Why is American internet so slow? 31st in the World on Download Speed.. 42nd on upload speed
Why is American internet so slow?
The country that literally invented the internet is now
behind Estonia in terms of download speeds
By John Aziz | March 5, 2014
According to a recent study by Ookla Speedtest, the U.S.
ranks a shocking 31st in the world in terms of average download speeds. The
leaders in the world are Hong Kong at 72.49 Mbps and Singapore on 58.84 Mbps.
And America? Averaging speeds of 20.77 Mbps, it falls behind countries like
Estonia, Hungary, Slovakia, and Uruguay.
Its upload speeds are even worse. Globally, the U.S.
ranks 42nd with an average upload speed of 6.31 Mbps, behind Lesotho, Belarus,
Slovenia, and other countries you only hear mentioned on Jeopardy.
So how did America fall behind? How did the country that
literally invented the internet — and the home to world-leading tech companies
such as Apple, Microsoft, Netflix, Facebook, Google, and Cisco — fall behind so
many others in download speeds?
Susan Crawford argues that "huge telecommunication
companies" such as Comcast, Time Warner, Verizon, and AT&T have
"divided up markets and put themselves in a position where they're subject
to no competition."
How? The 1996 Telecommunications Act — which was meant to
foster competition — allowed cable companies and telecoms companies to simply
divide markets and merge their way to monopoly, allowing them to charge
customers higher and higher prices without the kind of investment in internet
infrastructure, especially in next-generation fiber optic connections, that is
ongoing in other countries. Fiber optic connections offer a particularly
compelling example. While expensive to build, they offer faster and smoother
connections than traditional copper wire connections. But Verizon stopped
building out fiber optic infrastructure in 2010 — citing high costs — just as
other countries were getting to work.
Crawford told the BBC:
We deregulated high-speed internet access 10 years ago
and since then we've seen enormous consolidation and monopolies… Left to their
own devices, companies that supply internet access will charge high prices,
because they face neither competition nor oversight. [BBC]
If a market becomes a monopoly, there's often nothing
whatever to force monopolists to invest in infrastructure or improve their
service. Of course, in the few places where a new competitor like Google Fiber
has appeared, telecoms companies have been spooked and forced to cut prices and
improve service in response to the new competition. But that isn't happening
everywhere. It's very expensive for a new competitor to come into a market,
like telecommunications, that has very high barriers to entry. Laying copper
wire or fiber optic cable is expensive, and if the incumbent companies won't
grant new competitors access to their infrastructure, then the free market
forces of competition don't work and infrastructure stagnates, even as consumer
anger and desire for competition rises due to poor service.
Other countries have done more to ensure that the market
is open to competition. A 2006 study comparing the American and South Korean
broadband markets concluded:
[T]he South Korean market was able to grow rapidly due to
fierce competition in the market, mostly facilitated by the Korean government's
open access rule and policy choices more favorable to new entrants rather than
to the incumbents. Furthermore, near monopoly control of the residential communications
infrastructure by cable operators and telephone companies manifests itself as
relatively high pricing and lower quality in the U.S. [Professor Richard Taylor
and Eun-A Park via Academic.edu]
And the gap between the U.S. and Korea has only grown
wider since then.
The idea of a regulated market being more conducive to
competition may be alien to free market ideologues, but telecoms and internet
is a real world example of deregulation leading to monopolization instead of
competition in lots of markets.
The Obama administration is trying to undercut the whole
mess by building new publicly-funded wireless networks to offer fast 4G
internet across the U.S. Whether this public investment will really prove
effective at bringing internet competition to monopolized markets — and nudging
the highly profitable private companies like Time Warner and Comcast into
improving their services — remains to be seen.
So, many — including Crawford and others — are now
calling for stronger regulation of the existing market. At The New Yorker, John
Cassidy argued last month:
What we need is a new competition policy that puts the
interests of consumers first, seeks to replicate what other countries have
done, and treats with extreme skepticism the arguments of monopoly incumbents
such as Comcast and Time Warner Cable. [The New Yorker]
But he's skeptical we'll get it, noting that: "The
new head of the Federal Communications Commission, Tom Wheeler, is a former
lobbyist for two sets of vested interests: the cell-phone operators and, you
guessed it, the cable companies."
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