right? There is a reason it is cheaper, but plenty of people have done work to show it could be done far cheaper by ridding ourselves of the current postal service in favor of one modernized and made more efficient: case in point, the mailman recently came to my place complaining "I didn't sign up for this. I came for 8 hour days and they have me doing 12", and he is doing work not half the difficulty, strain, effort, or amount of training that my last position required: AND it was rare not to have a 12-16 hour day (the 16 hour ones being in the peak seasons). I know the pain of not having time besides work (all too well), but many times "government position", in the minds of those who seek them, is though of some kind of sinecure or easy street: a place to go for regular pay, hours, and ease. I know that's not all of them (I work for a guy with quite the job in government, actually), but there is a ton that could be done that even average, ordinary people could submit to make all cheaper tomorrow or next week: the problem is that it would mean JOB cuts, only what government workers in non-essential functions often don't "get" is that Americans not on the direct take don't consider government jobs as "productive" (rather than economically vampiric) jobs: many aren't, some are: some that aren't are necessary, some that are aren't.

See what happens to the USPS when all monopoly privileges partial or total are eliminated: it will likely be crushed. And btw, I don't necessarily blame USPS: it doesn't have the backing of many investors, for instance, to push innovation, the politicians certainly aren't going to bring it, and its own workers would have fought it all the way. I do feel for them: I used to talk to an oddity of a human being who happened to be a mail man, and I worry what will happen to him outside the confines of such a regular, predictable, and merciful set of routines to follow for work (he will probably get alcohol poisoning, actually), but in pure economic terms, or terms of cost, benefits, and values added or gained, the USPS really can be outdone if the barriers are removed (and others aren't erected).

Take a peak here, http://postalemployeenetwork.com/news/2010/03/postal-or-federal-employee-pay/ [postalempl...etwork.com] The author justifies the postal wage by pointing-out that their pay is comparable to other federal workers (note earlier he tries to imply they are not, and the whole really makes no argument). But how is the job of walking door-to-door delivering mail, a very simple assignment, comparable to, say, a programmer, a nuclear auditor, a forensic accountant, a nuclear engineer or station monitor, a water quality analyst? I mean postal worker's pay per year is twice what I made doing heavy work that required a lot of skill, critical thinking, constant-retraining (equipment, tech in use, signalling, etc. was being evolved steadily), technical aptitude, AND customer management: if we fire them all tomorrow and half the work force, cut their benefits, and investigate what back-room deals were made, we could hire twice the force at just under half the cost per worker, or we could just re-hire the workers at half the cost and provide them all with decent healthcare (paying more than other public "servants" do percentage wise, comparable to the people they "serve"), and I would be a LOT of people who are unemployed right now would happily take the deal.