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Progress Stalled: The American Internet

Guest article by Ty Root – you can find him at tyroot.com or @TyRoot. He’s also on some podcast no one listens to.

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When I first set out to write this piece, I had but one objective: to bitch and complain about the lack of freedom American cellular users have when it comes to choosing wireless carriers and how they use their cell phones. But to be honest, this is old news. I know comparing the USA to a country like France is similar to comparing apples to oranges, but the truth is most if not all U.S. cell carriers fool you into thinking your cell phone is unlocked. If you need more insight on the matter, I suggest you read Forbe’s article on the subject, written late last year. Up until recently (with Verizon’s version of the iPhone 5: see below) purchasing an iPhone in the United States required customers to do some heavy detective work, scanning each line of fine print carefully, just to see if their “unlocked,” unsubsidized iPhone 4S would work EVERYWHERE overseas, let alone stateside.

The short answer is: it’s complicated. Verizon apparently has special agreements with allied international carriers that can restrict a Verizon purchased iPhone from working on certain, unpartnered cell providers overseas. It’s extremely confusing, and at the same time infuriating. Basically, Verizon can maintain control over your iPhone 4S even if you aren’t using their network. AT&T isn’t much better. Even if you bought your AT&T iPhone 4S (or 5) at the full retail price of $800 bucks, it would still only work on AT&T’s network. This means there are essentially 4 types of iPhones in the U.S: Verizon’s, AT&T’s, Sprint’s & Apple’s. And the only way to ensure you get an unlocked iPhone is to purchase an unlocked, carrier-free version, directly from an Apple retail store (or online) when they are finally available weeks after launch.

Again, this mainly pertains to the iPhone 4S, but the truth is purchasing a cell phone in the United States and using it on any cell provider that you wish is incredibly difficult, if not impossible. Like many of you, I’d love to see this change, but it appears shitty American cell phone service isn’t going away anytime soon. That said, The Verge pointed out late last month that the new iPhone 5 on Verizon comes unlocked straight out of the box, allowing you to use Apple’s new Jesus Phone on ANY CDMA or GSM carrier that you wish (even AT&T, although from what I read, you will not be able to use AT&T’s LTE network).

Anyways, I digress. I also want to talk about why we as Americans pay so much for shitty cable, cell, and Internet service. Here are some quick facts:

  • America ranks 29th in Internet speed worldwide
  • We pay about 4 times as much as the French pay for the main trio of services: Cable TV, phone service, and Internet. (about $160/mo. vs. $38/mo)
  • We rank behind smaller, supposedly less developed countries, like Bulgaria & Romania in terms of Internet speeds (granted, many hacker-haven countries outrank us for obvious reasons).
  • And Americans can pay up to 38 times the price the Japanese pay for internet data.

I gathered this information from former New York Times reporter David Cay Johnston’s new book, The Fine Print: How Big Companies Use ‘Plain English’ to Rob You Blind. One could argue the guy is typical bleeding heart liberal, but as a Pulitzer Prize winning reporter, he seems to know his shit. Johnson covers many topics in his book: some boring, some not. However, what does grab my attention is the amount of money we as Americans pay for services that are comparably shitty to that of the rest of the industrialized world.

Johnston focuses on the broken promises of the major cable & telecom companies to bring America into the 21st century along a supposed “Information Superhighway”. His claims are interesting: for the past 20 years, phone & cable companies have spent time and money, testifying before Congress and persuading U.S. consumers to “invest” and subscribe to their services, all while collecting almost $500 billion dollars in sales & fees from American households – money that was supposed to be reserved for the construction of a solid and state-of-the-art telecommunication infrastructure that would benefit the entire country. It never happened. Instead, we got a very limited system, that EFFECTIVELY serves only densely populated areas across the United States.

At a glance, this makes perfect sense. Why invest the money to bring high-speed internet to sparsely populated areas like west Texas, or upstate New York? Telecom companies could profit much more from concentrating their efforts on Manhattan and other metropolitan areas. After working the regulatory process and pleading with Congress, the telephone and cable companies were able to get the rules written for their benefit. So if you live in Po-dunk Alaska, good luck convincing Comcast to get you high-speed internet.

