In the past, OS News has discussed how U.S. broadband access lags many other countries in terms of cost, speed, and availability. Now, this detailed report from the New America Foundation tells why. It all comes down to a lack of competition among the carriers, which can be traced back to the days when cable companies were granted local monopolies. The report argues that “…data caps… are hardly a necessity. Rather, they are motivated by a desire to further increase revenues from existing subscribers and protect legacy services such as cable television from competing Internet services.” The report’s conclusion: don’t expect improvements without legislative action.
“It all comes down to a lack of competition among the carriers, which can be traced back to the days when cable companies were granted local monopolies.”
So using force to grant artificial monopolies to firms externalizes costs and leads to fewer, larger, less agile, less interested in customer demand firms?
Who would have thought?
It was indeed the government action in the US that caused the quasi monopoly. But the correct action of the government would indeed be legislative and to dismantle all the boons that those companies have had over the years and let the market forces decide who is the better provider. It worked in northern Europe where the state owned almost everything telecommunicative in the past. (TV, Telephone, Radio, and so on)
UK you have 2 options: Cable (a monopoly) or BT (a monopoly provider, but many re-sellers.) With Cable, depending on area – and this does vary, you get Fibre Optic broadband, speeds up to 50mb/s. Might be higher now, but that was the speed last time I looked (actually, might be 100 now?) With BT (and all of their re-sellers, some of which do sell at a lower rate), you get ADSL up to 8mbs (if you are very lucky and live fairly close to the local exchange) and in a few areas Fibre. The BT advertising would have you believe they are the best option, but to be honest, their service is not very cheap. Cable can be okay, so we have a package that gives 20mbs, the best TV package without buying premium channels and a phone line. We pay something like £65 (so, what, US$100?) for that. Remembering that bundles on demand TV (which no one else in the UK can currently rival, as it comes on its own dedicated fibre connection to the STB, not over the connection everyone else in the house is using.) It’s a fairly good deal, but I’m sure we pay too much. There’s no usage cap, though they do shape the data at peak times. Having said that, I download GB’s of data, connect to a work VPN all day long and stream Youtube and Netflix almost every day. The kids alone used over 16GB of data over Christmas streaming films and TV shows on Netflix.
Canada’s situation is pretty similar: Rogers for cable, Bell for DSL, and their various re-sellers (there’s also Shaw, Telus and Cogeco, but they only operate regionally and often in areas Bell/Rogers don’t bother with). There’s no real competition between them; I’ve even had an acquaintance who works at Rogers admit that they have monthly meetings together, discussing what each other has planned and basically doing the same. Every year I have to threaten to leave and barter with them just to keep my TV/Internet bill in the area of $100; without negotiated discounts I’d be paying upwards of $150. Sure, I could lock in for more than a year and maybe get even lower, but I don’t even like doing it at all. What’s fair in a contract where the other party has conditions that say, “we reserve the right to change things at any time to whatever we want, and if you don’t like it and want to leave, we’re free to penalize you for doing so.”?
And much like the UK, we don’t have many legal options when it comes to television alternatives like the U.S. does. Hulu isn’t available. Our selection on Netflix blows. iTunes is DRM-riddled and stuff is often long delayed arriving (Game of Thrones?). Over-the-air is a possibility, but it’s made difficult when Canadian broadcasters barely pump out a decent signal from their towers (the major stations are owned by Bell and Rogers. Coincidence?).
I’ve personally had terrible experiences with both companies, but at the moment I’d give a slight edge to Bell. The main one is that they’re offering fiber-to-the-home – an actual upgrade to their services. Rogers seems to be actively downgrading their level of service, while milking their existing customer base as much as possible. (caps & throttling + price increases). I was also REALLY not impressed when I found out that Rogers uses different caps for different regions – in Ontario, I think it’s 250GB, compared to a 75GB cap in Atlantic Canada (same monthly cost, though).
Cable (Virgin Media): 110Mbs (advertised as 100Mb)
BT Infinity: 76Mbs
Both of those are just downstream speeds (I *think* VM offer 10Mb upstream. BT offer 19Mbs).
Neither providers supply end-to-end fibre (well, not in the context of home broadband. At work we have a couple of GbE fibre links provided by BT).
BT Infinity is fibre to the cabinet (FTTC) – so the street and door are all copper. VM are -IIRC- fibre to the street, so from the street to the door is copper.
