Why Is Internet Still So Slow And Expensive In The U.S.?

Most people in the United States can’t get a decent Internet connection. That seems like a simple enough problem, but there is no easy solution. To make matters more confusing, most information floating around about broadband availability is confusing and contradictory. A lot needs to be sorted out before we get decent connections at an affordable price. 

Take the National Broadband Map. Many of us in the industry define true broadband as a symmetric connection with at least 100 megabits per second (Mbps).  If you believe the National Broadband map, 97% of North Carolina (where I live) has access to 100 Mbps.  Yet, almost no one that I know either in North Carolina or across the United States can download at at that speed. (Check my earlier article for a chart of speeds that my technology aware friends shared with me last fall.)

Meanwhile, the FCC’s minimum standard for broadband is set as 4 Mbps download and 1 Mbps upload, but no one I know considers that true broadband.

Beyond confusing information, I see six factors which impact the broadband speed and cost in the U.S.

Current Providers Monopolize The Market

If you have options other than DSL or cable-modem service from a couple of providers, you live in an area that is very fortunate among US  locations. The best number that I can find indicates that there are only 640,000 households in the U.S. that meet the gold standard of 100 Mbps. 

Canada, which has a much smaller population, has 540,000 homes with similar fiber connectivity. With over 117,000,000 households in the U.S., our 640,000 homes translates to about one half of one percent of homes having access to true “big broadband.” 

Three quarters of the U.S.  has access to only two “little broadband” providers, usually cable modem or DSL—not really a choice if you want “big broadband” speeds. Just as in the days when we had limited choice with telephone service, costs will be higher and service will be poorer when there is no competition.

There Is Little Incentive For Better Service

Current providers are reaping a fortune. Comcast made $6.8 billion in profits last year. Time Warner managed $3.6 billion in profits. Of course these companies don’t make all of that money from delivering connectivity, but a Comcast proposal to buy Time Warner and further consolidate the industry is under review by the FCC. One has to wonder how consumers will benefit if two of the worst offenders on customer service merge. It’s unlikely that we will get faster Internet connectivity out of the deal.

Current Technology Is Old And Expensive To Upgrade

Cable and telephone/DSL providers mostly use copper wire technology. A lot of it is cable that was put in the ground years ago; the fully amortized infrastructure is helping to fuel the huge profits above. Installing fiber can cost $3,000 or more per home. We’re already being gouged with premium rates, so why would we pay even more? Obviously the incumbents think it is highly unlikely we will, so there’s little incentive to install lots of new fiber. Don’t expect new upgrades to the old copper technology won’t rescue us any time soon.

There Is No National Strategy For True “Big Broadband”

The FCC’s most recent program is focused on helping established telecommunications carriers deliver broadband services. Yet if you look at all the recent successes in bringing fiber to communities, it is not established carriers but startups—innovative companies and municipalities—who are tired of waiting and are finding the help they need get fiber projects underway. 

The FCC has come down on the side of municipal broadband and challenged laws like the one in Tennessee that make it harder for cities to participate in broadband projects. On the other hand the House of Representatives wants to let states limit broadband competition from cities which have delivered most of our big broadband successes. Our government does not seem to have a coherent strategy of getting us to true big broadband.

Broadband Is Actually Infrastructure

Broadband is best compared to the Interstate Highway System. We did not design and pay for our highways so that only trucks from one company could use it. We designed it so that everyone can use it. 

If we had a program to construct fiber-based “digital road systems,” then any company that wanted to deliver services via the shared digital road system could do so—if they are willing to pay the appropriate fees. If we have more than one service provider offering services and competing for our business, we would get lower costs and better service.

On an open access fiber network such as The WiredRoad, business Internet connection costs drop up to 40% and consumer costs are reduced a significant but lesser amount. If it were easier to finance fiber construction with low-cost municipal or government bonds, we would have more fiber. However, incumbent providers have lobbied in many states like North Carolina to make that illegal.

People Do Not Understand True Big Broadband And Its Economic Benefits

True 100 Mbps symmetric broadband has the potential to fundamentally alter many of the assumptions underlying our economy. Currently one of the reasons we travel to work in office buildings clustered in large cities is that is where it is economically feasible to provide the connectivity that modern workers need. 

If workers could get 100 Mbps at their home, we could have smaller office buildings and people could work from home more often—reducing the use of fossil fuels and reducing wear and tear on streets and highways.

It would also become much more practical to start a business from home if you have affordable, high performance connectivity. If you can do high quality multi-point video conferencing from your home, you can accomplish more work with less travel. 

Fiber To The Home has the same kind of explosive growth potential as the Internet did when people were first getting connected. We have barely tapped the kind and type of services that will be developed for fiber-connected homes and businesses because there are currently so few of them. The potential for collaboration and new business growth is huge.

Fiber is actually one of the best investments a homeowner can make. While it may cost up to $3,000 to bring fiber to your home, studies have shown that the value of your home will rise from $5,000 to $10,000. You will not get that return from remodeling a kitchen or adding a new deck.

Currently, getting Fiber To The Home is almost a lottery. If you live in a Google city, a city like Danville, Va., Wilson, N.C., or even the WiredRoad region of rural southwest Virginia, you have access to fiber. If not, you are playing a waiting game similar to what happened during the last century when people outside the cities were waiting for electricity.

Unfortunately, the world moves much faster now, and as many will tell you the U.S. is falling farther behind other countries in getting access to true “big broadband.” It does not seem likely that regulatory relief will occur, so someone needs to step up to the plate. Our best hope lies with a combination of innovative companies, local governments and interested consumers working together.

Image courtesy of Flickr user Sean MacEntee

Facebook Comments