Telecom Monopolies Stifle Internet Speeds in the US

March 10, 2014
By: Tracey E. Schelmetic

Since the United States essentially invented the Internet and American companies have led the Web services industry for decades, it’s easy to assume that the U.S. leads the nation when it comes to Internet speeds.

It would be a wrong assumption. In fact, when it comes to download speeds, the U.S. is behind Slovakia, Hungary, Uruguay and Estonia, with download speeds at about an average of 20.77 Mbps. (Compare this to average download speeds of 72.49 Mbps in Hong Kong.) On upload speeds, the statistics are even more dismal. An average U.S. upload speed of 6.31 Mbps puts us behind the African nation of Lesotho. These statistics come courtesy of Ookla’s global speed test service.

Our next question is likely to be…why? The answer is that most nations view Internet service as a national commodity, important to for everyone to be productive. In many parts of Asia and Europe, broadband Internet is low-cost (sometimes free) and very fast. In the U.S., it’s a way to squeeze money out of consumers while minimizing the need for investments.

“For a country that pays as much lip service to the free market as the U.S., it’s embarrassing how little competition there is in the ISP market,” writes Derek Mead of Motherboard. “It’s notoriously difficult to switch providers if you even have the option; many people would have to move to find a new provider.”

According to a recent Pew (News - Alert) study, only two-thirds of American adults have access to broadband, and they are charged far more than citizens of other nations for the privilege. It’s the poor who are left out of access to critical Web services and communications.

Susan Crawford, former special assistant to President Obama for science, technology and innovation, recently told Bill Moyers that the U.S. government has allowed a few powerful media conglomerates to put profit ahead of the public interest — rigging the rules, raising prices, and stifling competition.

“The rich are getting gouged, the poor are very often left out, and this means that we’re creating, yet again, two Americas, and deepening inequality through this communications inequality,” said Crawford, noting that giant and powerful telecom companies such as Comcast (News - Alert), Time Warner, Verizon, and AT&T have "divided up markets and put themselves in a position where they're subject to no competition,” said Crawford.

According to John Aziz, writing for The Week, the root of the problem can be traced to the 1996 Telecommunications Act, which was created to foster competition but has, in fact, done the opposite, allowing powerful telecom and cable 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 internet infrastructure, especially in next-generation fiber optic connections, that is ongoing in other countries.”

Should U.S. regulators allow the proposed merger between Comcast and Time Warner (News - Alert) Cable to go through, the situation is likely to get worse, and benefit only a very few people right at the top. 

Edited by Stefania Viscusi