WhyIsAmericanInternetSoSlow?

ThecountrythatliterallyinventedtheInternetisnowbehindEstoniaintermsofdownloadspeeds

Source:JohnAziz/TheWeek.com

AccordingtoarecentstudybyOoklaSpeedtest,theU.S.ranksashocking31stintheworldintermsofaveragedownloadspeeds.TheleadersintheworldareHongKongat72.49 MbpsandSingaporeon58.84Mbps.AndAmerica?Averagingspeedsof20.77Mbps,itfalls behindcountrieslikeEstonia,Hungary,Slovakia,andUruguay.

Itsuploadspeedsareevenworse.Globally,theU.S.ranks42ndwithanaverageupload speedof6.31Mbps,behindLesotho,Belarus,Slovenia,andothercountriesyouonlyhear mentionedonJeopardy.

SohowdidAmericafallbehind?HowdidthecountrythatliterallyinventedtheInternet

—andthehometoworld-leadingtechcompaniessuchasApple,Microsoft,Netflix,Facebook, Google,andCisco—fallbehindsomanyothersindownloadspeeds?

SusanCrawfordarguesthat"hugetelecommunicationcompanies"suchasComcast, TimeWarner,Verizon,andAT&Thave"dividedupmarketsandputthemselvesinaposition wherethey'resubjecttonocompetition."

How?The1996TelecommunicationsAct—whichwasmeanttofostercompetition— allowedcablecompaniesandtelecomscompaniestosimplydividemarketsandmergetheirway tomonopoly,allowingthemtochargecustomershigherandhigherpriceswithoutthekindof investmentininternetinfrastructure,especiallyinnext-generationfiberopticconnections,thatis ongoinginothercountries.Fiberopticconnectionsofferaparticularlycompellingexample.

Whileexpensivetobuild,theyofferfasterandsmootherconnectionsthantraditionalcopperwireconnections.ButVerizonstoppedbuildingoutfiberopticinfrastructurein2010—citinghigh costs—justasothercountriesweregettingtowork.

CrawfordtoldtheBBC:

Wederegulatedhigh-speedinternetaccess10yearsagoandsincethenwe'veseen enormousconsolidationandmonopolies…Lefttotheirowndevices,companies thatsupplyinternetaccesswillchargehighprices,becausetheyfaceneither competitionnoroversight.[BBC]

Ifamarketbecomesamonopoly,there'softennothingwhatevertoforcemonopoliststo investininfrastructureorimprovetheirservice.Ofcourse,inthefewplaceswhereanew competitorlikeGoogleFiberhasappeared,telecomscompanieshavebeenspookedandforced tocutpricesandimproveserviceinresponsetothenewcompetition.Butthatisn'thappening everywhere.It'sveryexpensiveforanewcompetitortocomeintoamarket,liketelecommunications,thathasveryhighbarrierstoentry.Layingcopperwireorfiberopticcableisexpensive,andiftheincumbentcompanieswon'tgrantnewcompetitorsaccesstotheir infrastructure,thenthefreemarketforcesofcompetitiondon'tworkandinfrastructurestagnates, evenasconsumerangeranddesireforcompetitionrisesduetopoorservice.

Othercountrieshavedonemoretoensurethatthemarketisopentocompetition.A2006 studycomparingtheAmericanandSouthKoreanbroadbandmarketsconcluded:

TheSouthKoreanmarketwasabletogrowrapidlyduetofiercecompetitioninthemarket,mostlyfacilitatedbytheKoreangovernment'sopenaccessruleandpolicychoicesmorefavorabletonewentrantsratherthantotheincumbents.Furthermore,nearmonopolycontrolof theresidentialcommunicationsinfrastructurebycableoperatorsandtelephonecompanies manifestsitselfasrelativelyhighpricingandlowerqualityintheU.S.Andthegapbetweenthe

U.S.andKoreahasonlygrownwidersincethen.

Theideaofaregulatedmarketbeingmoreconducivetocompetitionmaybealientofreemarketideologues,buttelecomsandinternetisarealworldexampleofderegulationleadingto monopolizationinsteadofcompetitioninlotsofmarkets.

TheObamaadministrationistryingtoundercutthewholemessbybuildingnew publicly-fundedwirelessnetworkstoofferfast4GinternetacrosstheU.S.Whetherthispublicinvestmentwillreallyproveeffectiveatbringinginternetcompetitiontomonopolizedmarkets

—andnudgingthehighlyprofitableprivatecompanieslikeTimeWarnerandComcastinto improvingtheirservices—remainstobeseen.

So,many—includingCrawfordandothers—arenowcallingforstrongerregulationof theexistingmarket.AtTheNewYorker,JohnCassidyarguedlastmonth:

Whatweneedisanewcompetitionpolicythatputstheinterestsofconsumers first,seekstoreplicatewhatothercountrieshavedone,andtreatswithextremeskepticismtheargumentsofmonopolyincumbentssuchasComcastandTimeWarnerCable.[TheNewYorker]

Buthe'sskepticalwe'llgetit,notingthat:"ThenewheadoftheFederalCommunications Commission,TomWheeler,isaformerlobbyistfortwosetsofvestedinterests:thecell-phoneoperatorsand,youguessedit,thecablecompanies."

PossibleResponseQuestions:

  • DoyouthinkthattheInternetindustryneedsmoreregulation?Why?Whynot?
  • DoeshavingafasterInternetmatter?Why?Whynot?
  • Pickandrespondtooneormorepassagesinthisarticle
  • MarkZuckerburg,CEOofFacebook,arguesthattheInternetshouldbefreeforall.Doyouagreeordisagreewithhim?Why?Whynot?

You can find his argument at: