US internet/cell costs

[Rosbif]

Hey,

a thought prompted by the various discussions of phone plans and whatnot on here...

Here in socialist paradise, we pay 40€/mth for unlimited calls, data and TV (but not the big league sports stuff). It's fibre, so the connection is about 50mb/s. I need a good connection for work (large file transfers), but the regular domestic service works fine. For a cell, I pay 20€ for unlimited calls and texts (including international), plus 20gb of 4G data. 4G is pretty quick, 75mb/s average over the last few speedtests.

My question is, why is it so expensive in the US?? You guys are the inventors of so much of what makes the internet run, a nation of early adopters (except on here ;) ) and yet it seems like the average plan is costing people 100USD/mth? What's going on?

[Paul der Krake]

Huge country with spread out suburbs.
Little regulatory oversight.
Massive barriers to entry for potential competitors.

[forummm]

My question is, why is it so expensive in the US??

We have monopolies/oligopolies that are very wealthy and buy off legislators so that they can charge whatever they want to charge and provide low quality service in return. The telecom industry is a huge lobbying and campaign contribution player. When municipalities try to create competition for them the industry shuts it down as quickly as possible most of the time.

Huge country with spread out suburbs.
Little regulatory oversight.
Massive barriers to entry for potential competitors.

I think this is true, but the political forces are the stronger ones. It's actually not that expensive for a city to build their own gigabit network. But they have a hell of a time doing it in the face of the industry opposition.

[Rosbif]

Thanks for the replies, I did wonder if it was a regulatory issue. Interesting that municipalities try to provide alternatives. Anyhoo, best of luck with getting some decent service ;)

[TheThirstyStag]

Planet money podcast # 529 talks a little bit about this.  Basically, much of it dates back to an FCC ruling in the 90's defining what the internet is.  Is it like a phone line? Or like a utility.  In Europe, a utility.  In the USA, a phone line.  The phone line model is monopolistic.  The utility model requires the company that owns the physical line to lease it out to competing companies to provide service to the home.  Competition = lower prices for the consumer.

Great 15-minute podcast.

[Daley]

Here's a good overview: http://www.counterpunch.org/2010/05/28/the-great-telecom-rip-off/

...and a good resource on the topic: http://newnetworks.com/

[StockBeard]

Huge country with spread out suburbs.

Internet is an interesting example of the "market" not always being the appropriate solution. Because of the size of the country, the market's incentive is for good prices to target high density cities, which means people in rural areas are screwed. In that kind of situation, federal/governmental subsidies could make sense, if you consider internet/cellphone a "basic utility" for citizens today, which I think it is (just like I can see how it's essential to have public control on the price of water, electricity, etc...)

Public transportation is another example where the situation in the US is, on average, terrible compared to other countries.

[alsoknownasDean]

Isn't it true in many parts of the States that one can only buy internet service from one or two providers?

[kimmarg]

Isn't it true in many parts of the States that one can only buy internet service from one or two providers?

Yes, my only options are through the phone company or the cable company. There is a local competitor for DSL but sadly I'm on the wrong side of some switch box and can't get it. I suppose satellite is a third option but it's usually slower and more expensive. Only people I know with satellite have no broadband options at all without it.

[MustacheExplorer]

Many municipalities in the United States also sign exclusive contracts with cable/internet services in exchange for high fees.

[Sid Hoffman]

Rosbif left out the part about how Europeans tend to get totally ripped off if they use their mobile phone outside of their own tiny home country.  With the USA, the sheer number of square kilometers that you get unlimited coverage is something Europeans can only dream about.

http://europa.eu/youreurope/citizens/travel/money-charges/mobile-roaming-costs/index_en.htm

Even more of a punch in the face to Europeans is that I can use my USA-based T-Mobile cell phone in over 100 countries around the world with no additional charges for data or text, and in some cases, no charge for phone calls either.  All for $23/month.  Ha!

[Pinkleaf]

Isn't it true in many parts of the States that one can only buy internet service from one or two providers?

Yes, my only options are through the phone company or the cable company. There is a local competitor for DSL but sadly I'm on the wrong side of some switch box and can't get it. I suppose satellite is a third option but it's usually slower and more expensive. Only people I know with satellite have no broadband options at all without it.

Where I live, my options are dial up, satellite or a wireless hotspot. Cable and DSL stop 1 mile south of me, and last I checked, neither of those had any plans to ever expand any further. Rural living has it advantages but internet service is def not one of them.