However, many would argue the outcome to such lobbying and rule changing has set America back when it comes to competing in a global economy that depends heavily on Internet commerce. To make matters even more troublesome, there is no IMMEDIATE incentive for telecom companies to upgrade their services, nor to spread them to lower-populated regions of the country. Whether it’s because our country is too large (when compared to Japan, Korea, etc), or how little our government regulates the cable & telecom industry, this much should disturb you: cable and phone bills seem to be rising past the rate of inflation, and the quality of service we are paying for appears to be getting shittier. Should all the blame be placed on the government “sanctioned” telecom & cable duopoly?

To be fair, copper lines can still be a shared resource, and there are alternative options available to American consumers who don’t want to pay Comcast or Time Warner for internet access (like Sonic.net). However, these smaller ISPs have regional restrictions that prevent them from offering their services to customers who live outside their range, which is often just a couple of miles.

I remember reading an article last year on Engadget about why European broadband is so much faster and cheaper than here in America. Some of the blame was attributed to our government’s lack of regulation and poor city planning. Whereas I am not so quick to agree, I do recommend watching the video feature that supplements the article above. It is extremely interesting. Regardless, it appears many governments around the world spend a shit ton of money building out high speed broadband infrastructures, either by forcing telecoms and ISP providers to allow competition on their existing networks, or simply building out government-subsidized fiber-optic frameworks. Whereas here in good ‘ole America, money was spent building out cell towers – a broadband service that was arguably unscalable – and two bullshit wars overseas. No one is in a rush to lay down and install an expansive fibre-optic framework because they don’t have to. Competition is scarce and the incentive to innovate is low. But whether it’s fibre or copper wire, the sad truth is that America is lagging behind. That much is certain.

What remains uncertain is who is at fault, and how do we fix it? I’m not here to point fingers at the big duopoly of the telecom and cable providers, who many argue fail to invest their profits in newer technologies. I am not here to cry out to Uncle Sam to step in and fix the issue. However, change is needed in order for the U.S. to move forward and compete in a global economy. Less than competitive Internet speeds hurt everyone, including the “big, bad” corporations and the American public. And when we have big cable providers suing small towns for installing their own municipal broadband networks, you know there is a problem.

Cable providers don’t like competing with local city governments for broadband services. It makes them angry. It makes them forced to compete. However, they don’t like competing with private companies either. Earlier this month, AT&T & Time Warner began to bitch and moan to city officials in Kansas City because Google had been granted numerous free perks and discounted permits, which enticed the web giant to bring its fibre optic services to the small town in Missouri. Naturally, Time Warner and AT&T want a fair fight with Google, so it makes sense they want the same preferential treatment. It’s just too bad they have nothing better to offer.

From what I’ve gathered, the United States of America is the only industrialized country without a federal law or policy promoting universal, high-speed broadband. I know, I can hear the socialist rants coming from a mile away. However, maybe we should explore the idea, once more, of forcing our telecom & cable companies to rent their wires to smaller ISP’s. Maybe then they’ll finally invest the money to upgrade their entire network to fibre. Or perhaps we need to encourage vested-interest groups from both sides to help front the bill in upgrading our country to fibre? Maybe we should let state & local governments decide what’s best for them without the fear of getting sued? Or maybe it’s a thousand times more complicated than any of this, and I have no clue what I am talking about.

As someone who identifies himself as a fiscal conservative, I am torn on the issue. I believe in a free-market society and I rather avoid government intervention. But there are times where government works: Like small city-governments working together to establish their own municipal broadband networks because Comcast or Time Warner won’t spend the dollars to either extend their service to remote areas or improve on existing services.

So, to end this rant, I suggest people step up and voice their concerns. Write or call your local legislature, vote with your wallet, throw your set-top box out on the street…..do what it takes, because this change is happening at a snail’s pace. And I like being number 1. Not number 29. Fuck that.

 
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