Why American Internet Service Is Slow and Expensive 351
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.'"
Because... (Score:5, Insightful)
I bet most of the profits (Score:2, Insightful)
The same reason our passenger rail system stinks. (Score:3, Insightful)
Re:But calculate the same as the beer calculation (Score:4, Insightful)
Did you factor in locations in the US, where the population density is comparable to Japan's?
Re:It's not cheap to build (Score:2, Insightful)
Essentially it was $4k per subscriber. That's an awfully long payback when you are only getting less than a few hundred bucks a month
*facepalm*
$100/mo is 30% ROR - I don't know, but that is quite good. Even for 10% ROR, you know, $33/mo, it is not that expensive as infrastructure goes. And you can upsell your customers with lots of stuff over these connections, be it TV, or phone service, or security systems, etc.
Re:It's not cheap to build (Score:5, Insightful)
Re:The same reason our passenger rail system stink (Score:5, Insightful)
This breaks down when you *aren't* far away from major, major cities (1 million plus), aren't far away from commuter towns (30k)... and can't get anything but Satellite or line of sight wireless. I am in this situation. It takes me 5 minutes, more or less, to get to town. I am within range of the circuit. The problem? There's a load coil in the line. Good for phones, bad for DSL. That's really the only thing stopping me from having way cheaper roughly 1.5mbps DSL.
This also breaks down when you pay lots of money *in the middle of the city.*
IMO, the basic, fundamental problem is that, because of the nature of the service - like electricity - we have monopolies with basically no competition. You either get DSL or Cable, pretty much... unless you're in one of the few fiber areas. That doesn't exactly generate much competition - one DSL company, one cable company. It's difficult to maintain a market-driven good-for-consumer-pricing environment when there's only one player, maybe two.
And then we get into caps and speed and all that, and it gets worse. ;)
Re: SOCIALIZE! (Score:5, Insightful)
Given that the government tramples on constitutional rights all the time (i.e. 2nd Amendment), the FCC would find a way to restrict your "freedom-of-speech rights". Using your highway system example, driving is a privilege granted by the government to use their roads, not a right. Just as they have implemented laws and rules and restrictions on driving, they could easily do so on the internet. Fines could be implemented for cussing, anit-political rantings, etc. and it would just become another government cash cow. We would end up paying as much or more as we do now in registration fees and licensing, and likely have less freedoms on the internet.
Re:So what do we do? (Score:4, Insightful)
Those people from 40 years ago? They're the ones in charge now.
Re:SOCIALIZE! (Score:5, Insightful)
gross inefficiencies, waste, and abuse
This is a oft mentioned fallacy by the anti-government crowd. The cheapest way to get a letter (an actual paper one, not e-mail) from NYC to LA is via the US Postal Service. The reason that the conservatives in Congress were so against making Medicare available to be purchased by anyone is because they knew that private insurance companies wouldn't be able to compete. There are some things government does well, others it doesn't. It's not a universal truism that they fuck up everything they touch.
Re:It's not cheap to build (Score:5, Insightful)
Agreed. Somehow lots and lots of suburban households are able to be serviced with telephone, electricity, water, natural gas, and even cable television for ballpark $50-$100 per month each. It is just a basic consumer infrastructure problem, one that has been solved before literally billions of times already. Why are broadband companies so especially less competent than others at providing this kind of service?
I am paying $45 per month for a decent DSL service. There is plenty of money up for grabs to pay for these things, if the malignant monopolies can be pushed aside.
Re:One could ask the same question about Cell serv (Score:5, Insightful)
If it's so *unregulated,* why does so much money go from telecoms to congress in the form of lobbying?
The word you're looking for is: bribery.
This is a point where ideology really fraks things up: all regulation is not bad. You drink clean water, eat safe food, and breath clean air BECAUSE OF REGULATIONS. Regulations are bad when they favor the few over the many, especially when the few are taking advantage of the many. In this case, the "regulations" in place are largely from the few (wealthy and dishonest) managing to bribe enough people to make laws to give them more power and control, AT THE EXPENSE of everyone else.
