It's a sad fact that Americans pay more for Internet than other developed nations. There are multiple reasons as to why we pay too much for Internet and we went into a few of those reasons over the weekend. A new study from the New America Foundation has confirmed that Americans are indeed paying too much for Internet.
The report, "The Cost of Connectivity," compared high-speed Internet offerings in 22 cities around the world by price, download and upload speed, and bundled services. The most important finding in the report is how much $35 gets a consumer in these cities. The results may surprise you.
Consumers in Paris, France can get a bundle that includes 100 Mbps Internet, television and phone for about $35. In Lafayette, LA, which the study bills as a "top American city," the cheapest Internet package available costs $65 and only includes a 6 Mbps connection. That's a bundle, however, and much of the cost probably comes from the bundled in television service.
When we go into just Internet, it gets really sad. Hong Kong residents can get symmetrical download and upload speeds of 500 Mbps for $37 a month. For the same price, Washington D.C. and New York residents get speeds that are a fraction of what our friends in China get (25 Mbps download/2Mbps upload).
Speaking to Ars Technica, a member of the New America Foundation, Benjamin Lennett, says that one of the problems is a "really flawed assumption that telephone companies and cable companies are going to compete with each other." He says that these companies are actually working under a "negotiated truce" that sees them respecting each other's territory while setting up monopolies in cities.
As for solutions, Lennett points to what the city of Longmont is doing - buying up fiber and selling residents Internet. The introduction of Google as an ISP should also have the same effect of driving prices down with competition.
In its defense, Verizon argued that it's unfair to compare Internet speeds of American cities to foreign cities. In a response to Ars Technica, a company spokesperson said that the study is flawed because it only looks at cities. The speeds in countries like China dramatically drop once one leaves the cities.
Of course, for that argument, we only have to look at states with large rural populations. The city gets fast Internet for a decent price whereas consumers out in the rural parts of the state are stuck with slow Internet for higher prices. It's the same situation around the world with the cities getting the better deal while those in rural communities are left high and dry. Even then, it's still surprising to see cities in foreign countries getting a better deal than their U.S. counterparts.