Why Is Broadband More Expensive In the US Than Elsewhere? 569
mrspoonsi writes "The BBC reports "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?...'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. 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."
Telco oligopoly (Score:5, Insightful)
The telco lobby writes the legislation.
Re:Telco oligopoly (Score:5, Informative)
Gizmodo article [gizmodo.com] on it from earlier this year.
Re:Telco oligopoly (Score:5, Insightful)
The telco lobby writes the legislation.
Nope, but you're half-way there. The problem with the United States is that, well... States. In most other countries, if you want to run cable, utilities, etc., you go to the federal government, get your permit, do whatever environmental impact studies need done, and be on your merry. But here, you have to deal with municipalities. Thousands of them. And that opens the door for exclusive contracts; Which are typically for 10, 20, even 50 years. And it goes to one company. One. For an entire town. For 50 years. They didn't write any legislation, they just took advantage of how our government was organized. It's a glitch courtesy of our Constitution.
The other half of the equation though, and one most people forget, is that the United States is big. Like, really big. Like, it could fit all those other countries mentioned inside it and still have space left over for dessert. Low population density is what fucks us, even more than the above-mentioned which, while bad, can be fixed by law. You cannot shrink a landmass down to a more maintainable size.
Roads, water works, electricity, cabling... all of it, we need more. A lot more than say, Japan would. In Japan, people are packed in like sardines. There are parts of this country where you can watch your dog run away for three days it's so flat and barren. But it still needs cabling run across it.
We are, in a very literal sense, a victim of our own size. No fat american jokes though please.
Re:Telco oligopoly (Score:5, Insightful)
Low population density is what fucks us, even more than the above-mentioned which, while bad, can be fixed by law. You cannot shrink a landmass down to a more maintainable size.
This is a horse shit excuse and I'm tired of hearing it. Why doesn't the Northeast megalopolis have cheap internet? It has a population density of 360 people/sq km
How about all of the 'mega regions' of the US? http://en.wikipedia.org/wiki/Megaregions_of_the_United_States [wikipedia.org]
Why don't the east and west coasts have high speed rail, good cheap internet, etc.
South Korea is on a peninsula with a country stuck in the 70s to the north. Yet they have great internet. Their population density isn't that much greater than the North East megalopolis and much closer than say Sweden, Norway, Finland. All of which also have great internet. Denmark density is a 1/3 of the north east and I was still getting 1 Gbps in my hotel.
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Why doesn't the Northeast megalopolis have cheap internet? It has a population density of 360 people/sq km
Well there's your answer. Seoul has a population density of 17,288 people per sq km.
Re:Telco oligopoly (Score:5, Informative)
Hrm... Seoul is a city, not a region. New York City's population density is about 10,630/km sq and Manhatten is about 25,846/km sq. [wikipedia.org]
Your argument needs more argument, I think.
Re:Telco oligopoly (Score:5, Interesting)
Girlintraining almost has it right. While we are not socialistic and have a government being a good big brother to us, we are pseudo-Capitalistic with the worst part of both Socialism and Capitalism in force. If we had a REALLY free economy, the problem would be solved quite quickly. The problem is, we don't have a friggin clue how to solve the problem infrastructure.
My solution would be to build out via a BOND measure, Fiber to the house/apt/business. Back haul it to a central facility or neighborhood closet, I don't care. Pay a guy to manage connecting Address A to Service Provider B in the closet, where Service Provider B is the company that Address A contracts service through. Allow for a certain number of Service Providers, via auction, to be able to install their CO-LO equipment in said facility, use that auction pricing to pay for the person in the closet connecting Addresses to Service Providers (or other means).
The Municipality would build out the FIOS infrastructure plant, not giving "franchise" rights to any single player. This would provide EACH Address the opportunity to buy whatever services they actually need from whomever they actually like. Bad Players would leave the marketplace, new players come in with compelling products that shake up the marketplace.
The Infrastructure would have to have a service fee for maintenance, based on usage of the FIOS plant. More expensive plans (tax on Service Provider plans) would pay a higher "service fee" and no fee would be charged for people who opt out.
If this were setup this way, the build out would be contracted, to bring FIOS plant to each Address/dwelling/Apt/Business, a bond measure would be the easiest means to achieving this build out.
This would give Comcast, Verizon, AT&T, and any other company access to every Address in the municipality via what is essentially "dark fiber". And the is no known downside, except for those companies.
Re:Telco oligopoly (Score:5, Insightful)
Girlintraining almost has it right. While we are not socialistic and have a government being a good big brother to us, we are pseudo-Capitalistic with the worst part of both Socialism and Capitalism in force. If we had a REALLY free economy, the problem would be solved quite quickly. The problem is, we don't have a friggin clue how to solve the problem infrastructure.
Infrastructure that depends on right of way to land creates a natural monopoly. I don't feel going laisse faire would accomplish anything. If you remove government control and hand over access to private citizens, you will amplify the problem a thousand-fold; Everyone between point A and point B will want a cut, and not everyone will be willing to offer access at a reasonable rate. This is why you have easements and eminent domain. Our current system places right of way in the hands of municipalities, which often offer exclusive contracts and can also be bullied or bought off in ways that the state or federal authorities cannot.
You cannot have a 'free' economy when you're dealing with a natural monopoly. Even Adam Smith in Wealth of Nations said as much about land ownership. It must be owned or controlled by the government, or you get situations exactly like this; Profits increase because the fixed costs remain constant but demand is ever-increasing. Telecommunications is the classic case of a natural monopoly. You would be hard pressed to find a better example!
Re:Telco oligopoly (Score:5, Interesting)
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Seoul.
What about Israel, Bulgaria, Switzerland, Belgium, Romania and Latvia. All of which are in the top 10 too.
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This is a horse shit excuse and I'm tired of hearing it.
