Newsroom Magazine Global Edition Today Is Friday, March 19, 2010

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America’s Telecommunications Conspiracy
Governance Section



Why Is The United States Ranked 7th in Internet Bandwidth?

United States Ranks 9th in Average Broadband Speed. Source: OCED

. . . We believe that the United States should establish a national goal of making at least 100 Mbps of bandwidth capacity available to all Americans at affordable rates by 2012, and that this capacity should be expanded to at least 1 Gbps by 2015. The best way to reach these goals is through a non-partisan blue-ribbon commission, as we outlined in our paper entitled “Eight Bold Steps to a National broadband Strategy” in January 2007.

Baller-Herbst Report

Washington

Japan Wins Internet Broadband Race

Some argue that the reason the United States ranks far behind most other nations in terms of end user bandwidth capacity is widespread failure among the nation’s mammoth telecommunications companies to deliver on promises they made over a decade ago. Since passage of the 1996 Telecommunications Act U.S. broadband subscribers have soared while average connection speeds have only slightly improved.

America’s six telecommunications giants own and control the major Internet backbone networks as well as most cable television systems in North America.  While the Japanese and Koreans invested heavily in digital infrastructure America’s profit-driven telecommunications providers invested in lobbying. While other nations plowed ahead, the United States has remained comparatively  stagnant in terms of broadband connectivity. The reason is political, not technical: The nation’s telecommunications giants favored the FCC to setting the lower limit of broadband service at 200  kb/s. Presto! Anything above dial-up was broadband in America.

Broadband service prices

Broadband Subscription Pricing -- Source: OCED

We remain alone in defining broadband at such levels. The result is that Swedes, Koreans, Japanese and the French enjoy faster Internet service both upstream and down.  For DSL users, the median download speed in the US is about 1.9 megabits per second, while  the median cable access speed is 4.9 megabits. These compare to 61 megabits in Japan, 45 megabits in South Korea, 18 megabits in Sweden, 17 megabits in France, and 7 megabits in Canada.

Even though U. S. Internet connectivity is among the slowest, the countries offering legitimate broadband service are also among the least costly. According to OCED, Japan provides 61 megabit connections at about half the price paid by U. S. subscribers.

Slow Is More Profitable In America

Broadband Subscribers by Country Q2 2007 -- Source: OCED

In the last twelve years, the average Japanese broadband service has increased to 61.0 mb/s while the U. S. average has advanced to only 4.8 mb/s. The reason is investment in infrastructure — for most of the equipment capable of delivering Japan’s high level Internet service is American made. Some wonder why the nation with the technology has not made good use of it in it’s domestic Internet system. The answer is money, power and an ongoing telecommunications conspiracy that offsets investment in infrastructure through massive lobbying — Pay To Play Telecommunications.

Pay To Play Telecommunications

America’s Second Class Internet

Currently, depending on which study one consults, the United States now ranks between 15th and 25th in broadband deployment (broadband lines divided by some measure of population), 14th in average advertised download speed; 9th in fiber connections as a percent of total subscribers; 22nd in average monthly price for broadband; 11th in price per unit of bandwidth (Megabits per second); 18th in price of the fastest available broadband services; and 17th in growth of broadband penetration.

In the Information Technology and Innovation Foundation (ITIF)’s new composite global ranking, which takes into account penetration, speed, and price, the United States ranks 15th.

Baller-Herbst Report

When America’s telecommunications oligopoly lobbied for passage of the Telecommunications Act of 1996 they promised to deliver broadband Internet service nationwide. After spending some $400 mln lobbying congress to be set free of regulation on ownership, services and pricing, broadcasters, telephone compnaies and cable systems were transformed into very productive money machines. Although interstate fiber-optic bandwidth was significantly improved, the more costly investment in what’s called the last-mile infrastructure was largely avoided by deftly calling ordinary DSL connections broadband.

Stimulus To Bottom Line

The Stimulus Act recently passed by congress includes some $7.2 bln to improve Internet bandwidth ( speed ) in the nation that created the Internet. Americans, who annually lose millions of man hours to slow Internet service, or suffer from intermittent video streams,  are handicapped by what has become second-rate Internet bandwidth. Now that the congress has chosen to include broadband Internet connectivity in the stimulus package, Americans who desperately want better Internet connectivity may yet be disappointed. The problem isn’t technological, but political. Pay to play telecommunications policy-making, in which monies are spent on lobbying congress in preference to investing in technological infrastructure, have already begun. Their purpose is to avoid an increase what qualifies as broadband.  US companies want no set Internet speeds in stimulus.

Unkept Promises

And Now Data Caps

Since [ last ] June, Time Warner Cable has forced Beaumont [ Texas ] customers to choose from one of four monthly caps: 5, 10, 20, or 40GB. Pricing plans range from $29.95 a month for a 5GB cap and 768Kbps download speeds to $54.90 for a 40GB cap at 15Mbps. And if you exceed your cap, you’re charged an extra $1 per gigabyte.

The Register

One segment of America’s oligopial telecommunications industry, common carriers and telephone industry, have used lobbying to circumvent their Internet bandwidth promises. While most other nations consider broadband Internet service to begin around 6.0 mb/s, the U.S. telecommunications industry convinced congress to set the floor at 200 kb/s. As an industry, U.S. telecommunications companies, excluding most cable systems, have failed to invest in broadband infrastructure — especially in last mile infrastructure that connects users to high-speed central office facilities.

The monies went elsewhere — to strengthen competitive positioning and/or to acquire competitors. Under the 1996 law local telephone compnaies ( CLECs ) were freed of competitive constraints and ownership limits. Absent limits, the number of major telecommunications carriers has decreased from 50 to 6. Two of the largest CLEC’s in 1966 (  Teleport Communications Group (TCG) and Metropolitan Fiber Systems ) have now been merged into AT&T and MCI/Worldcom respectively.

If congress fails to significantly increase the minimum broadband Internet connection speed, or outlaw data caps limits and metered billing, there seems little hope for American Internet users to enjoy all the benefits offered by today’s emerging broadband content providers.