Slashdot Mirror
Why Is Broadband More Expensive In the US Than Elsewhere?
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."
The telco lobby writes the legislation.
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.
1. Where I live we do have choice between carriers, and it is not even a big city. 2. When I was in a densely populated area, Northern VA, we had choice too. Deregulation to allow competition causes monopolies? No, does not compute. Regulation creates barriers to entry that leans to monopolies or few providers, those who can get the government to protect their territory with police power. ATT was a national monopoly only until the feds allowed competition. Your local utility is only a monopoly as long as your local government makes them one, same with your cable provider, etc.
Time Bomber the Book coming soon.
Much like healthcare, most Americans don't have a real choice. I would pay less and get better healthcare and faster internet service if I could.
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.
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.
Negative moral value of force outweighs the positive value of good intentions.
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.
Lost at C:>. Found at C.
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, 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, 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 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.
My blog
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.
Virtually serving coffee
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.
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.
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.
Understanding the scope of the problem is the first step on the path to true panic.
I should have included this article which puts things in better perspective.
http://royal.pingdom.com/2013/03/12/broadband-prices/
In a truly deregulated market, cable companies would split the markets to maximise profits.
FTFY.
Yes, I'm left. You have a problem with that?
Natural monopoly is a myth. A city could bury conduit under its streets and charge a reasonable rate for pulling copper or fiber.
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.
Sometimes the invisible hand flips you a quite visible finger.
http://en.wikipedia.org/wiki/Nash_equilibrium
there is no reason an ogilopoly has to achieve the maximization of global utility
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.