"A variety of market and technical factors, government efforts, and access to resources at the local level have influenced the deployment of broadband infrastructure. Areas with low population density and rugged terrain, as well as areas removed from cities, are generally more costly to serve than are densely populated areas and areas with flat terrain. As such, deployment tends to be less developed in more rural parts of the country. Technical factors can also affect deployment. GAO also found that a varie
Re:Telco oligopoly (Score:5, Insightful)
No one questions that its more costly to supply infrastructure to rural areas. The question is why that excuse is at all relevant to American cities. My connectivity, in an urban area in a technological center of the country, is piss poor and extraordinarily expensive because Comcast has an effective monopoly.
In addition to their price setting ability, Comcast has no incentive to systematically increase network capacity. Instead, they use incremental upgrades made in the course of necessary maintenance to provide new introductory offers while locking in existing customers at lower and more expensive tiers. I tried to find out recently if I could upgrade to a higher service tier - and the answer was no. Even though I'm on the lowest tier (15 Mbps @ $50/mo) and am an existing customer, they will only "offer" me new subscriber packages for which I am not eligible.
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You might be right about our ordinances (I will have to find out), but still you are saying that even though there is still no economic incentive whatsoever for Comcast to improve service, they would do so if only our big bad city council would permit them to?
I don't actually believe there is an infrastructure problem here as higher service tiers are available in new subscriber packages. Their strategy is to get subscribers at a low tier, then make (or just "turn on") marginal improvements to attract new cu
Re:Telco oligopoly (Score:4, Informative)
"Why don't the east and west coasts have high speed rail,"
Old established rail that can't be taken out of service, and NIMBY.
The Northeast in particular would benefit from HSR, and note that rail made the 'burbs practical LONG before automobiles were available, but there isn't room for a buildout.
Re:Telco oligopoly (Score:5, Insightful)
Except you can't blame municipalities for the cost when they're pretty much the only part of government that's been trying to provide low-cost access. Many municipal governments have tried to set up as ISPs for their citizens, and the costs are typically far lower than what you see from the cable/DSL duopoly. They've been lobbied and sued and otherwise lawyered to death for the effort, but at least they're trying.
And while you can't fix size, you don't really need to. Most of the long-distance fiber backbones have already been run, and most of the US population lives in urban or suburban areas. The bulk of the land area of the US is rural, and they may not get cheap broadband anytime soon (it literally took an act of Congress to get them electricity and telephone after all), but they're a pretty small minority.
Many states have laws prohibiting municipal... (Score:3)
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Yet the US has a population density higher than that of Sweden and Finland. And yet those two countries have well-connected populations, many effectively having broadband access for free. And not coincidentally, those two are well connected together too, as they are also to their southern neighbours. It's almost as if forward planning and cooperation can achieve objectives benefitting all involved parties. Ouch, it's that nasty European "socialism" rearing its ugl
Re:Telco oligopoly (Score:5, Insightful)
We like our internet service like we like our medical service.
Way overpriced do to large companies owning congress.
Why? (Score:5, Insightful)
Why is Broadband more expensive?
Why do we pay more for healthcare?
Why is our productivity so high compared to real wages?
Why does our government spy on us and disregard our civil liberties?
Why are we below the average in ability according to OECD?
Why is the gap between the richest and the poorest on par with that of African countries?
And finally, why the fuck do people keep telling me this is the greatest country on Earth?
I want to be proud for my country and what it stood for, but it's hard to see nowadays.
Re:Why? (Score:5, Insightful)
Will McAvoy: [Looks at Jenny] And, yeah, you... sorority girl. Just in case you accidentally wander into a voting booth one day, there are some things you should know. One of them is: There is absolutely no evidence to support the statement that we're the greatest country in the world. We're 7th in literacy, 27th in math, 22nd in science, 49th in life expectancy, 178th in infant mortality, 3rd in median household income, number 4 in labor force and number 4 in exports. We lead the world in only three categories: number of incarcerated citizens per capita, number of adults who believe angels are real and defense spending - where we spend more than the next 26 countries combined, 25 of whom are allies. Now, none of this is the fault of a 20-year-old college student, but you, nonetheless, are without a doubt a member of the worst period generation period ever period, so when you ask what makes us the greatest country in the world, I don't know what the FUCK you're talking about!... Yosemite?
[Stunned silence]
Re:Why? (Score:5, Informative)
We're 7th in literacy, 27th in math, 22nd in science, 49th in life expectancy, 178th in infant mortality, 3rd in median household income, number 4 in labor force and number 4 in exports. We lead the world in only three categories: number of incarcerated citizens per capita, number of adults who believe angels are real and defense spending - where we spend more than the next 26 countries combined, 25 of whom are allies.
Literacy [wikipedia.org]: 48th.
Math [slj.com]: 32nd.
Science [nationmaster.com]: 14th
Life expectancy [wikipedia.org]: 33rd
Infant mortality ('05-10) [wikipedia.org]: 40th.
Median household income [wikipedia.org]: 4th.
Labor force [wikipedia.org]: 3rd
Exports (per capita) [wikipedia.org]: 43rd
Exports (gross) [wikipedia.org]: 2nd
Incarceration (per capita) [wikipedia.org]: 1st
Adults (belief in angels) [about]: No reliable statistics available. 41-80%
Defense spending (gross) [wikipedia.org]: 1st
Defense spending (% GDP) [wikipedia.org]: 2nd (tied with Russia)
"where we spend more than the next 26 countries combined, 25 of whom are allies."
False. Only the next 14. Of those, only 9 are allies.
Re:Why? (Score:5, Insightful)
If America stopped exporting food, so many countries could finally get domestic food supply on financially viable track and get self-reliant and people in those countries would get up economically out of poverty and hunger. Agriculture is the first industry of any country and we are denying them to opportunity to build it, basically keeping them in the stone age.
On top of that people in US starve, while US exports food. How can you put that together other than the US Food Aid being basically a money giveaway to the local agriculture industry. You need to read some more on this "achievement" you mention. It is the one policy that basically decimates central america and africa and keeps them from developing. It is almost as bad as the fact that since they are now fully reliant on the food aid, we dictate policiies like no condoms in a continent fighting the worst AIDS epidemic.
http://www.theguardian.com/global-development/2012/jul/18/us-multinationals-control-food-aid [theguardian.com]
Make sure to get your flag ready.