It’s also worth mentioning that BT have been rolling out ADSL2+ to a number of towns. Which sees speeds increased from theoretical max of 8Mb to 24Mb. These speeds theoretical maximums aren’t fully achievable though: line noise, other subscribers, etc. But you can still get fairly decent performance if you’re lucky.
Edited 2013-01-24 14:09 UTC
I *think* VM does have better up speeds, but they are not standard and the user ends up paying a lot more. They might only be for business use (though then you get in to the wonderful world of Cable and Wireless.)
I think it depends. Some areas VM are fibre to cabinet, copper to the door, but their cabling is (IMO) better, as the cables are designed for high capacity broadcast TV, rather than phone traffic (saying that, do BT Fibre installs come over the standard phone line up to the door, or do they cable like VM do?)
The problem with BT is that it’s all very random still. VM, you either get close to the best quoted speed or you don’t get anything because they aren’t in that area. Unless your local loop is saturated, the speeds are very consistent. With BT, you will hardly ever come close to the advertised speed, and ADSL up speeds are fairly dismal compared to either fibre offering.
The other thing: this new site being advertised in the UK, Broadbandchoices.co.uk, show you something important about BT infinity: the speed may be quoted the same, the price may be similar or cheaper, but the data is capped. VM isn’t, and like I mentioned – you might well have your data shaped at peak, but I can still stream Netflix all day without hitting any buffering on my Wii or iPad/Nexus 7. BT Infinity is also still very niche, and we certainly don’t get it yet in my area.
Edited 2013-01-24 15:02 UTC
I’m not 100% sure to be honest. I think they used the existing line when I signed up, just replacing my master phone socket with an ethernet -RJ45- socket.
I’ve heard some people comment about the capping on BT, but I’ve actually found them to be highly forgiving. Though I will concede this is purely my own anecdotal evidence and my usage isn’t really typical (most of my heavy traffic is over night and nearly all of my traffic is encrypted either as HTTPS or tunnelled via SSH. Plus I don’t really do torrents (bar Linux CDs and creative commons content as I feel guilty stealing the bandwidth hehe)
Edited 2013-01-24 18:10 UTC
Yeah – honestly don’t know if it is really capped… but the 30mbs VM listed is not, where as the at the same level BT Infinity is listed as being capped. Given the monthly cost (removing all the gumph and free periods) is more or less the same, I’d go with VM given the choice. I know their ADSL was always capped (though I don’t know what they define as “capped”, it might just be traffic shaping or reduced speeds.)
The thing that really grinds my nads is the BT self congratulatory adverts. Crap like having the best “WIFI” speeds (because, you know, every other base station using N is obviously inferior to the BT Home Hub – in some fantasy world), and those awful students that look like they’re in their 30’s. Just about any provider that isn’t BT is preferable, even if they still use the BT exchanges and wiring. /rant-off
Actually I have BE. They have their own equipment in the exchange and I get my landline phone from The Post Office.
If you want to know what is in your area look up your exchange in http://www.samknows.com and it will show you all the unbunded options.
That said Fiber to the exchange is either from BT or Virgin Media. However if you are close enough to the exchange ADSL2+ with no bandwidth limit is pretty good from BE.
The underlying infrastructure is still owned by BT and BE still pay BT to use it. That’s the real issue. VM own the residential cable, BT own the residential copperwire telephone network and their own fibre – everyone else lease capacity from BT. Corporate tend to use C&W, but that is hella expensive.
We need a TL;DR version…
In every place I’ve ever lived (in the US) the broadband provider was an absolute monopoly. It’s their way or plain dialup (I guess satellite is always an option, uck). Further out west they’ve got verizon fios in addition to optimum online, and in that market they fight over customers. I wish we had verizon fios here. Competition works, but only to the extent that it exists.
Edit: It seems the article focuses more on mobile.
Edited 2013-01-24 15:57 UTC
FiOS isn’t really that competitive. It is great service, but you pay a lot for it and then some.
Casey99,
A brother in law has FIOS, and the difference is largely due to taxes. Someone explain this logic to me, verizon customers have to pay $20+ in taxes whereas optimum online customers don’t. I realise that technically verizon are classified as a telco (sales taxes) where as cable companies are not. But these days both of them offer THE EXACT SAME SERVICES (TV, Phone, Internet). It just seems like the law is playing favouritism to me.
