The Open Technology Institute recently issued a report titled “The Cost of Connectivity”. It showed that the price of internet access is high in America — and probably going higher — which is especially troubling because our upload and download speeds lag much of the world.
Perhaps we could have come up with a more delicate way of saying this, but we’re angry, so we make no apologies for what we are about to say: American consumers are getting screwed when it comes to internet access.
Let us set the stage by quoting the Open Technology report:
“In December 2011, Verizon Wireless, Comcast, Time Warner Cable, Bright House Networks, and Cox Communications announced the sale of a large chunk of mobile broadband spectrum held by the cable companies. For Verizon, the deal will net them additional spectrum for their already sizeable stockpile, while the cable companies receive several billion dollars in cash. As part of the deal, the companies agreed on a series of joint re-sale, marketing, and technology development agreements. Beginning in January 2012, Comcast and Verizon Wireless debuted joint promotions in Portland and Seattle, offering customers who sign a two-year contract for both wireless and cable service a prepaid Visa card of up to $300. In addition, Comcast will promote Verizon Wireless service through its call centers and retail stores.”
In plain English? The companies and their shareholders win, but consumers lose.
This isn’t just our opinion. Senator Herb Kohl (D-WI) said, “Many now wonder if these agreements that we are examining… amount to a truce between one of the two largest phone companies and over 70 percent of the cable TV industry.”
If the deal is approved by the powers that be in Washington, DC, it will undoubtedly lead to higher prices for U.S. consumers because more subscribers will be held hostage by the near monopoly cable holds in high-speed residential broadband.
Monopoly? We can already hear readers saying, “What monopoly?” But that’s only because they are not aware that more than 82% of residential high speed broadband subscriptions are delivered via cable.
Shocked? We thought you would be.
Here’s something else you’re probably unaware of. The cable monopoly is growing even stronger. In the future, because telephone providers have, for the most part, stopped upgrading their networks.
Here’s what we mean: AT&T stopped building out U-Verse, it’s fiber-to-the-neighborhood technology nearly two years ago. And FiOS, Verizon’s fiber-to-the-home service, stopped expanding in 2010 when it had only reached a small percentage of American consumers.
This leaves consumers scrambling for high speed internet access at affordable prices. The Open Technology report predicts that “… upgrades will likely continue to take the shape of higher speed offerings in areas where infrastructure already exists, as Verizon announced plans for a new, higher tier of broadband services in June 2012. Meanwhile, unless consumers live in areas where Verizon and AT&T have already deployed FiOS or U-verse, they will have exactly one choice for high-speed Internet service.”
Monopolies always harm consumers and this monopoly is no different. Despite studies showing that the United States lags much of the developed world in internet speeds, the monopoly situation gives cable companies very little incentive to invest in technologies that will increase speeds. It’s Economics 101. When there’s no competition, there’s no compelling economic reason for them to invest money they’d rather hoard.
Clearly, the United States needs a new approach to create robust broadband competition if it is to keep pace with its international peers. Instead of mandating some form of open access or promoting unbundling, the FCC continues its slavish devotion to serving the desires of the cable and telephone companies instead of serving the people of this great country.
The very name of our website (CheapInternet.com) makes very clear our position on the desperate need for a new approach by the FCC.
It is abundantly clear that policymakers need to take steps — immediate steps — to increase competition rather than decrease it as they have been doing. They need to make it easier for new competitors to enter the marketplace. And we’re talking not just about federal regulators, but state regulators as well.
With every day that passes, everyone — individuals, businesses, and governments — becomes more reliant on high-speed internet access for every aspect of life.
We urge the FCC commissioners to do the jobs they were appointed to do. And we urge FCC staff to do the jobs they were hired to do. Protect the American people. Invest in the American people. Help them get the same kind of high speed broadband access that the rest of the developed world already has.
This is the United States of America, damn it. We’re supposed to be an example to the world, not the dodgy crazy uncle they laugh at behind his back.
Source: http://newamerica.net/publications/policy/the_cost_of_connectivity (link now broken)
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