Home > Uncategorized > U.S. Internet Users Pay More for Slower Service – Bloomberg

U.S. Internet Users Pay More for Slower Service – Bloomberg

This is exactly what happened in the 1880s, when privately owned electric companies served big cities and the homes of the rich, and everyone else intermittently if at all. By the mid-1920s, 15 holding companies controlled 85 percent of the nation’s electricity distribution, and the Federal Trade Commission found that the power trusts routinely gouged consumers.

In response, thousands of communities formed their own electrical utilities. Now more than 2,000 U.S. communities, including Los Angeles, San Antonio and Seattle provide their own power. And electricity is a regulated public utility.

Why don’t Americans apply this same thinking to communications?

After the Great Depression, the Federal Communications Commission was given the job of providing the U.S. with a high- quality communications system at reasonable rates. For 50 years, the state oversaw the development of phone service. Providers were prohibited from entering into other businesses and were obliged to serve the public on nondiscriminatory terms. Anyone could make a phone call to anyone else.

In the 1970s, communities began handing out exclusive franchises to cable companies that could bring remote entertainment into homes. Over the next 20 years, the cable companies consolidated and swapped system franchises. By the mid-1980s, the phone companies wanted to expand their bandwidth to allow video delivery, too, but said they couldn’t attract the needed capital unless they were released from the conditions imposed on them by the AT&T breakup.

The arrival of commercial Internet communications in the mid-1990s posed a threat to both the phone and cable companies; eventually, the FCC deregulated the entire sector, thinking that competition among various modalities of Internet access –cable, phone, wireless, satellite — would protect Americans. And in 2002, when the five-year period of deregulation began, there was indeed rough parity in speed and price between the cable companies and telephone companies providing Internet access.

Soon, however, cable companies found a way to upgrade their networks to provide connections perhaps 100 times faster than what was possible over copper wires, and at much lower expense than the phone companies incurred replacing their phone lines.

via U.S. Internet Users Pay More for Slower Service – Bloomberg.

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