BBC: The Great American Broadband Ripoff; Customers Pay 3x More than Europe, 5x More than Korea

cost_broadband_around_the_worldBroadband in the United States costs far more than in other countries — nearly three times as much as in the UK and France, and at least five times more than South Korea, according to BBC News.

The New America Foundation compared hundreds of available packages around the world and found customers in America’s largest cities are getting the biggest bills.

Customers in San Francisco with a discounted low-medium speed bundle including broadband pay $99 a month. A near-equivalent package costs London residents $38. New Yorkers get some savings from Time Warner and Cablevision facing down Verizon FiOS. But it isn’t enough. In the Big Apple, a promotional bundle averages $70 a month. “C’est la vie,” say Parisians. They only pay $35 for about the same. Even Washington, D.C. residents, which include the country’s most powerful politicians, pay Comcast its $68 asking price. In Seoul, South Korea, a comparable offer costs $15 a month.

High asking prices don’t buy better service. According to a report by the OECD issued over the summer, the United States ranks among the worst in terms of broadband-only pricing. With an average price of $90 a month for 45Mbps service, the U.S. ranked 30th out of 33 countries. Add phone and television service and the price spikes to around $200.

The BBC pondered why there is such a disparity in pricing. The answer was easy to spot: the lack of true competition.

countries_with_high_speed_broadband“Americans pay so much because they don’t have a choice,” said Susan Crawford, a former special assistant to President Barack Obama on science, technology and innovation policy. “We deregulated high-speed Internet access 10 years ago and since then we’ve seen enormous consolidation and monopolies, so left to their own devices, companies that supply Internet access will charge high prices, because they face neither competition nor oversight.”

Although Americans can name the largest and deep pocketed providers — Comcast, AT&T, Time Warner Cable, Verizon, Cablevision, CenturyLink, Cox, and Frontier — most cannot choose from more than one cable provider and one telephone company. Comcast does not compete against Time Warner and AT&T does not compete against Verizon, except in the wireless world where both companies offer near-identical plans and pricing.

Comcast is quite the gouger in San Francisco.

Bay area customers told the BBC they get bills ranging from $120 a month for television and broadband (not including a $7 modem rental fee) to $200 a month for phone, TV, and Internet access. That same cable company is now testing a 300GB monthly usage cap on broadband in several American cities.

In contrast South Korea offers ubiquitous free Wi-Fi letting customers avoid usage charges. Home broadband is fast and cheap. Most pay $20 a month for 100Mbps.

Digging deeper, the BBC found clues why robust broadband competition delivers savings for consumers in Europe and Asia while Americans pay more.

Rick Karr, who made a PBS documentary in the UK comparing broadband costs at home and abroad, said the critical moment came when the British regulator Ofcom forced British Telecom to open its network and allow other companies to sell broadband over its copper telephone wires. In the United States, regulators never forced cable operators to open their networks, and after a 6-3 Supreme Court decision upheld the cable industry’s insistence it need not share access with competitors, telephone companies quickly called for parity.

Unlike in the UK, where broadband providers can compete using BT's network to reach customers, a Supreme Court decision upheld the cable industry's right to keep competitors off its cable broadband network.

A 2005 Supreme Court decision upheld the cable industry’s right to keep competitors off its cable broadband network.

Some argue the ruling promotes more competition by provoking competitors to build their own networks. But current conventional wisdom among the investment community teaches one cable and one phone company is considered good enough. Additional providers would erode the standing of all and force price cutting to compete.

There are exceptions. Although Google’s fiber to the home service has drawn national attention for its inexpensive gigabit fiber broadband network ($70 for broadband-only service), at least 150 cities are served by the public sector — co-op or publicly owned utility companies that offer broadband, often delivered over fiber optic networks.

Those networks often charge considerably less than the incumbent cable operator or phone company, a fact that has driven many privately run operators to seek legislative bans on community broadband.

In response to the report, telecommunications companies avoided the topic of prices and focused instead on value for money and the future.

Lowell McAdam, CEO of Verizon Communications, said Europe was replete with a decade of underinvestment, leaving many with less than 30Mbps service. The National Cable and Telecommunications Association said it was difficult to make international comparisons on price and Scott Cleland, part of the industry-funded NetCompetition website claimed although people may pay higher bills, they can at least choose among phone, cable, wireless or satellite.

“We may be paying more in your eyes today but we are building for tomorrow and the long-term,” said Cleland.