Re: SOCIALIZE! (Score:5, Insightful)
That's another form of "capture", in this case by control freaks. We don't have a government that represents the people, at least not all of them. All too often government represents the interests of the rich and powerful, the loud and obnoxious, or those who want others to conform to their way of thinking--when what government should be doing is guaranteeing and preserving freedom (and yes, that includes freedom FROM monied interests in some cases, sorry libertarians).
Government should not be in the business of controlling individual liberties without a damned good reason. The "driving is a privilege" BS is a prime example. That should never have been allowed to take root, has no basis in any kind of constitutional republic, and that it has taken root we're going to be forever eradicating it, just as we're going to be forever eradicating the "because it's on a computer/on the Internet then law enforcement should have it without a warrant" crap too. Both things, BTW, have been allowed to exist because some people are fearful of cars and some people are fearful of computers and control freaks use those to gain support for their positions.
However, consider this: corporations are not exactly huge defenders of freedom and individual liberty. They are in fact quite the opposite and they prove it constantly. It is at least possible for people to take their government back and make it work for them. I would aruge it is their duty, as would some rather wise folks from a couple hundred years ago. It is not possible to make a corporation behave correctly in a civilized society absent a monetary interest or force of law. We need the force of law on OUR side, not theirs. In this case, it need not be government provided broadband. I don't want the government making my computers, shoes, jeans, etc. and broadband isn't something they should do either for just those reasons you specified. However, government can and should require certain behaviors out of the private entities that do so, in no small part because of their use of right of way, the limited useful spectrum, and the fact that they seem to have taken our money and stolen it. Governments should not be prohibited from stepping in and providing services in those areas where private companies don't want to, which of course is what private companies have been buying into law for some time now.
It's not black and white, this or that, etc. There are ways to make things better without giving all the power to one side or the other. The point is right now the power is too far on the private side when it comes to money, the "force" is all directed against the citizens, and it's not helping anybody.
Re:SOCIALIZE! (Score:5, Insightful)
Yes and no (on the USPS). The reason I say that is due to one question: how much of a break in taxation, fuel, and other costs does the USPS get? I'm willing to wager that they don't have to pay any FAA-associated fees for aircraft certification, and are usually exempt from state vehicle taxation, fuel taxes, property taxes on post offices, vehicle insurance premiums (the gov't handles that), etc. There's also the fact that the USPS doesn't have to pay taxes on income, and has no shareholders to please. FedEx, UPS, DHL... they all have to pay all of that and more.
I bet it's enough to have an artificially-reduced bottom-line - far, far smaller than the likes of FedEx or UPS. This in turn artificially lowers the entire overhead costs per entity once you count in HR/salary costs.
I don't hate the post office or anything, but before pointing to them as a shining example? At least remember that unlike their competition, the USPS gets to start the race quite a few strides ahead of the competition.
Re:The same reason our passenger rail system stink (Score:4, Insightful)
That's the usual crap excuse by people who don't want to admit that it's just a matter of money, i.e. regulation, incentives, taxation etc.
Europe and Russia have well developed (hence popular) passenger railway systems. Oh and the US used to also. You may want to look up why it was run down.
This is a failure of LAW, not failure of ISP (Score:4, Insightful)
Just one change in the interpretation of the law, where the customer's right to withhold payment for service not received, regardless of what the business printed on their contracts would do the trick.
It would incentivize customer service instead of incentivizing legal trickery as it does now.
Can you imagine the legal representatives of some company defending themselves against a defamation lawsuit where some plaintiff is suing because the company screwed up his credit report ? The plaintiff shows the judge a http://www.speedtest.com/ [speedtest.com] report showing 23kB/sec when the company claimed a 3MB/sec speed? The corporate lawyer approaches the judge and shows the bill clearly showed $53.93 and the plaintiff only paid fifty cents!