If you say so. I had only cable internet from Comcast and after a few price hikes to a little over $70 PLUS 250GB data caps I moved to FIOS for internet only.
I pay just under $55 ($54.95 or 99 or something like that) now for FIOS each month for 15/5 which is FASTER than comcast and, oh.. no data caps.
Verizon are a bunch of shit heads too, but don’t tell me FIOS doesn’t have competitive prices, caps, speeds, etc. That’s a crock.
Edited 2013-01-24 18:18 UTC
xaoslaad,
“I pay just under $55 ($54.95 or 99 or something like that) now for FIOS each month for 15/5 which is FASTER than comcast and, oh.. no data caps.”
That’s a great price, was that a special deal? Maybe I’m just too accustomed to the higher prices/lower competition in the middle of long island. We’d love to have FIOS out here, our cable service has had problems and I’m so jealous of the bandwidth my brother in law is actually getting with FIOS.
Edited 2013-01-24 18:51 UTC
I had to sign a 2 year contract for the price – that was the downside of the whole thing. But as I’m not planning to move anytime soon it was no issue for me, as long as the service was reliable. So far it has been.
In most places you have to pay $60 for 3/1Mbps unbundled. That’s without the added taxes/fees. That is expensive. Even more if you are one of the unlucky people served by VDSL2 instead of fiber. 15/5 is $70 is most places, plus taxes/fees. If you bundle it goes way down. But then you pay for TV.
It may be uncapped, but Verizon has said before they don’t know if FiOS will stay that way. Comcast is currently not enforcing the cap in many places.
Edited 2013-01-24 19:57 UTC
Holy carp! 30Mb in the UK from Virgin Media (cable, fibre to the cabinet) is £22.50 a month, which is about US$36. And we tend to think *we* pay too much. You can actually get it cheaper if you take a phone line too (overall it costs more, but the broadband is reduced to around £15, plus about the same for the phone line.)
It’s not as simple as adding another company to the mix. I know several markets off the top of my head that have 4+ providers. The providers pretty much hold each other’s hands and keep the prices high and the speeds slow. There is no competition unless one of the providers is actually willing to compete.
In my area, I’ll admit I am lucky. I have service from a cooperative and they are the one and only company in the area. Yet they offer FTTH and speeds beyond that of any of the providers in the surrounding larger markets. They don’t offer it because of competition. They offer it because they can, because it better serves their customers.
When we cancelled Comcast phone and TV, they increased the internet charge to $70+ for the 20/4 service. Verizon internet only is also $70+ for an slower 15/5 FIOS service.
For very low income Comcast customers, there is the “Essentials” program for a humble 1mb/s for $10/month that includes modem (thanks to the NBC merger). Not much use for TV streaming or download junkies.
Edited 2013-01-24 17:45 UTC
transputer_guy,
“When we cancelled Comcast phone and TV, they increased the internet charge to $70+ for the 20/4 service. Verizon internet only is also $70+ for an slower 15/5 FIOS service.”
Your right, the unbundled prices are horrible:
http://www22.verizon.com/home/fios-fastest-internet/#plans
Internet alone at $70.
For another $10 they add TV service, and another $10 they add in phone. I’m sure it’s the work of the guys in marketing, who figure customers will just opt for the bundle given how “cheap” they are. And they’re probably right about that, even though it sucks for folks who just want one service.
Verizon FiOS typically runs faster than advertised however.
It really is a matter of finance — in particular that NOBODY in this economy is planning a long term outlay for new infrastructure given the high initial investment. Copper costs money, fiber costs money, and NOBODY is going to pony up the front money to run the new lines needed to handle it when there’s an existing infrastructure they can charge more for — and that to be frank isn’t even paid off yet in many places!
That’s why so much effort went into re-using the existing copper in the first place! Sure in a handful of crowded cities you might maybe see FiOS — but don’t count on seeing it in places like Northern New Hampshire, Western Maine or the Dakota’s where 33.6 dialup is a good day; you’d think the population density in such places was below 20 people per square mile or something.
What, you thought the places with the highest speed landlines corresponding to the highest population densities was a coincidence?
Well, it kind of is. I live on a gravel road with no neighbors within a half mile, yet I have FTTH.
Low-density areas hardly influence the statistics …they have not that many households in the first place.
BTW, most of Nordic countries have overall population density close to that 20 per square mile. They also tend to have nice internet access offers.
