Broadband 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.

“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.

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.

Powell

A former chairman of the Federal Communications Commission turned top cable lobbyist rang the warning bell at an industry convention this week, recommending America’s cable operators hurry out usage caps and usage-based billing before a perception takes hold the industry is trying to protect cable television revenue.

Michael Powell, the former head of the FCC during the Bush Administration is now America’s top cable industry lobbyist, serving as president and CEO of the National Cable & Telecommunications Association (NCTA). From 2001-2005 Powell claimed to represent the interests of the American people. From 2011 on, he represents the interests of Comcast, Time Warner Cable, Cox, and other large cable operators.

Attending the SCTE Cable-Tec Expo 2013 in Atlanta, Powell identified the cable industry’s top priority for next year: “broadband, broadband, and broadband.”

The NCTA fears the current unregulated “Wild West” nature of broadband service is ripe for regulatory checks and balances. The NCTA plans to prioritize lobbying to prevent the implementation of consumer protection regulations governing the Internet. Powell warned it would be “World War III” if the FCC moved to oversee broadband by changing its definition as an unregulated “information service” to a regulated common carrier utility.

Powell is very familiar with the FCC’s current definition because he presided over the agency when it contemplated the current framework as it applies to DSL and cable broadband providers.

While Powell has a long record opposing blatant Net Neutrality violations that block competing websites and services, he does not want the FCC meddling in how providers charge or provision access.

Powell believes some of cable’s biggest problems come from bad marketing.

Powell disagreed with statements from some Wall Street analysts like Craig Moffett who earlier predicted the window for broadband usage-based limits and fees was closing or closed already.

Powell does not care that consumers are accustomed to and overwhelmingly support unlimited access. Instead, he urged cable executives to “move with some urgency and purpose” to implement usage-based billing for economic reasons, despite the growing perception such limits are designed to protect cable television service from online competition.

“I don’t think it’s too late,” Powell said. “But it’s not something you can wait for forever.”

Powell pointed to the success wireless carriers have had forcing the majority of customers to usage capped, consumption billing plans and believes the cable industry can do the same.

The NCTA president also described many of the industry’s hurdles as marketing and perception problems.

The cable industry, long bottom-rated by consumers in satisfaction surveys, can do better according to Powell, by making sure they are nimble enough to meet competition head-on.

Powell described Google Fiber as a limited experiment unlikely to directly compete with cable over the long-term, and with a new version of the DOCSIS cable broadband platform on the way, operators will be able to compete with speeds of 500-1,000Mbps and beyond. He just hates that it’s called DOCSIS 3.1, noting it wasn’t “consumer-friendly” in “a 4G and 5G world.”

Kevin Hart, executive vice president and chief technology officer of Cox Communications joked the marketing department would get right on it.

At least 88 percent of Dutch consumers are getting 50Mbps from their broadband provider, with the remaining 12 percent expected to get similar speed increases within two years.

A Telecompaper survey found nearly one-third of those consumers consider 50Mbps speeds necessary and almost the same number believe they will need 200Mbps service at some point in the future.

The Netherlands has benefited from a series of provider speed upgrades which have lifted connection speeds to 50Mbps or more.

Only 12% of Dutch consumers do not already receive 50Mbps broadband service. They will have it within two years according to Dutch telecom observers.

This year, enhanced competition from fiber broadband providers have forced cable companies to boost speeds. Some providers now offer tiers as fast as 100-200Mbps, mostly over fiber networks. Two-thirds of Dutch consumers believe fiber networks are necessary to get the best speed increases.

At the end of 2012 there were 1,450,000 households connected to fiber to the home service, 440,000 more than one year before. This is reflected in the growing number of consumers reporting they have fiber broadband, which has halted the growth in cable broadband’s market share.

The report ‘Dutch Consumer Connected 2013’ is based on the Telecompaper Consumer Panel, an online survey conducted between March and May 2013 among almost 15,000 consumers aged 12-80. The report also presents the results for 2010, 2011 and 2012.

AT&T says government regulations have hampered the company’s plans to roll out faster broadband networks to areas where consumers and businesses want faster speeds.

Now that Google has gotten permission to roll out its gigabit fiber network only to neighborhoods that show an interest in the service, AT&T says it should be allowed to operate the same way.

CEO Randall Stephenson told investors at a J.P. Morgan investor conference in Boston that AT&T would like to build fiber networks, but government requirements that it offer the service universally across the communities it serves has made such networks financially unprofitable. Eliminating those rules would create a new incentive for fiber upgrades in areas that want them.

“I think you are going to see that begin to manifest itself around the United States, and in not just AT&T and Google,” Stephenson said. “You will see others doing this because the demand for really high-speed broadband via gigabit-type fiber-based solutions on a targeted basis is going to be very, very high.”

AT&T says Google has already changed how future broadband networks are deployed — only to areas where there is enough demand for the service. Google’s entry into Kansas City came with a pre-registration procedure that allowed the company to gauge demand for its fiber network. The neighborhoods expressing the most interest were given priority during the network buildout. Google also won the right to entirely bypass neighborhoods where an insufficient number of residents expressed interest in the service.

Stephenson

Traditionally, cable and phone companies constructing networks like FiOS, U-verse, and similar fiber deployments are required to offer service throughout each community. The only general exception relates to sparsely populated or very high cost areas that have an insufficient number of potential customers, making return on investment difficult. Google can bypass even the most densely populated sections of downtown Kansas City if there is insufficient demand for its service. Cable and phone providers who attempted this in the past would have been accused of “redlining” — singling out only the most lucrative, affluent service areas while bypassing low-income neighborhoods.

