U.S. is Losing the Race for Faster Internet and Big Telecom is to Blame

photo by Michael Dorausch via Flickr

The power and breadth of telecom companies may be affecting your Internet speed, new innovations, and especially your wallet–unfortunately, it may only be getting worse.  

When considering power of companies like Verizon, Comcast, or Time Warner, the word monopoly may come to mind–and such association might even be fair. To put it in perspective, in 2013, Comcast–the world’s biggest media company–brought in a monstrous $64 billion, $13 billion of which was operating income and another $7 billion in net profits alone according to The New Yorker.

There’s nothing wrong with a little profit–after all, profit is what successful companies are built for. But there’s just one problem–even though Comcast already owns a quarter of the U.S. broadband market, they aren’t content with their current lion’s share.

For consumers, monopoly isn’t just a game

Competition is the bedrock of a freewheeling and functional capitalist society. It’s this competition that fuels innovation, affordable commodities, and encourages efficient, and hopefully customer-friendly, business models. According to Internet activist and Harvard professor in intellectual property Susan Crawford, it’s this key component which telcom companies lack.

Not unlike railroad companies of the early 1900s, only a handful of telecom companies have accrued a disproportionate influence on the market through the consolidation of power, Crawford argues This type of monopolistic business practice, has disincentivized innovation and allowed such companies to operate with impunity in regard to competitive pricing and services.

How bad is it?

When turning a blind eye to the rest of the world, it’s fairly easy to feel complacent, however, in reality American broadband prices are higher than anywhere else in the developed world, and sadly offer sometimes less than half the speed as other competitive countries like South Korea and Sweden.

Crawford notes that for $25 per month customers in Seoul and Stockholm are getting gigabytes of service–which is nearly 100 times faster than the highest broadband service available in the U.S. for a fifth of the price.

According to a Harvard study (pdf) in 2010, the U.S. has fallen behind greatly in the realm of broadband speed and connectivity, ranking just 16 out of 31 countries in the developed world.

What’s in store?

The future of broadband services has arguably been more fluctuant than ever before. With a proposed merger between telecom providers Comcast and Time Warner (providers number one and two in the United States respectively) it appears the push towards market consolidation is stronger than ever before.

Though the merger hasn’t yet been finalized, the power of big telecom has taken a tremendous turn following a Supreme Court decision to nullify the FCC’s open internet order.

Reformers like Susan Crawford continue to push for government involvement–a model which the U.K. has used to some success–in hopes of turning the tide of monopolistic telecom companies. In her eyes, it’s not just a matter of lower prices or faster broadband, but falling behind societally as well.

“What’s at stake is whether the new jobs, new ideas, new services of the 21st century will come from the United States or they’ll come from Stockholm, Seoul, Beijing, where there are kids already playing in the virtual sandboxes of these very high capacity networks,” she tells NPR. “It’s a real risk to the country not to be the place where new ideas come from.”

Despite Crawfords cautioning, monopoly over telecommunications will likely only persist in upcoming years. Unless a push for major policy change affects legislation surrounding current business practices, we can expect to see more of the same.

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James Pero