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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.'"
Screwing over people for profit the the American way???
There was an interesting NY Times article on the cost per customer for Verizon to deploy their FiOS product. 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 and you also need to have money to operate the network, provide sales and technical support, etc http://www.nytimes.com/2008/08/19/technology/19fios.html Perhaps continued development in technologies like LTE will provide less expensive methods to get customers in the future
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.
There are two rules for success:
1. Never tell everything you know.
Communications is a basic service provided by government. It's defined in the US constitution as well, as the Postal service.
There's no reason for private internet providers to exist.
Get rid of them, implement a government-designed system, like the roads. It would be far cheaper than building the highway system.
The best part of government ISP is that it has to follow constitutional freedom-of-speech rights, whereas a private ISP can shut down any message critical of the company, since private organizations don't have to follow the constitution.
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. ;)
Those people from 40 years ago? They're the ones in charge now.
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.
"Tell me doctor, with all of your defenses, are there any provisions for an attack by killer bees?"
South Korea has a special circumstance: (According to a marketing guy at a router company where I worked) About 95% of their population lives in giant apartment buildings - large enough that they have telephone central offices in their basements.
You don't have to dig up the neighborhood to get the service to them. You can just put an edge router in the basement, run indoor cat5-or-better up the existing communication conduits (if it wasn't there already), and feed them 100M (maybe 1G by now) Ethernet, which gets from building to building and to the backbone via fibers in the bundle that was already there (in old construction) for the telephone service. This makes installation VERY cheap and wiring distances short enough that high speeds are easy.
With that speed available the biggest bandwidth user (according to this guy) was live 1-to-1 naked video "phone calls" between youngsters of opposite sexes still living with their parents. It let them do their courtship form their bedrooms without being in each other's presence unsupervised, or making physical contact (either of which would cause much consternation with their elders in their strongly regimented society). It's much like the way affordable automobiles and drive-in movies changed the courtship habits in the US, especially after WW II.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
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.
Fascism: An authoritarian and nationalistic right-wing system of government and social organization. See also: NAZI's
This Catbeller has been banging this drum for over eleven years, may I just say?
The "free market" ain't, and never can be, free, when you are dealing with players who understand the markets better than you do, and, furthermore, will cheat like motherfuckers. Conspiracy isn't necessary. The unwritten rules are always clear. Manufacture scarcity.
The new forestry corporations did it in the late 80s, buying up forests and rights, until in 1992 they tripled wood prices overnight, blaming Clinton and his evil environmental regulations, which didn't exist yet, being as he just was elected, for the cause. They cornered the market and fixed prices. The on;y congresscitter to object was fabulously ejected by them funding his shiny new opponent. No one else dared say a word.
Enron INfamously pretended that evil regulations made them incapable of restraining costs as they shut down power plants on mathematicians say-so to jack prices. California's entire budget mess for the last ten years can be traced back to that robbery. Free market is only free for those who control the market.
Enron not-so-famously was hell-bent on cornering the world's water supplies in drought areas - guess why... but don't worry, in their absence other bastards have bought up water rights, and soon "scarcity" will quintuple water prices across the world.
Kucinich in Cleveland was right, when he said the new private power companies would raise rates after they took over power grids. Cleveland to this day still has lower electrical bills than all the surrounding cities with free-market electric companies gouging them for decades.
And internet and radio internet... ah, so damned obviously they have refused to build infrastructure and have been "forced" to raise prices while the rest of the world simply licenses companies to build infrastructure at a decent price. Eleven YEARS ago, here, I posted a quick calculation: how much have people paid, in total, for DSL, cable, and modem charges combined - and how much had the telcos actually spent. It's eleven years later. We've pumped a good chunk of a trillion into their pockets, and they've spent a tiny fraction of that on actual buildout. They are taking us like a lost tourist.
Most of the rest of the world does it correctly. Scale has nothing to do with it. We don't have a limited amount of cash and a limited workforce; our companies can scale up any buildout. THEY DON'T WANT TO.
Copy whatever country did it right. Let local muni governments build out the systems for a fraction of the cost that these lying sacks of excrement quote. Let this end. There Ain't No Such Thing As A Free Market. Not when the "free" market companies can buy each other or merge, thus eliminating the market, or simply cooperate by obeying unwritten rules to jackup prices.
Well, I live in the sticks ( >70 miles outside of a major metro area), and in spite of a county population density of around 22 per sq. mile, I get 30mbps at $30/mo. (more often than not it drifts above 40, especially in winter when the tourists all stay home).
I could probably count on one hand, with all 5 fingers to spare, the number of "one percenters" who live out here.
It isn't fiber-to-the-doorstep, but given the low population and the alternatives in most other rural areas, it ain't half bad. *shrug*
Quo usque tandem abutere, Nimbus, patientia nostra?
We have passed law that allows business to exact full payment for undefined partial service. Clever business use of phrases like " service up to " followed by phrases like " for only $$$.$$/mo* " then " * other charges may apply " and the like have led to a business environment where business can provide whatever they feel like and customers have to take what they are lucky enough to get.
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/ 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.
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
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
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.
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.
Why is Snark Required?
I hear this all the time. Sweden is less population dense than the US is! Estonia is less population dense than the US is! Norway is much less population dense than the US is! Why does New York City and San Francisco (the most population dense areas in the United States) get slower and more expensive internet than rural areas in Germany? Hey, Mexico has slower and more expensive internet than the US, and it is more population dense! Maybe it's an inverse relationship after all!
If you plot population density vs internet quality in countries, I don't think you'll come up with any clear trend. And if you only look at urban environments, internet in the USA is still crappy, which is another reason not to bother considering population when wondering why US telcos charge lots of money for low quality service.
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.