Wall Street’s Demand for Faster Trades Might Help Arctic Canada With Fiber Broadband

Twenty-nine milliseconds. To most people, that fraction of a second means little. But time is big money for stock traders seeking a speed edge.

A Toronto company hoping to capitalize on that demand has filed a request with Canadian regulators to approve a proposed new fiber-optic line running through the Northwest Passage.

Arctic Fibre plans to spend $600 million to stretch a 15,700km cable between Japan and Nunavut, Canada on the way to Cork, Ireland, and Québec, where it would further connect to the northeastern United States.

Arctic Fibre's Network Map

Arctic Fibre’s Network Map

To gain government support, Arctic Fibre has asked the Nunavut Impact Review Board and Industry Canada for submarine cable landing licenses that would dramatically improve Internet access and speeds in remote parts of northernmost Canada, especially in the territory of Nunavut. Fiber connections would be available in Iqaluit, Cambridge Bay, Cape Dorset, Igloolik, Taloyoak, and Goja Haven – all in Nunavut. Other fiber connections would be available in Tuktoyaktuk, N.W.T., and in Shemya, Nome, Kotzebue, Point Hope, Wainwright, Barrow, and Prudhoe Bay, Alaska.

In the future, further expansion could bring fiber connections to:

  • Québec: Ivujivik, Kangiqsujuaq, Kingirsuk, Kuujjuaq, Quaqtaq, and Salluit
  • Nunavut: Chesterfield Inlet, Rankin Inlet, Arviat, Pangnirtung, Qikiqtarjuaq, Clyde River, Pond Inlet, and Resolute Bay

AF-System-Map-Sept-2013

Deep pocketed investment firms are attracted to claims the new network will cut 29 milliseconds off data connections between Tokyo and London, giving investors a tiny, but very lucrative edge in automated stock trading.

“We’re pretty well assured that that is going to happen fairly quickly,” Doug Cunningham, president of Arctic Fibre told Canadian Press. “Not that it’s rubber-stamped, but we’re very confident that we will be getting a license forthwith.”

The new cable could be running by 2016.

Two Companies Compete With Gigabit Broadband Offers on Remote Isle of Jersey

Phillip Dampier October 24, 2013 Broadband Speed, Community Networks, Competition, Consumer News, Public Policy & Gov't, Rural Broadband, Video Comments Off on Two Companies Compete With Gigabit Broadband Offers on Remote Isle of Jersey

gigabit jerseyMore than 5,000 residents and businesses living on the island Bailiwick of Jersey now have a choice of two Internet Service Providers – both supplying gigabit fiber optic broadband.

Jersey Telecom, a government-owned provider, has been removing obsolete copper wiring and replacing it with fiber to the home service that should reach the entire island by 2015. The fiber network is open to all competitors. JT charges £59.99 ($97.25) per month for gigabit speeds, but now caps usage at just 100GB a month. Overlimit fees are around 50c per GB between the hours of 8am-midnight. Usage is unlimited during off-peak hours.

In addition to JT, Jersey customers who live on the remote Channel Island, a British Crown Dependency off the coast of France, can now also choose Sure Jersey, a privately owned ISP that offers unlimited use plans.

The fiber optic network is spreading to other Channel Islands, with significantly populated parts of Guernsey set to receive a fiber upgrade next.

713px-Europe-Jersey.svgUsing traditional Return On Investment standards, Jersey would barely qualify for basic DSL service. The island has a population of just 100,000 residents, some spread far and wide in remote locations. Basic DSL service was supplied to customers in more densely populated communities, but speeds were often slow and congestion became a major problem, especially at night.

The local government determined Jersey’s broadband needs could best be met by upgrading to government-owned infrastructure that private businesses could lease to sell service. Much like public roads benefit private companies that use them to transport goods, JT’s fiber network is designed to help bolster the island’s digital economy.

Since the introduction of gigabit fiber, new digital startups have launched on the island and others have moved their digital businesses to the fiber-enabled island. FeelUnique, launched from Jersey, has now become Europe’s largest online beauty retailer, employing over 150. Other businesses on the island have launched software ventures for the health care and education markets, banking/investment products and services, and 3D printing ventures. Having a wide broadband pipe has helped anchor digital businesses to the island because moving elsewhere leaves many with little better than substandard DSL or an enormous price tag for a customized new fiber build.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/JT Fiber Has Arrived 2013.mp4[/flv]

Residents of Jersey talk about how fiber broadband has changed their online experience. (2 minutes)

 [flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Digital Jersey Limited – Vision 2014 from Digital Jersey.mp4[/flv]

Digital Jersey released this video showing the group’s vision on how to leverage gigabit fiber broadband to boost the island’s digital economy in 2014. (3 minutes)

AT&T, Verizon Among the Biggest ‘Pay to Play’ Campaign Contributors and Lobbying Spenders

lobbyist-cashAT&T and Verizon are among the biggest tech company spenders in Washington, paying millions every quarter to lobby federal and state lawmakers on how they can make life easier for the telecom giants.