Re:Why? (Score:4, Interesting)
Why is Broadband more expensive?
Regulatory hurdles, low population density, and we are one of the largest countries by area on Earth.
Why do we pay more for healthcare?
Because America subscribes to a warped version of capitalism that places things in the private domain when most other governments wisely decided to manage these things. This includes, but is not limited to, basic utilities like water, electricity, telecommunications, internet, and even roadways. This policy benefits a tiny fraction of Americans -- perhaps 1 in every 250 Americans, while harming the rest, and it is not changed because our government has essentially been co-opted by wealthy private interests and corporations. As our popular media is controlled by the same, the illusion is presented of choice regarding political affiliation and candidates, when in fact no choice exists.
Why is our productivity so high compared to real wages?
Because we don't take vacation, or sick days, and have no labour party present to defend workers' rights, leading to the majority of states passing variations of Right to Work laws which effectively ban unions and allow employers to fire people for any reason, at any time. As a result, the rights of workers suffer, leading to institutionalized abuse and exploitation of workers. Should labor prices rise, it is easy to simply order Congress to flood the affected market with immigrants and crash the labor price.
Why does our government spy on us and disregard our civil liberties?
All governments do that. Ours just got caught. As far as why they do it, the reasons are too numerous to list here, but effectively it comes down to national security and preventing any widespread political insurrection amongst a highly exploited worker caste.
Why are we below the average in ability according to OECD?
Because we invest very little in public education, and the price of post-secondary education is inflating at double digit percentages every year, effectively eliminating access to higher education for many, if not the majority, of the population.
Why is the gap between the richest and the poorest on par with that of African countries?
This isn't entirely accurate. Japan has the lowest wealth inequity of any country on Earth, and the highest is Bolivia. The United States, while scoring nearly the same as Uguanda, also wasn't that far off from the United Kingdom. Source [wikipedia.org] The problem is not a wealth "gap" per-se but rather that when you plot wealth distribution as a curve, the United States has an uncharacteristically high concentration of wealth amongst the top 1% -- far higher than any other country on Earth.
There are many reasons for this, but essentially it comes down to a lack of inheritance tax and how our economy has been structured; We are much more an investment and service-based economy than most, and both of these, but investment in particular, leads to rapid wealth disparity being created. Deregulation of the stock market, banks, etc., also have contributed significantly to this problem -- we are, as it were, robbing Peter to pay Paul. See also: Too big to fail. While the impact of any one of these legislative initiatives isn't enough to change things, collectively they are excerting a continuous pressure on the economy and over the past thirty years the problem has worsened. However, the retirement of the boomers has acted like a catalyst, rapidly accelerating this trend.
And finally, why the fuck do people keep telling me this is the greatest country on Earth?
Because we live here. Duh. Nobody's national anthem starts with "We're Number Two!"
Re:Telco oligopoly (Score:5, Insightful)
How come the invisible hand of the market doesn't spank the telcos for their impudence?
Three words: Right Of Way.
Most cities/towns don't want to have their streets clogged up with wiring, so they limit what they lease out for rights to put in wire/cable/fiber, or worse, auction it off. Thus the number of competitors is pretty limited. This in turn creates a nasty little duopoly/triopoly in most areas, with one provider on cable (Comcast/Time-Warner/Charter), one on DSL (CenturyLink/Frontier), and maybe one for fiber if your locale is lucky enough to have it. Some areas also have wireless broadband as well, but nowadays that's as rare as fiber.
Either way, the result is a "stable" market of regular price hikes where the consumer has no incentive to switch... I've only seen one exception, when Charter moved into the rural Oregon coastal area where I lived - I saw my broadband cost go down from CenturyStink's $70/mo for 3mb/sec, to Charter's $30/mo for 30mb/sec (which I suspect will remain that way until Charter takes over enough of the region.)
Given the lower population density overall for the US (but not average, mind), the initial cost for competition coupled with reluctance from town/city/county officials to grant right-of-way (or worse, watching them action off or sell right-of-way for astoundingly high prices), means you the consumer are, well, screwed.
Throw into the mix is the intensive and money-rich lobbying efforts by existing telcos to prohibit any worthwhile competition or muni-owned infrastructure, and you have a shit situation overall, no?.
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Many municipalities are too spread out for economic home-runs even for fiber.
My personal preference, having lived in 4 different areas, is for telecommunications to be handled by a local cooperative, otherwise known as a 'customer owned business'.
I've received utilities from commercial companies, government and employee owned, as well as cooperatives. The Coops have always had the best customer service, price vs performance, etc...
Yes, this is very true.
In the US, the "last mile" tends to be "the last 14 miles" People forget that the average country is a fraction of the size of the US, heck, some states are bigger than the majority of other countries.
Basically, the US would bump up against the edges of ALL OF EUROPE if laid over the top.
The comparisons, from the get go, are just plain stupid if they neglect these facts.
Locally, there has been huge inroads in fiber penetration into all sorts of places that were data deserts i
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Basically, the US would bump up against the edges of ALL OF EUROPE if laid over the top.
This excuse might make more sense if only rural connectivity was slow and expensive. But that's not the case: urban connectivity is just as expensive, and just as slow, even for areas with extremely high population densities.
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Also: Govenment officials are so clueless they think it's a "competitive market" when there are TWO providers.
This has been built into communication regulations (and the thinking of regulators) at least since the original analog cellphone spectrum allocations - where they broke the available spectrum in half and gave half to the incumbent telco in the area and half to ONE "competitor".
This is the theory they used when the supreme court and FCC decided that the market was "competitive" when there was a telc
Re:Telco oligopoly (Score:5, Insightful)
Because the state interferes by granting monopolies over land rights for cabling and radio spectrum.
