Americans pay more for lesser Internet

Posted on November 2, 2014 / 3 Comments

The Open Technology Institute (OTI) finds that customers in the U.S. continue to pay higher prices for slower Internet. It examines broadband prices and speeds in 24 cities in the U.S. and abroad. Looking at the price consumers pay for 25 Megabits per second (Mbps) in each city, as well as the speed they can get for $50 in each city, the report finds that Americans in major cities pay higher than average prices for 25 Mbps and get slower than average speeds for $50 when compared to their global peers. Martyn Warwick of telecomtv.com explains:

The US lags much of the rest of the world not as a result of inferior technology but because there just isn’t sufficient competition in the marketplace to force the fat and lazy monopolies and duopolies that dominate the SME and residential broadband internet access sector from their monied torpor. It is a state of affairs that, if not addressed, will have serious long-term economic consequences for US competitiveness.

As Tim Wu, an erstwhile advisor to the US Federal Trade Commission and now a Professor at Columbia Law School, says, “It’s very simple economics The average market [in the US] has one or two serious Internet providers, and they set their prices at monopoly or duopoly pricing.” That’s the basic reason why the US so obviously lags behind so many other countries when it come to Internet speed and affordability. In America it can take 20 time longer to download a film than it does in Hong Kong, London, Paris, Seoul, Tokyo or Zurich and it costs 10 times as much.

Download OTI’s Cost of Connectivity 2014 report.

3 Comments

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Rohan Samarajiva
November 2, 2014, 11:10 am
The problem in the heads of people like Warwick is that their world is limited to that of the members of the OECD. The headline includes the terms “more” and “lesser.” They compare the US to some OECD country. LIRNEasia research ( e.g., http://lirneasia.net/2011/03/10479/) has demonstrated that US and Canadian consumers get more Kbps per dollar than consumers in our countries, including Bangladesh.

Let the insular telecom people have their internal debates. Our focus is on the emerging economies.
Rohan Samarajiva
November 3, 2014, 7:54 pm
http://www.nytimes.com/2014/11/03/technology/europe-shifts-on-priorities-for-telecoms.html?emc=edit_th_20141103&nl=todaysheadlines&nlid=9770121&_r=0

Now the other side of the irrelevant-to-us debate.