More People Realize The Obvious: Telco Regulatory Capture Is Why We Have Crappy, Expensive Broadband

by Mike Masnick
Techdirt
Sep. 28, 2012

This is hardly a new thing, but it's nice to see it getting more attention. There's a new book, The Fine Print: How Big Companies Use 'Plain English' to Rob You Blind, by reporter David Cay Johnston that points out that regulatory capture and a lack of competition are why we have crappy, expensive internet (and mobile phone service). Among the points he raises, summarized over at Yahoo's Daily Ticker, are the following:

Americans pay four times as much as the French for an Internet triple-play package—phone, cable TV and Internet—at an average of $160 per month versus $38 per month.

The French get global free calling and worldwide live television. Their Internet is also 10 times faster at downloading information and 20 times faster uploading it.

America has gone from #1 in Internet speed (when we invented it) to 29th in the world and falling.

Bulgaria is among the countries with faster Internet service.

Americans pay 38 times as much as the Japanese for Internet data.

Of course, we've seen most of this before, and we've heard all the excuses, about how we're more spread out. But, in the long run, the facts remain: we're piss poor at the internet, and that's a pretty big problem when the internet has become so important to so many people's lives and jobs. Johnston highlights the key problems:

"The telecos got the rules changed while we weren't watching," says Johnston in the accompanying interview. Basically, the phone and cable companies lobbied Washington to change laws and regulations to favor their businesses over their customers.

And remember the so-called "Information Superhighway"?

Over the course of the last 20 years, nearly $500 billion has been collected by the telecom companies to (allegedly) bring America into the 21st century with an "Information Superhighway," says Johnston. That works out to $3,000 per household to have access to high-speed Internet.

But America did not get what it was promised and much of the country will never get fiber optic lines...

Indeed, this is nothing new. We've been writing about this for about a decade now. It's also why we're uncomfortable with net neutrality laws, even if we believe the concept of net neutrality is quite important. We've seen how the telcos are very, very, very good at working the system to their advantage.

The only real answer to our problems is to encourage more significant competition. The question that's reasonable to ask is where that competition should be. It's not at all clear that it needs to be at the infrastructure level -- since that can be redundant. However, as Australia is now doing, you could invest heavily in a core fiber network that brings tremendous high speed access everywhere... and then let service providers compete at the service level, rather than the infrastructure level. Yet there appears to be little appetite for such things in the US these days. Rather, you have the big telcos and cable companies creating their own little controlled markets, with crappy service and inflated prices... while the rest of the world does much, much better. We've been able to get away with it in the short term, but over time, the lack of good broadband in the US is going to hurt us economically.