Nash Equilibrium (Score:5, Informative)
http://en.wikipedia.org/wiki/Nash_equilibrium
there is no reason an ogilopoly has to achieve the maximization of global utility
Probably Obama. Or the Tea Party. (Score:5, Insightful)
America is the home of capitalism, which means competition, which drives down prices and raises standards. The rest of the world is a socialist hellhole.
It's similar to what the North Koreans believe, with a touch of stockholm syndrome.
Re:Probably Obama. Or the Tea Party. (Score:5, Insightful)
Precisely this. The illusion of "choice" and "capitalism" is strong in the USA.
Then you get down to the nitty gritty.
In the town I live in, precious few grocery stores aren't the HEB brand. There is no real competition for them and they gouge.
In the neighborhood I life in, I can't get FiOS and the AT&T DSL options are a joke (they won't bother putting in capacity). So if you want anything but *shudder* dialup, your options are Warner, Warner, or... Warner. Zero competition, price gouging accordingly.
The communications market is so "deregulated" that monopolism takes over, with deliberate barriers to entry placed by noncompete agreements and dirty tactics. And yet so many people think anarcho-libertarian, "laissez faire" deregulation will somehow make their lives better in every aspect.
Re:Probably Obama. Or the Tea Party. (Score:5, Insightful)
That's not true at all. Try opening up a new cable company in your local town, or opening up a new power plant and running new wires to all the houses. Oh, that's right, you can't, because the government has decided that it would be inefficient to have more than one set of power lines, or water lines, or cable lines, or telephone lines, etc, going into a single home. So they allow one provider to service the whole town and be a government sanctioned monopoly. That's hardly "deregulation"... in fact, it's the epitome of the government regulating and controlling everything.
Re:Probably Obama. Or the Tea Party. (Score:5, Insightful)
Its more a matter of practicality than regulation.
Nobody would stand for yet another cable company trenching through every neighborhood laying new wire or fiber. Even if they wanted to, they couldn't afford it. The only way this gets done is when the neighborhood is built, and there is nothing to disrupt, and not sidewalks or driveways are laid yet. You can trench, pipe, and pedestal a hundred home subdivision in an afternoon and leave it to the home builder to cable each house to the pedestal. Comcast or Verizon will jump at the chance to do that because it means a lot of customers are locked in.
When you build a subdivision, you typically deed the streets, waterlines, sewers, to the city/county at the end of construction.
Its long past time to stop subcontracting the bandwidth job to the Telco/Cable companies and make the subdivision contractor put that in
and deed that to the city as well. Yes it raises home prices.
You don't know what you are talking about. (Score:3)
That's ridiculous. I used to install pipelines and wells beneath roads in southern California. That's a much slower and messier process than laying underground cables (I know because we did that too). Believe me, the residents did stand for it. To them it's just more road work. It would be easy for a company to lay new subterranean cable, and it would be even easier to place it above ground.
Re:You don't know what you are talking about. (Score:4, Interesting)
I've done plenty of work in neighborhoods. The work is easier, because there is less traffic. No, you don't have to rip everything up, initially you'd take a big saw, saw out the pavement, run a trencher down it, put in the cable with boxes for each house, bury it and pave it over. It'd take maybe a day per block with at most dozen people, so maybe $5,000 for a block of a two dozen houses (both sides of the street). That's just $200 per house initially. Then you'd connect people when they sign up, because people aren't gong to let you bury a cable in their yard for a service they aren't getting. That would probably be a half days work for a team of 4, so about $800. So if you were doing a neighborhood of 1000 houses, you'd need $200,000 initially which you'd probably issue bonds for, you could easily get those at 10% annual interest because it's for physical infrastructure. If 125 houses signed up you'd need another $100,000 to wire them up and you'd probably take out bank loans to cover that cost, which you could get for much less than 5%. Your annual costs for the interest would be less than $20,000 for initial capital, and less than $5,000 for the connections. The total cost on interest would be just $17 per month per connected house in this scenario. Assuming you were installing premium fiber, you could charge $50-$100 per month, so the cost of installing the fiber would be relatively minimal.
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Telephone is a many-to-many service, using circuit switching to dramatically reduce the number of necessary wires. Why couldn't power lines, water lines, cable lines, and so on do the same using valves, relays, etc.?
What ?
Are you daft? You're streaming music from the web and suddenly it goes silent because your neighbor checked his mail?
How to you propose to have water at every tap without a pipe running to the faucet? Bang on the pipe till some
operator dressed like Lilly Tomlin working in your basement pulls a hose out of one pipe and plugs it into another?
Re:Probably Obama. Or the Tea Party. (Score:5, Insightful)
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Alternatives?
The reality is it's simply not practical to allow any random person to dig up the streets or put up new telephone poles willy-nilly to run new lines, especially considering the extreme risk both to existing lines (corporate property) and personal residences.
If my neighbor signs up with a shotty power, water, gas, or even Internet company...my home is at higher risk of fire or flooding.
It's not (simply) about inefficiencies. It's about safety, reliability, and accountability.
The fact is there a
Re:Probably Obama. Or the Tea Party. (Score:5, Informative)
In the UK, there is one set of electricity wires in the street, one set of gas pipes, and one set (or sometimes two sets) of telephone cables.
The owner of the electricity wires, the gas pipes, and except in Hull, one of the sets of telephone cables, is required to make them available to other suppliers at a regulated price. That means I can choose from many different people to supply my gas, electricity and telephone.
modernize the telco deregulation (Score:3)
In the US telco companies are required to lease their plant at wholesale rates to competitive exchange carriers. This deregulation is what gave us unlimited long distance and voip. In most areas of the country DSL that can be leased on a wholesale basis is quite slow based in technology issues. CLEC's are mostly stuck buying bare wires from the customer premise to the local telco exchange, putting the loop distance in the ADSL range. They have kept CLEC's out of their VDSL and fiber products due to how the
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. in fact, it's the epitome of the government regulating and controlling everything.
That's not what I call regulation. regulation serves to increase competition and protect the weakest actor on the market (in this case: the consumer, by far). The thing you think that is regulation, is in fact a tool of plutocracy.