Edited 2013-01-31 23:50 UTC
For cable, it’s basically Road Runner or EarthLink. To make matters worse, it all goes through Time Warner Cable, so if you get pissed off at them, drop cable (which is what I ended up having to do several years ago due to their increasingly shitty service).
So then I had to find a DSL provider. The only fucking one is AT&T. So it’s Time Warner vs. AT&T. Cable vs. DSL. Shitty service vs. shitty service. I’m not exactly happy with AT&T either, but what is the alternative? Getting out of this country?
The state of Internet service providers here really is bad. They both suck equally in their own ways. Good thing I don’t give a damn about TV, and if I wanted to get a landline telephone service Sage seems to be a cheaper alternative to AT&T. Too bad I have to deal with them for Internet service though.
This article is about the US, but can anyone give some more insight into the pricing/competitiveness of ISPs in europe for comparison?
Most of us in the US are keenly aware of the lack of competition, but we don’t really have a good idea about how these things are elsewhere.
In England, I used to pay £37.50 for a land line and 100Mbps cable broadband package when I lived in a mid-sized town. I now live in a medium-sized village of ~2000 people, and I pay £36.75 for a slightly slower package (land line and 76Mbps fibre-optic broadband). Both were effectively uncapped in terms of data.
Prices in England are quite low, though, and I don’t know how representative they are of European prices – high-speed broadband in Norway is much costlier, for example.
Edited 2013-01-24 23:20 UTC
My situation in Belgium: DSL with 25184 kbps down, 2048 kbps up, no limit, but fair use policy for 40€ a month, that includes the telephone. Without telephone it would be 30€. That isn’t the cheapest solution now, but service is good (in my case).
There are multiple providers for DSL, but it also depends a little bit on where you live. It is also important you have a good quality fysical connection, so most ‘old’ houses have a much reduced speed.
Cable is more expensive and mostly faster, but for some people with a low quality telephone connection the only option if you want fast internet.
In France, the average ADSL (up to 20Mbps) + VoIP + TV package is at around €30, and if you live in the right place you can get an FTTB (up to 100Mbps) + VoIP + TV package from Numericable for around €35.
VoIP services typically include landline calls, and then you are charged an extra if you call a mobile phone or special number with them. On its side, TV service typically includes a few basic programs, and then you pay an extra if you want to watch the most popular channels.
The main trick, as hinted above already, is that everyone pays about the same price, but not everyone gets the same service. ADSL is particularly sensitive to phone line quality, so bitrates and latencies vary a lot from one home to another, even within the same district. And while fiber is much more reliable, it is only available in few areas at the moment. Probably because only one operator (Numericable) is seriously working on it, while the others spend more time fighting each other than actually building up their networks.
Still, even with that being considered, I still feel horribly afraid when I look at the price of telecom services in Canada. I probably won’t escape those since my girlfriend wants to move there for her studies, but boy… where do you American people find all the money that goes in your cellphone and internet bills ?
Edited 2013-01-28 17:55 UTC
Neolander,
“Still, even with that being considered, I still feel horribly afraid when I look at the price of telecom services in Canada. I probably won’t escape those since my girlfriend wants to move there for her studies, but boy… where do you American people find all the money that goes in your cellphone and internet bills ?”
Well everybody here is made of money. (Wait, credit cards you say?) Some day it’s all going to collapse, we’re a debtor nation through and through. The difference between us and other debtor nations in europe is that we can print our own money to pay the hefty national debt. We’d be doomed with an international currency like the EU.
Yea, mobile prices are high. Everyone complains about rogers in Canada, but you take what you can get. High prices can be somewhat mitigated by sharing plans (additional fees may apply of course). I’ve never had a data plan, even though there are times I miss it.
Some people may do away with a land line all together, but VOIP services have been extremely competitive in the US and with a sirpura^H^H^H linksys^H^H^H cisco POTS phone adapter you can substitute it for a landline (avoid grandstream devices). My service, which I can recommend in NY, sells Canadian service cheaply.
http://www.vitelity.com/pricing/
As for broadband internet, well you’ll probably end up with one choice where ever you go so that’ll be that.
The conclusion qualifies as BS… It contradicts the initial (and true by the way) assertion that cable companies were granted monopoly status by the… state. And then they want to fix it with more legislation issued by the same institution that created the problem in the first place? Yeah, that will fix it… Give them more power, like they don’t have too much already.
