By Kristofer Younger
In spite of our naturally assumed leadership in Internet speed and affordability, the United States is woefully behind in both.
Even the most expensive and fastest Internet speeds available to consumers in high-rent places like New York and Los Angeles are slower and more expensive than “high speed Internet” in cities like Hong Kong, Zurich and even Bucharest. And many smaller U.S. cities have speeds comparable to these distant places. And much of that speed and affordability can be attributed to the dynamics of market competition.
In the last 25 years, the Internet has become one of the fundamental aspects of everyday life: millions of smartphones, computers and tablets run lives, businesses and culture – all of it built on reliable network access. Some jokingly refer to the newest, lowest, and most basic human need in the pyramid of Maslow’s Hierarchy of Needs as “wireless” just below food, water and sleep.
And in the larger U.S. markets, monopolies and duopolies (fiber and cable), are the norm. As Tom Wheeler, the FCC chairman, was quoted: “Stop and let that sink in: Three-quarters of American homes have no competitive choice for the essential infrastructure for 21st-century economics and democracy.” Consumers in these markets get one choice, maybe two. When the FCC made the internet an information service (and kept it unregulated) in 2002, rather than regulate it like a phone company is, it was hoped that competition would flourish. In fact, the opposite has happened.
Here in Delaware, we generally have two high speed Internet choices, Comcast and Verizon FIOS, both at about $80-90 a month for what passes for high speed Internet (25 Mbps). In places like Kansas City and Lafayette, La., that same service is between $40-50 a month. We don’t have Google’s attention here in Delaware, but if we did, we might be able to get the 25Mbps service for the $41monthly rate that consumers pay in Kansas City.
One of the things that should become quite apparent in many places over the coming decades is that business investment and economic impact will follow Internet investment and expansion.
Money follows the larger pipes. The larger the pipes, the more business a place can handle and will handle. Singapore, whose government actively subsidizes broadband, is a place of heavy business growth in those market segments, which need cheap, fast Internet infrastructure.
But even without government subsidies, these new net neutrality rules should spur significant changes in the dynamics of the markets around broadband delivery. It is hoped by its proponents that net neutrality will enable all kinds of competitive offerings to flourish, from high-speed wide-area wireless, new cable and fiber offerings, and even new satellite providers.
But one of the certainties of the development of the internet and its market dynamics is that it changes so quickly and unpredictably, uncertainty is the only constant.
The FCC’s decision to take a large regulatory step of making the Internet more like a telephone or railroad network (or for that matter, a government network of highways, with regulated access for all) and less like the “wild west” where the big broadband provider get to make the rules and divide the spoils, is roundly criticized and widely applauded from all directions. Many say that the government should stay out of regulating large network providers. Many others embrace it, welcoming the rules enabling them to compete. The grass roots efforts of the tech community have been impactful and wide ranging too – highly supportive of banning content throttling and paid-for priority lanes.
I’ve been fond of saying over the last two decades that, “Someday this internet thing is going to be really big.” And I still believe that, for as impactful and pervasive as the internet is today, there are still many things it can and will do better for our economy and lives. Some day, the Internet will be really big. ♦