Re:Probably Obama. Or the Tea Party. (Score:5, Informative)
"you can't, because the government has decided that it would be inefficient to have more than one set of power lines, or water lines, or cable lines, or telephone lines, etc, going into a single home."
This all actually fits together. The glue that makes it all stick (or rather, fall apart) is regulation under FCC Title II. At the risk of oversimplifying, it went something like this:
In the early telephone days, the U.S. saw that multiple competing, and usually incompatible, telephone systems wasn't working well. It decided to allow one highly regulated monopoly to build our countrywide telephone infrastucture. In exchange for allowing it to operate unchallenged, it had to live with certain regulations, as a common carrier under FCC Title II.
There are certain strict regulations that apply to Title II common carriers. Among the rules are, in no particular order: (1) the carriers cannot supply content, they can only carry content (telephone conversations, internet packets) created by others. (2) A common carrier cannot intercept communications, or allow communications to be intentionally intercepted, without a warrant. There are other rules, too, but those are the two important ones for the moment.
As a result of having a single, unified infrastructure, at the time the U.S. phone system was the envy of the world. This telephone monopoly was eventually broken up (the reasons are beyond the scope of this summary), but telcos still have to live by common carrier rules.
Then along came cable TV. Back when it started to become apparent that cable could also be a good medium for internet communication, the cable companies (which were already fat from cable TV profits) lobbied Congress to specifically pass a law saying Title II (common carrier) regulation would not apply to ISPs.
The result is what we see today: ISPs can legally intercept your communications in various ways, cable companies can supply content AS WELL AS carry communications (the possible negative consequences of this should be obvious), and they have had huge mergers and developed monopolies because they are not subject to the same sane regulation as the telcos were (are).
The point being this: in countries where the common communications backbones are required to allow sharing by competitors, internet service is faster and cheaper. That is true competition. What the cable companies in the U.S. are calling "competition" really isn't.
Free-market capitalism is not always the best answer, when it comes to common public services, utilities, etc. And it is becoming increasingly obvious that it hasn't worked for cable in the U.S. [But note: lobbying Congress is not "free market capitalism", either... so it's kind of a moot point in this particular instance.]
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Re:Probably Obama. Or the Tea Party. (Score:5, Interesting)
And as of typing this, three ignorant fools modded you insightful.
Do you know what happens in reality, behind those pretty words and talking points that are carefully fed to you via mass media? When your megatelco sees competition it:
1. Blocks peering at local exchanges which it mostly controls, or puts in prices so high that fledgling business goes under.
2. Lowers its user prices for a short period, dumping the price and bankrupting the competitor. Then pushing prices to even higher level to gain the money lost back.
3. Buys new competitor out outright.
4. Uses local bought and paid for legislature to block the competitor.
5. Reminds its contacts in the local media to talk about 4. as if it's the fault of the government, and that more deregulation is needed to control 1-4. And so useful idiot like yourself types up that wonderful ideological drivel that is being carefully fed to him and he gets to parrot, and three other ignorant fools mod him insightful.
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"inefficient"
actual, its because it isn't practical and it create a heavy burden on the citizen.
So it's a good way to gt infrastructure they requires long distances built, but doesn't many everyone gets the street torn apart of each competitor.
You should study the initial roll outs and expansion of electricity where a lot of people where running lines. It's pretty horrible.
The regulation exists becasue of a reason. You should look at why any regulation exists.
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Except that monopolies are almost always created by regulation.
In the town I live in, precious few grocery stores aren't the HEB brand. There is no real competition for them and they gouge.
Why is there no competition for them? Is there something stopping another chain from opening a store and charging slightly less and taking all their customer?
In the neighborhood I life in, I can't get FiOS and the AT&T DSL options are a joke (they won't bother putting in capacity). So if you w
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3) If the current provider is really "gouging" the customers, it should be no problem for the newcomer to offer a better deal and still be profitable
Maybe more of a problem than you think. If they've been gouging, that means they're rolling in money compared to you. When you show up with a new low price, they can easily undercut you (even to the point of taking losses for a few years) and your selling point dries up overnight.
Re:Probably Obama. Or the Tea Party. (Score:5, Interesting)
Why is there no competition for them? Is there something stopping another chain from opening a store and charging slightly less and taking all their customer?
Yes, the cost of setting up a new store. That's a significant cost, and if you did do that, they'd drop their prices. I've seen where stores have waited until a competitor bought land near them, then they dropped their prices significantly. The land was sold by the competitor because it was no longer profitable. Then the prices went back up. The monopoly bought the land, making money from their competitor, then developed into something that could never compete with them (offices, rather than retail), then sold it to a property management company, ensuring nobody could get an equivelent piece of land at a reasonable price for miles around them
There are many ways for monopolies to abuse the marketplace without directly manipulating it.
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Monopoly is natural outcome of unregulated capitalism. Take a look at what was happening in US in early 20th century.
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Re:Probably Obama. Or the Tea Party. (Score:4, Informative)
Well, it's complicated.
Take the example of France. Broadband internet and digital TV go largely through DSL. And yes, it's pretty damn cheap. When I was there, three years ago, I was paying 30 Euros / month for broadband internet + unlimited phone calls + television with a bazillion channels (did you know that there are two channels broadcasting in frigging Aramaic?)
Now one reason why France has cheap, abundant DSL is because of massive infrastructure built by former government monopolies. But at the beginning, even though they had this infrastructure, internet was still pretty damn expensive. The few telcos that were operating the networks obviously had a very gentle concept of competition.
Then this guy [wikipedia.org] came along, leased an existing network and offered much better service at much lower cost. Everybody had to align.
So it's not just about competition or government - it's both together. Also, there's competition and "competition". Competition only works if you have some outsider willing to move in and break the "gentlemen's agreements". Apparently T-mobile is kind of doing this in America with mobile phone contracts, but broadband internet is still firmly within the grip of the cable oligopoly.
