Why is the Internet slow and costly in the U.S.?
By Patrick Marshall
In Tokyo, Seoul, and Hong Kong, residents get bidirectional, gigabit Internet for less than U.S. $40 a month. On the other side of the globe, Parisians have a similar deal, though their upload speed is only 200 megabits per second (and much of the rest of France isnt so lucky).
Most of us in the U.S. would be happy with half that bandwidth — even as we accept paying twice as much as Internet subscribers in Asia and Europe. In Seattle, I pay Comcast nearly $67 per month for a 50Mbps (6.2 megabytes per second — MBps) connection.
So why is broadband such a bad deal in the U.S.? What gives?
The answer lies at the uneasy intersection of technology and politics, and the story begins in 1984, when Congress passed the Cable Communications Policy Act (more info). At the time, of course, personal computers had only recently been introduced and the public Internet didnt yet exist. (The precursor to the Internet — ARPANET [more info] — was carrying messages between university and government researchers and had been doing so since 1969.)
In those days of dial-up connections, legislators probably had no inkling that most consumer broadband Internet service would eventually travel over cable-television lines. Their primary concern was bringing some order to the burgeoning cable-TV markets, ensuring both competitive pricing (via deregulation) and standards in programming. Government had some say in the matter because the private-sector companies cables had to traverse public property. But there was a long debate over which government agencies would implement the act: federal, state, or local?
Congress cedes cable access to local control
The Cable Communications Policy Act of 1984 gave municipalities primary authority to grant and renew franchise licenses for local cable operations.
Generally, communities have given cable companies access to public property in exchange for agreements about such things as programming and access to residences and businesses in specified areas.
It also meant that cable service would vary widely from one community to another.
In some cases, cable companies were granted exclusive rights to a particular region. But even without exclusivity, the first company to reach an agreement with a community generally became the sole provider because of the high cost of laying new cables. Competitors faced the daunting task of quickly making their own agreement with a local government and then carving out enough subscribers to pay for the huge investment.
And then the cable companies got lucky. Use of the Internet exploded, and low-bandwidth messaging became high-bandwidth streaming entertainment. With customers demanding faster Internet connections, cable immediately had a clear advantage over dial-up, DSL, and other types of Internet connections — it offered both speed and broad coverage.
That gave cable companies a huge customer base they didnt have to acquire. Moreover, the cable companies werent providing content; they earned their money from the connection to the Internet, not from selling streaming entertainment to customers. That meant that the cable companies had little incentive to improve service.
Municipalities try to cash in on broadband
Frustrated by the lack of competition and the quality of service provided by cable companies, some communities opted to use their own infrastructure to provide Internet service.
In 1999, after a storm wiped out much of its communications infrastructure, the small town of Bristol, Virginia, built its own fiber-optic network for internal city government communications. In 2003, the town expanded that network to provide Internet service to the entire community. The nonprofit Optinet company formed by the city now offers broadband services to other communities in southern Virginia.
In the years since Bristol launched Optinet, more than 130 communities — mostly smaller towns not well served by cable companies — have followed suit, providing services over city-owned fiber or cable
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