Now AT&T hopes Google has established a precedent it can use to cherry-pick network upgrades of its own.

“The key is being able to do it in places where you know there is going to be high demand and people willing to pay the premium for those type services,” Stephenson said, predicting in some parts of Austin, AT&T could achieve a 35 percent market share for its promised fiber network.

Stephenson also suggested an unlikely new source of money to finance fiber upgrades — content producers and applications developers who need faster networks to support sales of their online products and services. That would shift the economics of faster broadband to an entire new model — broadband providers may decide their current networks are fast enough and might avoid upgrading them without some financial compensation from the websites and content producers customers visit.

Wireless Industry: We’re running out of spectrum!
Wireless Industry: We’ve got plenty to room for unlimited ESPN!

America is on the verge of a wireless traffic data jam so bad, it could bring America to its knees.

Or not.

Stop the Cap! notices with some interest that while wireless carriers continue to sound the alarm about a spectrum crisis so serious it necessitates further compressing the UHF television dial and forces other spectrum users to become closer neighbors, the same giant phone companies warning of impending doom are negotiating with online video producers to offer customers “toll-free,” all-you-cat-eat streaming video of major sports events that won’t count against your usage allowance.

ESPN is in talks with at least one major carrier (AT&T or Verizon Wireless) to subsidize some of the costs of its streamed video content so that customers can watch as much as they want without running into a provider’s usage limit. Both Verizon and AT&T have signaled their interest in allowing content producers to pay for subscribers’ data usage. In fact, they don’t seem to care who pays for the enormous bandwidth consumed by streaming video, so long as someone does.

At a recent investment bank conference Verizon Wireless chief executive Dan Mead explained the next chapter in monetizing data usage will allow the company to rake in more revenue from third parties instead of customers already struggling with high wireless bills.

“We are actively exploring those opportunities and looking at every way to bring value to our customers,” said Mead.

Content producers are increasingly frustrated with the stingy caps on offer at AT&T and Verizon Wireless because customers stop accessing that content once they near their monthly usage limit. One large provider admitted to ESPN that “significant numbers” of customers are already reaching their cap before the end of their billing cycle, after which their online usage plummets to limit the sting of overlimit charges.

Offering “toll-free” data could dramatically increase the use of high bandwidth applications and increase profits at wireless providers based on new fees they could collect from content producers. Customers would still be subject to usage limits for all non-preferred content, a clear violation of Net Neutrality principles.

The buffet is open.

But in case you forgot, wireless carriers won exemption from Net Neutrality, arguing their networks lack the capacity to sustain a Net Neutral Internet experience. These same companies claim without more frequencies to handle the massive, potentially unsustainable amount of wireless traffic, the wireless data apocalypse could be at hand in just a few years. It was also the most-cited reason AT&T and Verizon discontinued their unlimited use data plans.

But unlimiting ESPN video? No problem.

In January 2010, Verizon Wireless was singing a very different tune to the FCC about the need to control and manage high bandwidth applications like the “toll-free” streaming video service ESPN proposes (underlining ours):

Wireless broadband services face technological and operational constraints arising from the need to manage spectrum sharing by a dynamically varying number of mobile users at any time. Thus, unlike, for example, cable broadband networks, where a known and relatively fixed number of subscribers share capacity in a given area, the capacity demand at any given cell site is much more variable as the number and mix of subscribers constantly change in sometimes highly unpredictable ways.

Are wireless carriers now part of the problem?

For example, as a subscriber using a high-bandwidth application such as streaming video moves from range of one cell site to another, the network must immediately provide the needed capacity for that subscriber, while not disrupting other subscribers using that same cell site. Of course, the problem is magnified many times over as multiple subscribers can be moving in and out of range of a cell site at any given moment. Moreover, the available bandwidth can fluctuate due to variations in radio frequency signal strength and quality, which can be affected by changing factors such as weather, traffic, speed, and the nearby presence of interfering devices (e.g., wireless microphones).

These problems compound those resulting from limited spectrum. As the Commission has repeatedly recognized in proclaiming an upcoming spectrum crisis, “as wireless is increasingly used as a platform for broadband communications services, the demand for spectrum bandwidth will likely continue to increase significantly, and spectrum availability may become critical to ensuring further innovation.”

A wireless carrier cannot readily increase capacity once it has exhausted its spectrum capacity. Thus, wireless broadband providers are left to acquire additional spectrum (to the extent available) or take measures that use their existing spectrum as efficiently as possible, which they do through a combination of investing in additional cell sites and network management practices that optimize network usage and address congestion so as to provide consumers with the quality of service they expect.

Regulators need to ask why wireless companies are telling the FCC there is a bandwidth crisis of epic proportions that requires the Commission to exempt them from important Net Neutrality principles while telling investment banks, shareholders and content producers the more traffic the merrier, as long as someone pays. Customers also might ask why their unlimited use data plans were discontinued while carriers seek deals to allow unlimited viewing with their preferred content partners.

What is the real motivation? The Wall Street Journal suggests one:

“Creating a second revenue stream for mobile broadband is the holy grail for wireless operators but collecting fees from content companies would probably make the FCC take a close look into the policy implications,” said Paul Gallant, managing director at Guggenheim Securities. An FCC spokesman declined to comment.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/WSJ ESPN Toll Free Data 5-9-13.flv[/flv]

The Wall Street Journal takes a closer look at a plan to manage an end run around Net Neutrality by allowing preferred content partners to offer streaming video services exempt from your usage cap. (4 minutes)