Re:Probably Obama. Or the Tea Party. (Score:5, Insightful)
Horrendously wrong.
Capitalism is a game in which the goal is simply to make the most money (with the least effort). The "free market" (aka competition) is just one of many possible strategies to make the most money. Competing in the free market however, is without question the most expensive, the riskiest, and the least rewarding possible strategy available to most business...which is precisely why practically every business on earth bends over backwards to avoid the free market at all costs.
Going into "new markets", forming monopolies, getting regulations passed to raise the barriers to entry, avoiding "mature markets", etc are all entirely about avoiding the free market and thus avoiding competition.
This is the biggest mental issue free market advocates face: The ironic reality that if you want an actual free market...you must drag people into it kicking and screaming (most effectively through tight regulation...).
Re:Probably Obama. Or the Tea Party. (Score:4, Insightful)
America is the home of capitalism, which means competition, which drives down prices and raises standards.
Competition. Right. My choices for internet are 50 mbps Comcast (which has to be bundled with cable service I don't use) or 1.5 mbps DSL. Seems there's lots of competition here.
all those executives got to have their BIG bonuses (Score:2)
â John Steinbeck, The Grapes of Wrath
What the market will bear. (Score:2)
People will pay whatever is charged up to the point that the market will bear. It's not that far off from an unregulated utility at this point. Television content delivery has similarly pulled their prices up through the roof, because people will pay it.
I haven't paid for either service (at least intentionally) since 2009. Under the right circumstances I might be persuaded to get the broadband again, but not cable or satellite television.
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People will pay whatever is charged up to the point that the market will bear.
+Everything, informative.
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People will pay whatever is charged up to the point that the market will bear.
... at which point purchase will become compulsory via government mandate.
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People will pay whatever is charged up to the point that the market will bear. It's not that far off from an unregulated utility at this point. Television content delivery has similarly pulled their prices up through the roof, because people will pay it.
I haven't paid for either service (at least intentionally) since 2009. Under the right circumstances I might be persuaded to get the broadband again, but not cable or satellite television.
I pay for satellite service here for TV because there is no cable company locally. I live in a town of about 3000, 40 miles from anywhere. Likewise, only ONE internet provider here, and the lines are slow as hell and expensive. Why? Because there is no competition.
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Suppliers will lower their prices until the can no longer to afford to be in business, they will innovate to reduce costs. That of course relies on competition. That is why you need competition. Otherwise yes they will charge as much as they can. They will produce it inefficiently as well because there is no driver to reduce costs, in fact high costs can be used to justify a high price.
That is why when you hear a pricing scheme that goes along the lines well product A replaces B so lets about the same price
Deregulated = Monopolies? (Score:5, Insightful)
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Where I live, we have precisely 2 choices: AT&T, or Mediacon.
Every once in a while, I see ads for some local startup offering decent speeds at fair prices, but it doesn't seem like they last more than 2-3 months before getting swallowed up by one of the aforementioned Big Fish.
Re:Deregulated = Monopolies? (Score:5, Insightful)
Your local utility is only a monopoly as long as your local government makes them one
The problem in the USA is that pressure groups, whether industrial or commercial have no counterbalance. The wrong sort of regulation stunts growth and competition. However zero regulation turns a free market into survival of the fittest with that survivor killing off the rest. Neither situation is good and a regulator who is able to stop consolidation and monopolies would act in the interests of the consumers.
That's what happens in most countries and it's what keeps a competitive market operating. The USA has allowed its corporations to become too influential and too powerful.
Re:Deregulated = Monopolies? (Score:5, Insightful)
Horseshit.
In the real world there's always more large corporations willing to try to get the regulators to set up special deals for them.
In the real world, if you didn't have regulation, you would still be having babies die of being poisoned by melamine laced formula from China.
As long as there's an advantage to be had and profit to be made, there's always going to be things companies will do to maximize their profits which directly harms other people. If there's no regulation, there's no consequences.
The market as so often gets pitched to us is incapable of solving these problems.
Without regulation, Enron and other fraudulent things would happen all the time and your economy would be even more of a Ponzi scheme than it is now. Without regulation, your environment would be so polluted as to be unlivable. It really would be survival of the least scrupulous and with the most money, and everyone else would be fucked.
Maybe in your capitalist fantasy land all of these would be self correcting problems. The problem is it would take decades, kill loads of people, and destroy most of your society along the way. And it likely still wouldn't do half of what people claim it would.
Pure laissez faire capitalism is as much of a unicorn as the socialist workers paradise is. The problem nobody seems to like to acknowledge is pure capitalism will fuck you just as deeply as pure socialism -- only in entirely different ways.
Neither system can actually exist in the extreme forms people like to advocate. Taken to their extremes, they're both full of shit.
It is always cheaper... (Score:2, Insightful)
to buy a congressman than to build a better business. To all those you think America is a free market, go fuck you ignorant self then read up on Mussolini's definition of fascism.
No real choice (Score:4, Insightful)
Why is this? I would guess that it's probably due to monopolies taking advantage of regulations to make competition stay away. Also probably in part to people wanting to watch specific sports and shows, and only being able to get them though one of the major cable/satellite networks. Shows like that are going to be hard for a startup internet company to replicate. Things like piracy, netflix, and itunes alleviates some of these problems, but a lot of people still prefer to get their games live.
Hmmm .... (Score:5, Insightful)
So, the conclusion is de-regulation is bad for consumers, but good for businesses.
Gee, I'm shocked. De-regulation basically is carte blanche to screw over your customers and not be accountable to anybody.
The whole mentality of "it's good as long someone is making profit" will be the death of us.
The 'free market' is a lie, and it always has been. Consumers don't have perfect information, and corporations will lie cheat and steal to improve their bottom line.
That de-regulation would ever improve anything for consumers has always been a big lie.
Re:Hmmm .... (Score:4, Interesting)
Day 1: Deregulation is evil!!!
Day 2: Deregulation is wonderful!!