The judge looks at the plaintiff's speedtest report and asks the corporate rep if the IP address on the sheet is theirs.... well follow your imagination of how that meeting should go.
A business license should not be an open pass for theft-by-one-sided contract.
Re:The same reason our passenger rail system stink (Score:4, Insightful)
Must be why Wyoming has no water or electricity. Can't be done.
Re: SOCIALIZE! (Score:5, Insightful)
You don't have to have it done by the government. In rural areas in the central U.S., power lines are often provided by co-op because of the lack of profitablit. Essentially the same owners although directly (as customer-owners) instead of indirectly (through the government). I never had any complaints with my power lines through the coop. I imagine I wouldn't have any problems with coop internet service either. And the great thing for rural folks, who already have a co-op organization, the right of way and necessary machinery are already under control. They'd just have to lay down the wiring.
Folks in town need to convince their rural neighbors to get their coop to do this, then extend their reach into town. And the coops could even connect to each other and provide a competitor to the companies that connect the various ISP networks together. Then you don't need network neutrality, because the coop will belong to and therefore serve the customers.
Capitalism is dead in the USA (Score:5, Insightful)
To take a current example, look at Samsung vs. Apple. No matter who wins, users loose. Where Apple is winning they are trying to eliminate Samsung, and vice versa. Whoever wins, your costs will be artificially high, and your service will suck.
The banking industry is the same way. So is agribusiness. At the consumer level supermarkets have razor thin profit margins, but the big players in food production also form a corrupt insiders club: Monsanto, Cargill, Archer-Daniels-Midland. Individual farmers are not agribusiness insiders, they are another group of victims.
This is capitalism in name only. It does not produce the benefits for society that is the claimed rational for a capitalist economy. As a consumer you have no meaningful choices because all the vendors are corrupt and inefficient. It's organized theft at a global scale.
Re:SOCIALIZE! (Score:4, Insightful)
Well it depends on your definition of efficient.
Private industry is extremely efficient at providing as little as possible for as much money as possible. So from the standpoint of owners it's very efficient.
The government on the other hand is good at providing large scale service for a lot of money. So if you look at it as a business, it's grossly inefficient. But the difference is that the 'owners' of the government are at the same time also customers, so they mostly end up better off, since they also get much better service from the government then they would from a private party.
Re:SOCIALIZE! (Score:4, Insightful)
Actually, the USPS doesn't have any air fleet nor do they do own any railroad assets. They have to purchase space from other carriers like UPS, FedEx, DHL, and AmTrak. Basically, like any other private company, they have to contract that part out.
I'm not sure if they get any special breaks on their ground vehicles, though.
Re: SOCIALIZE! (Score:5, Insightful)
Re:It's an Internet (Score:4, Insightful)
Gees dude do you know your mathematics at all 1%. Population of the US 311,591,917 - Jul 2011, now that's 311,592 people
Mathematics: 3,115,919 people.
More mathematics: Those people combined make 13.3% of the wealth and pay 22.3% of the federal income taxes (source [heritage.org]). This indicates the complete opposite of your use of the term "parasite", regardless of whether you look at the dollar value or the percentage.
Re:SOCIALIZE! (Score:4, Insightful)
This is a oft mentioned fallacy by the anti-government crowd. The cheapest way to get a letter (an actual paper one, not e-mail) from NYC to LA is via the US Postal Service.
What a horrible example. Of course it's the cheapest way. Legally, it's the only way to send a non-priority letter. Now, I don't have a beef with the postal service, and as far as postal services go the USPS is pretty good compared to what you find in other countries. But you can't knock private companies for not being competitive when they're not allowed to compete by law.
Re:SOCIALIZE! (Score:3, Insightful)
Because it's a real-world case that interferes with Libertarian faith-based economics?
Where is this "law" that prevents FedEx, UPS, or DHL from shipping around pieces of paper for less money than the USPS?