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Tuesday, June 25, 2013

'Highway Robbery for High-Speed Internet'

Why is internet service so expensive?:

Highway Robbery for High-Speed Internet, by Paul Waldman, American Prospect: If you're one of those Northeastern elitists who reads The New York Times, you turned to the last page of the front section Friday and saw an op-ed from a Verizon executive making the case that "the United States has gained a global leadership position in the marketplace for broadband"... "Hey," you might have said. "Didn't I read an almost identical op-ed in the Times just five days ago?" Indeed you did, though that one came not from a telecom executive but from a researcher at a telecom-funded think-tank. And if you live in Philadelphia, your paper recently featured this piece from a top executive at Comcast, explaining how, yes, American broadband is the bee's knees.
That smells an awful lot like a concerted campaign to convince Americans not to demand better from their broadband providers. ... The telecoms are right about one thing: In the last few years, broadband speeds have improved. ... But we're paying for what we get—oh boy, are we ever paying. ...
How did it come to this? ... Susan Crawford, a Harvard professor and author of Captive Audience: The Telecom Industry and Monopoly Power In the New Gilded Age, puts the blame on the situation that the cable and telecom companies have so purposefully engineered. "As things stand," she has written, "the U.S. has the worst of both worlds: no competition and no regulation." ... In many places, the local cable monopoly is the only realistic choice you have for internet service...
With growing demand for video, online games, and other bandwidth-sucking uses, ISPs have no choice but to keep increasing the speed of their service. But they're in a position to make sure that we keep paying through the nose for it. In other countries, costs have been kept down in large part because they treat broadband like a utility. We have special rules for things like water and electricity, both because they are absolutely vital to modern existence and because of the impracticality of having too many competing providers in any one geographical area. But in exchange for their monopoly position, companies like Pepco or Con Edison are subject to tight regulation to make sure they don't gouge their customers. Today's cable companies, on the other hand, enjoy all the benefits of their monopolies (or in some places, duopolies), with little of the regulatory oversight. As long as that's true, broadband won't get any cheaper.

    Posted by on Tuesday, June 25, 2013 at 05:53 AM in Economics, Market Failure | Permalink  Comments (26)


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