In this story, all deregulation is evil and capitalism is an illusion. In the Tesla story, deregulating car dealerships [slashdot.org] is great and everyone loves it. In states where people can choose their own power provider, deregulation is great. When we deregulated phone sales, everyone was happy. (For those who don't know: In the 1970s you had to buy phones from the phone company. they were all big, ugly, and expensive. No answering machines were allowed, etc.)
Can we just stop the blanket "all deregulation sucks" posts? Removing bad regulations is good. Updating old regulations to reflect modern technology is good. But not all regulations are bad. It just isn't black and white.
P.S. What deregulation of high-speed internet access were you even talking about? How can you say it was good or bad without even knowing what is being discussed?
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De-regulation basically is carte blanche to screw over your customers and not be accountable to anybody.
Not exactly true. If you deregulate an industry, you also make it easier for new businesses to popup and thrive which where not possible before. Assuming your regulations didn't create a single monolithic company that provides an essential service, when you remove regulations the capitalist forces will drive efficiency and competition will drive prices down.
So... What REALLY is the effect of deregulation? Better, more efficient delivery at reduced prices with more companies competing for your business.
T
Monopolies suit the surveillance state (Score:4, Interesting)
Once Upon a Time in America
Cheap communications has changed our society more than any other of our inventions and it has removed more tyrants from power than any weapon. Let’s take another step into the history books, back to May 1st, in 1844. Alfred Vail, working with Samuel Morse, was setting up the first telegraph line, and on that day sent the world’s first ever electronic message down the 24 miles of cable that were working, from Annapolis Junction to Washington D.C., to report the results of the Whig Party presidential nominations (Henry Clay won that nomination, and lost the subsequent election).
Just a decade later in 1855, the New York and Mississippi Valley Printing Telegraph Company and the New York & Western Union Telegraph Company merged to create Western Union. One assumes new-york-and-mississippi-valley-and-western-union-printing-telegraph-company.com was already taken by domain name squatters.
By 1900, Western Union operated a million miles of telegraph lines, and by 1945 it had an effective monopoly over the US market. As the New Yorker wrote [newyorker.com], monopolies make spying easier. It is an easy and obvious trade: the government allows, by inaction or by intervention, a powerful telecommunications company to become dominant in a market through mergers and acquisitions. In return that company provides the government with surveillance.
The New Yorker explains how Western Union used its monopoly to serve those in power:
It is quite visible how cost gravity drove communications down from an experiment for the wealthy to a mass market product so cheap even Western Union couldn’t make profits from it. By 1980 its telegraph business was dying, and the old Western Union business was finally closed in 2006 [wikipedia.org], after 151 years of operation. The name was, as we know, reused for a financial services company which today enjoys a government-sanctioned monopoly.
Curiously, Western Union’s long telegraph monopoly seems to have had only a small impact on the size of communications networks. If cost gravity was operating fully, at 29% a year, and telegraph costs were in free-fall, there would have been 37M miles of telegraph by 1900. Instead, assuming Western Union had half the market, there were 2M miles. That is a factor of 16 over 55 years, which is not much, and a part of that can be accounted for by quality improvements.
I’m also not sure what to do with the random figure of 113 million kilometers [integer-research.com] of fiber optic cable produced in 2010. A cable is a bundle of fibers, and the traffic rates are rather higher than Western Union’s old stock. Has cost gravity been working?
One smoking gun pointing to a century and half of cost gravity being hijacked by telecoms monopolies back through AT&T and Western Union is the cost of the modern equivalent of a telegraph, the text message.
Pay to use would solve everything (Score:4, Interesting)
Yes, yes - it's a "natural monopoly", we get it, you studied economics in college.
This whole thing could be fixed by changing the model from "pay to access" to "pay to use".
The US considers the infrastructure a fixed resource - fixed radio bandwidth allocated to certain players, fixed easements given to certain players, and so on. When you have a fixed resource, you have high access fees and discouraged use: multi-year contracts, high monthly bills, data caps, throttled access, poor/no connectivity with no guarantee, and so on.
In a "pay to use" model, the government would mandate a fixed maximum charge per gigabyte of usage. Companies with a fixed resource could increase profits only by encouraging more usage: deploy newer and faster technology, connecting more people, encouraging high data-transfer activities (netflix, et al.), and so on.
Such a change wouldn't even affect the existing players: take the total cost of internet access and divide by total internet usage to come up with a fee per-gigabyte that would give the same income next year as they get with the current system.
The difference being, now they have an incentive for service, instead of an incentive for rent-seeking.
Spying costs (Score:3)
Deregulated monopoly (Score:5, Interesting)
The big problem is that we deregulated the cable and phone companies, but we didn't remove their monopoly agreements and we didn't enforce any regulations barring them from entering into non-compete agreements. So you end up with a situation like where I live, where Cox Cable isn't subject to regulation regarding rates, services and quality, etc. but at the same time no competing cable company's allowed in (because Cox still has an agreement with the city making them the only cable company allowed to run cable on the public right-of-way), the city attorney routinely enforces that agreement (taking legal action when one of the two cable companies in the area tries to provide service in an area assigned to the other, even when that other company isn't actually providing service in the affected area), and there's an agreement between Cox and Time-Warner (the other company in the area) not to offer service where the other's already providing it. End result: all the downsides of a monopoly combined with all the downsides of completely-unregulated services. They can do whatever they want with rates, there's no legal basis for challenging them, and there's no competitor you can switch to. To fix the problem we have to remove this pseudo-deregulation: either they're fully deregulated and not allowed to bar competition from entering the area, or they've got a monopoly on service and are subject to regulation as a public utility.
USA is home of Mercantilism, not Capitalism (Score:2)
There's your tax-subsidized patent-owned-by-public answer.
Capitalism drives down costs.
Mercantalism, which Adam Smith, the father of Capitalism railed against, provides large players with greater rewards for inefficiencies propped up by people who claim to be Capitalists, but depend on the lack of competition to win them billions.
Only half true (Score:3)
It is worse in the US than in Korea. But Canada also has bad Internet [nationalpost.com]. South Africa has some slow speeds and usage caps [wikipedia.org]. Also Australia and other countries [arstechnica.com].