AT&T increased their lobbying budget by a whopping 23 percent in the third quarter, easily beating year over year spending of $3.5 million in the third quarter of 2012. In just three months this year, AT&T spent $4.3 million lobbying lawmakers on regulatory relief, retiring the rural landline network, reform of cell tower placement policies, and trying to keep the FCC from gaining new oversight powers.

Verizon Communications had lobbying costs of $3.09 million last year at this time. This year, it reduced that amount by two percent, spending $3.04 million. But Verizon Wireless upped its political spending by 19 percent, from $1.1 to $1.2 million. Taken together, Verizon spent a collective $4.24 million on lobbying in the last three months. Verizon lobbied on some of the same issues AT&T did.

In contrast Google spent $3.4 million, Facebook spent $1.4 million, and Microsoft spent $2.2 million.

“Once again the lobbying disclosures demonstrate the sad truth about the state of our democracy,” said John M. Simpson, Consumer Watchdog’s Privacy Project director. “When the government is open for business, policymaking is all about who has the cash and is willing throw it around.”

USA Today reported Verizon has also once again achieved a 0% effective tax rate during the past 12 months, which means any owed taxes will be offset by a variety of accounting tricks:

A big reason that Verizon’s effective tax rate is so low, coming in at a negative 4.8%, is largely due to accounting. The company’s sped-up depreciation, severance and pension costs are large credits that contribute to pushing the company’s taxes down, says Jonathan Schildkraut of Evercore. But there’s also a distortion caused by the company’s 55% interest in Verizon Wireless. Vodafone, which owns 45% of Verizon Wireless, pays taxes on its share, but the entire profit is reported on income. Adjusting for this, Verizon’s effective tax rate is closer to 30%, the company says. Verizon is buying Vodafone’s stake, which will eliminate the issue in the future. Similarly, real estate investment trusts have low effective tax rates because they pass profit to shareholders, who then pay the taxes.

The question for investors is whether or not companies paying low effective tax rates might, eventually, attract the attention to regulators. “They are slow at getting at these issues,” Yee says.

Time Warner Cable Adding Al Jazeera America to Cable Lineups

Phillip Dampier October 24, 2013 Consumer News 1 Comment

aljazeera-time-warnerTime Warner Cable, the nation’s second largest cable operator, has agreed to carry Al Jazeera America on its cable lineup nationwide, giving the network 10 million more potential viewers.

The contract, to be announced later today, will bring the English language U.S.-focused news channel to major cities, including Los Angeles and New York within weeks. Time Warner Cable customers in other cities will see the channel added by next March.

Al Jazeera America launched two months ago and has not been an initial ratings success. Despite being available in 44 million homes, fewer than 25,000 people watch the news channel at any given time. The ratings are comparable to Fox Business Channel after it launched.

“We said in January that we would consider Al Jazeera America,” Melinda Witmer, the chief video and content officer for Time Warner Cable. “Now that the channel is live, we think that it would be of value to our customers and are pleased to make it available.”

Time Warner Cable threw Al Jazeera’s predecessor, Current TV, off lineups the instant the network was sold to the Qatar-based news channel. AT&T U-verse also dropped Al Jazeera English just as it premiered, sparking a lawsuit.

The news network is touting the carriage agreement with Time Warner Cable as evidence the network is being taken seriously by cable industry executives. An Al Jazeera spokesman told the New York Times the company was in active negotiations with other cable and satellite providers to pick up the channel.

To win the agreement, Al Jazeera may have temporarily agreed to pay Time Warner Cable a launch fee described as compensation for marketing and ad support. Typically, cable networks receive payment for carriage, not the other way around.

Unlike Al Jazeera English, a global English language news channel intended for an international audience, Al Jazeera America is an American cable news channel, featuring recognizable news personalities including Soledad O’Brien and Ali Velshi, both formerly with CNN.

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