Competition works! No need for more legislation. Legislation usually is designed by the big guys (the companies supposedly under scrutiny). Allow free entry (no more monopolies) and then innovation will follow and prices will go down.
There are areas where you can already enter freely. Some places have 2 cable companies. It doesn’t bring down the prices.
Legislation is required to rescind the monopolies.
Places with the best offers of internet access (that would be mostly Nordic countries) traditionally have quite heavy state intervention, in most areas of life…
And those offers are great even despite very low population densities.
In our city, CLEAR has come in to compete with cable and AT&T DSL. CLEAR uses 4GL cellphone technology (basically your router is wireless to cell towers).
I’m thinking of trying it…. does anyone here use CLEAR?
Thanks for your feedback.
I had a friend who was selling them for a while so I got to check it out at my house without buying anything. Since the sales people work on commission, they’re super high pressure and annoying though…
They’re using Sprint’s network I think and lately claim there are no data caps…. but I’m still leery.
As far as performance goes, their upstream and downstream seemed close to advertised speeds, but 175ms+ ping times were the minimum, so hope you’re not gaming or anything.
This was a year or so ago though.
I think this just cries for intervention of the government.
The last time i had At&T pre paid they had a 50 (!!!) MB option for $5. What an insult.
As far as i concerned, the internet is a sinking ship in the US both land or wireless.
It is clear that they don’t want you to use any data at all. Or you have some extra cash. AT&T dataplan for entry level is $40 which gives you 1GB. Very generous.
I don’t use any consoles anymore because i always have to check how much data i used up. Netflix is now also on my list of “don’t watch to much”. I don’t even want to stream anything with Pandora.
It is a situation like in the drug realms. First they get you a fix till you hooked. Then the real face appears and you get squished like a lemon.
I am having 100Mbit/s down and 5Mbit/s up with Charter in the US for $95. Pretty pricey, but I like fast Internet access 🙂
It wasn’t always this way. Although I don’t miss dial-up Internet access, I am still nostalgic for the business environment that existed back in those days. I helped start a local dial-up ISP in the mid-90s. Back then there was healthy competition in the ISP market, and you had to provide good service to stay alive. We started the operation with a couple NT 3.x servers, a serial port multiplexer (my memory fails me on what exactly it was called), a bank of Supra 33.6 modems connected to POTs lines, all of which fed into an ISDN connection provided by another competing local ISP. We undercut the competition by offering unlimited access for about half the going rate. The service took off like crazy, going from a couple hundred users to a couple thousand within 6 months. Other than AT&T’s obstructive practices (it was very difficult to get AT&T to run new T1s in a timely manner), things were great. We quickly moved to a direct T1 feed from UUNet (later upgraded to load-balanced T1s from UUNet and SAVVIS, then just multiple T1s from SAVVIS when the once mighty UUNet turned to crap) and multiple T1 trunks that fed our USR TotalControl modem banks. We also added PRI trunks so we could offer ISDN, and installed a separate Rockwell-based K56flex concentrator for clients who owned modems that didn’t play nice with our USR gear. No other ISP in the area cared to invest in anything beyond the bare-minimum, and we quickly gained a great reputation in the area. I remember spending weeks tweaking various gear and servers so that we had much lower latencies, faster logon authentication, faster DNS lookups and gzipped/optimized local web content that loaded lightning-fast. I took pride in what we did, and rightly so. We maintained accounts with all competitors, just to make sure our service was top notch. We never oversold our bandwidth, and we paid attention to all the little things that our competition didn’t. The future looked bright.
Like most independents at the time, we took for granted that we would be able to move into the DSL market as it started to emerge. We all know what happened there – a lot of us independent ISPs dumped resources into DSL, only to find out that we were cut out of the game by AT&T (or whatever the legacy telco was in a given area).
I don’t know the answer to fixing the current system we have, but I do know first-hand that competition is the best thing we had going in the early days. It seems to me that the pipe providers and data providers should be decoupled. When you get into shared-mediums such as cable systems, I’m not sure if that is practical/possible though. Having been out of the industry for so long, my knowledge of the technical back-end stuff is not current whatsoever. But somehow, we need competition. Not just pretend competition from 2 or 3 providers, but real competition like we had in the early ISP days.
Just my 2 cents.