We're neither the slowest nor the most expensive.
No It's not. (Score:3)
US broadband is more expensive than a few countries.
Also the available speeds vary widely as well. The US has a decent speed overall. Given that a significant amount of content is available in the US. The real world speed in the US is significantly better than other locations around the world. See: http://www.netindex.com/ [netindex.com]
Lets also factor in region locking of content. The US generally does not suffer from the issue. Other regions around the world are simple blocked from content due to the region they are in. Again the US is at a significant advantage here.
There are a lot of other countries that are a hell of a lot more expensive than the US. Case in point a first world country Australia.
Overall the Internet experience in my humble opinion in the US is vastly superior to most other locations around the planet.
Now lets also factor in penetration of broadband and average household income. The US fairs very well indeed when you start to think about these factors. However the US is still behind some notables. Korea for some time still be the bench mark that other countries try to achieve on all fronts. Other countries are embarking on plans to significantly improve speed, bandwidth, and costs.
This article should have been about. If the US doesn't do anything to upgrade it's aging internet infrastructure it will soon be one the the most expensive and poorest performing broadband countries in the world.
Re:No It's not. (Score:5, Informative)
I should have included this article which puts things in better perspective.
http://royal.pingdom.com/2013/03/12/broadband-prices/ [pingdom.com]
Those prices are insane (Score:3)
Woohoo! (Score:2)
Another transatlantic pissing contest yay!
Not just internet (Score:2)
Since the 90s most of the deregulation that has occurred has not benefited the public interest or the consumer, but instead benefited the shareholder by decreasing competition through mergers and acquisitions. Even in the recent financial collapse, we found out that there were certain businesses that were too big to fail and had to be bailed out by the government. By definition, any business that is so big that it's failure would be catastrophic to the economy and needs bailed out by the government means t
Local loop length (Score:2)
I will remind folks that the US has much longer telephone local loop length than other countries.
Part of this is due to more rural and spread out suburbs, earlier deployment of telephone than other countries, but part of that may be also be due to CO consolidation during the firming up of ESS.
Re:Not really news... (Score:5, Insightful)
There is no oversight in clothing market and yet you can buy a shirt at Wallmart or Ross for $5 or shoes for $10. Why don't they charge $100 for a shirt and keep the difference? It is not government oversight that drives prices down but competition. Telcos are not a good case study of either free market or regulation as they are a special case in a lot of ways.
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Yes, the government does infrastructure really, really well.
Anything where the service can't be created by anyone.
Infrastructure is pretty much always cheaper for the consumer when the government does it becasue they aren't using it as a monopoly to boost profits. It's run a 0 +/-2% or so.
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In a truly deregulated market, the cost of entry for one cable company would be the same as for another. In a heavily regulated market that we actually have (at the local level) the first company had a very much lower cost of entry due to special deal with the local government.
Re:Not really news... (Score:5, Insightful)
In a truly deregulated market, cable companies would split the markets to maximise profits.
FTFY.
Natural Monopoly (Score:3)
No, In a truly unregulated market the barriers of entry would be higher for new entries into the cable market. It is one of the justifications used for regulating cable.
Look up the term “Natural Monopoly”. In any industry with high fixed costs and low marginal costs market structure will favor only one provider. If a challenger faces an incumbent, the incumbent will just drop prices until they drive out the challenger. They don’t need to pay for the high upfront capital costs – they
Natural monopoly is a myth (Score:4, Interesting)
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If they're already doing the expensive part, they might as well do the cheap part and run the fiber. That still leaves a lot of legacy area where there is no conduit currently.
Be it the fibers, just the conduit, or even just the right of way, there is a natural monopoly in there.
Meanwhile, it is notable that several broadband providers HAVE chosen to divide up territories rather than competing head to head.
It's a compromise (Score:3)
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Local government regulations are the biggest expense that new providers have to deal with when entering a given market. Why do you think Google is so picky about where they deploy fiber? They are cherry picking their first markets for those whose governments are going to provide the lowest barrier to entry. Kansas City not only had the lowest, but they were so interested in fiber that they even offered them perks for coming.
In fact, there's a city government whose politicians are currently in hot water beca
Re:That's overly simplistic - population density k (Score:4, Insightful)
The picture you paint of Europe is a little simplistic too. France has a few large cities, but the tenth-biggest one has less than half a million inhabitants. It has tens of thousands of villages with 1000 or less inhabitants. And you get a choice of cheap ADSL provider in most of those small villages.
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Switzerland, where I reside, is similar in many ways (though at a somewhat smaller scale): the Zurich metro area has about 1.1 million people. Geneva and Basel metro areas are each around 500,000 people. The Bern metro area is about 350,000 people and yet the small suburb where I live (pop ~30,000 people) has a relatively large amount of competition: Swisscom (20 Mbps max) and Sunrise (30 Mbps max) each have DSL offerings, UPC Cablecom offers fiber-to-the-node with a EuroDOCSIS 3.0 coax last mile (currently
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Is ANYTHING in NYC cheap? Just about everything runs at huge mark up in NYC for some reason or another. Internet access is no exception.
Outside of urban areas, the infrastructure costs for internet access is much higher, but INSIDE urban areas, the costs of labor, taxes, licenses, access fees all drive up the prices.
Re:Ease of Access (Score:4, Insightful)
When all of the internet is being filtered through five or six main providers, it is easier for the NSA to funnel all of the information into its data analysis machines. Can you image the headaches the NSA would have if all the little mom and pop companies (if they were still around to do internet), would not provide for a free backdoor to the operations...
Not really. All they have to do is put their taps on the backbone servers. Since everything is routed through them, they see everything.
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Bellevue probably made the same deal with comcast et al as did every other city. You put in the wires
and you can have a monopoly for X years.
I'm betting X years isn't up, but its so close to being up that Comcast sees no money in doing the last hundred feet for
new apartments or pulling more fiber.
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