Guest columnist Timothy Karr notes that U.S. consumers adopting high-speed Internet are falling behind those of other advanced countries, partly because of cost. He argues Congress and federal regulators should pay attention to help the U.S. economy be more competitive.
AS the New Year begins and officials in Washington, D.C., puzzle over ways to put the U.S. economy on a more stable footing, many have overlooked two reports from 2011 that point to a root of our lingering economic problems, and to a possible solution.
The first report, an annual survey by the Federal Communications Commission, found that the rate of U.S. consumers adopting high-speed Internet is falling behind that of broadband superpowers like South Korea and Denmark, where people pay less to cruise along a faster Web.
The FCC counts U.S. broadband subscribership at around 67 percent, while advanced economies in Asia have adoption rates well above 90 percent. On the basis of these comparisons, the report’s authors conclude that “broadband is not being reasonably and timely deployed and is not available to all Americans.”
The second report, from the McKinsey Global Institute, finds that Internet access has a significant impact on growth, jobs and wealth creation across all sectors of the economy, contributing more to the national GDPs of developed countries than energy, agriculture and several other critical industries. For the Internet to continue as a driver of economic growth both in the Pacific Northwest and beyond, governments need to “leverage” public spending on deployment to kick-start innovation, McKinsey’s authors conclude:
“Indeed, countries with the highest public investment in the Internet are also those with the largest nonpublic Internet contribution to GDP.”
America’s declining Internet standing is reason for concern. But are our politicians even paying attention?
Most have stood by and watched as the U.S. has gone from No. 1 in broadband penetration at the close of the 20th century down to — depending on the survey — 18th, 22nd or 25th in the world.
Also worrying is Washington’s reluctance to challenge the phone and cable lobby, which wields its financial clout to dictate communications policy to elected officials. Four of the biggest players, AT&T, Comcast, Time Warner Cable and Verizon, have funneled nearly half a billion dollars into campaign coffers and lobbying shops since the mid-1990s, when the Internet became widely available to people across the U.S.
Our current dilemma is largely the result of this largesse, which has created a controlling class of lobbyists who push any broadband policy that maximizes corporate profits while minimizing the obligation of phone and cable companies to compete with one another and better serve Internet users.
The companies’ refusal to go head-to-head in the marketplace is why Americans continue to pay a whole lot more and get a whole lot less of the Internet speeds we deserve. Compare our circumstances to those in Japan, where Internet users are accustomed to surfing the Web at speeds of 100 million bits per second (or Mbps) at the same prices Americans pay for access to dial-up. In Hong Kong, one provider now offers a $20-a-month “triple play” package that includes an astonishing 1,000 Mbps data service. (By way of comparison, my parents on Bainbridge Island would be lucky to get 15 Mbps out of their more costly Comcast connection.)
And Americans will keep paying more as long as 96 percent of households have just two or fewer choices for wired broadband, according to FCC data.
The absence of choice isn’t just bad news for Internet users. As the McKinsey report notes, it could have a negative ripple effect across an economy where new business and job growth are increasingly reliant on access to affordable and high-speed broadband.
Since phone and cable companies seem to prefer consolidation over competition, a policy fix is in order. The Obama administration’s National Broadband Plan, unveiled with much fanfare by the FCC, falls far short. While it sets a laudable goal of connecting 90 percent of households to high-speed Internet by the year 2020, it glosses over any serious discussion of America’s competition problem.
Not surprisingly, the phone and cable lobby doesn’t want the FCC to get any more involved, and frequently resort to calling any official intervention on behalf of consumers a “government takeover of the Internet.”
AT&T’s temper tantrum following the FCC’s recent decision to oppose its monopoly-minded takeover of T-Mobile reflects the prevailing attitude of a corporate lobby that has been spoiled rotten by regulators. If Washington returns to form in 2012 and lets industry dictate terms, a dwindling handful of Internet incumbents will continue to win. Millions of American Internet users will continue to lose. And the economy will continue to falter.
To connect every American to a world-class broadband network, we need more than benchmarks and platitudes; Washington needs to confront the phone and cable companies’ market power head on. We need to do this not just for the benefit of broadband consumers but to regain America’s global standing in an increasingly networked world.
This would involve opening up more spectrum to new players, especially companies willing to experiment with unlicensed mobile access. It would involve preventing anti-competitive market-sharing pacts of the sort recently struck by Verizon Wireless, Comcast, Cox and Time Warner Cable. And we need to push for an American version of the high-speed line sharing that has proved successful in driving down costs in parts of Europe and Asia.
Building a 21st-century broadband economy requires investment from both the public and private sectors — and policy reforms that put competition and Internet users first. Getting these reforms in place is going to be hard in 2012. But that fight is inevitable — as these companies push their interests at the expense of hardworking Americans. The sooner we win this fight the better.
Timothy Karr is senior director of strategy for Free Press, a nonpartisan media-reform group. Karr, a native of Bainbridge Island, lives near New York City.