Why US Internet Speeds Suck

Following up on an earlier post about slow Internet speeds and high prices, there's a second reason the US finds itself in this position.

Lack of competition.

And what has fostered that lack of competition?


(Yes, I know that's exactly what I stated in my first post on the subject, but it's still true.)

Susan Crawford argues that "huge telecommunication companies" such as Comcast, Time Warner, Verizon, and AT&T have "divided up markets and put themselves in a position where they're subject to no competition."

How? The 1996 Telecommunications Act — which was meant to foster competition — allowed cable companies and telecoms companies to simply divide markets and merge their way to monopoly, allowing them to charge customers higher and higher prices without the kind of investment in [I]nternet infrastructure, especially in next-generation fiber optic connections, that is ongoing in other countries. Fiber optic connections offer a particularly compelling example. While expensive to build, they offer faster and smoother connections than traditional copper wire connections. But Verizon stopped building out fiber optic infrastructure in 2010 — citing high costs — just as other countries were getting to work.

If a market becomes a monopoly, there's often nothing whatever to force monopolists to invest in infrastructure or improve their service. Of course, in the few places where a new competitor like Google Fiber has appeared, telecoms companies have been spooked and forced to cut prices and improve service in response to the new competition.

As I have written elsewhere, I have seen what competition can do, both in pricing and available data speeds. I have also seen what happens when telcos or cable operators lock out competition: poor service at high prices, or worse, no service at all.

One place where such legal blockades have hurt has been Texas, where municipalities are barred by law from competing against incumbents, even if those incumbents either can't or won't provide the services their customers demand. Under such cases, the law is wrong and is anti-competitive. So why do such laws exist?

Why, politics, of course!