The greater impediments to the U.S.'s successful delivery of high-speed broadband, however, are political and economic. The Federal Communications Commission has incomplete authority to manage the broadband market—thanks to its 2002 decision to classify the Internet as an "information service" rather "telecommunication service," the latter of which the agency would have been able to control as part of the Telecommunications Act of 1996. This opened up the courts to shoot down the FCC's efforts to enforce net neutrality and keep Internet providers from limiting Web traffic, as the U.S. Court of Appeals for the District of Columbia Circuit did in April when it ruled in favor of Comcast. The FCC had objected to Comcast's blocking of subscribers' access to peer-to-peer software used to view bandwidth-hungry video.

ISP nightmares
What really scares ISPs is the potential that they would have to invest in a more robust infrastructure to support a steep increase in Internet traffic, without any reassurance that they could make more money from implementing new fiber optics. Internet protocol–based traffic will increase 4.3 fold between 2009 and 2014 worldwide, to the point where 750 exabytes (an exabyte is one billion gigabytes) of data per month are coursing through the Net, Robert Pepper, Cisco's vice president of global technology policy, said at the telecommunications forum. North America will generate the most Internet protocol (IP) traffic by 2014—19 exabytes per month, according to Pepper.

Much of this growth will be driven by video downloads. People cannot get enough of Web-based video, whether it is downloaded to their televisions, computers or mobile phones, Pepper said, adding, "Video to the PC is big, and video to the TV is growing."

Such predictions do not sit well with ISPs, which are reluctant to make large investments in infrastructure since the 2001 dot-com meltdown left many of them with lots of capacity to access the Internet but not nearly as many companies to pay for that access. Telecommunications companies are operating at a time when they are struggling to find new means of revenue growth, despite the demand for faster and more reliable fixed and mobile access to the Internet, Yves Gassot, CEO of French telecom research firm IDATE, said at the Columbia forum.

Time Warner Cable and other ISPs want to increase broadband capacity in step with demand. "From our perspective, it has to be driven by what consumers actually want, not what we hope they might want," Steve Teplitz, senior vice president of government relations for Time Warner, the U.S.'s second largest cable operator and third largest ISP, said at the confab.

Also weighing down ISPs is the FCC's National Broadband Plan, mandated by Congress last year as part of the American Recovery and Reinvestment Act. The plan aims to provide 100 million U.S. households with access to 100-megabit-per-second Internet connections by 2020.

"We think the government is ill-suited to make judgments regarding what infrastructure is required and the capacity level," Teplitz said. Whereas 100 megabits per second has widely been touted as a target broadband access speed, "maybe we'll learn that 100 megabits per second isn't enough. The government shouldn't decide what the speeds are."

Not surprisingly, Verizon has the same view as its ISP competitor. Looking even further out, Link Hoewing, Verizon's vice president of Internet and technology policy, said at the Columbia conclave, "Given the usage we're seeing, we can't justify gigabit delivery and the costs that would entail."

But ISP attempts to paint themselves as victims of increased demand for their services are hard to figure. Last year, Verizon's average revenue per user per month (ARPU) for data services grew by 17.9 percent to $15.20 compared with 2008 due to increased use of mobile broadband, e-mail and messaging offerings. The company's wireless data revenue grew 31 percent. (AT&T's wireless data revenue grew 33 percent in 2009.) (pdf) Likewise, Time Warner saw an increase in revenue for both its residential and commercial high-speed data services from 2008 to 2009, according to the company's 2009 annual report (pdf). Time Warner also reported that the costs to deliver high-speed data services decreased during that same time period.

22 Comments

1. 1. dbtinc 12:49 PM 10/26/10

   $28 a month for Premium service!? And here in the US, we are ripped off for $50 a month for much slower access. Yep, slowly but surely we are slipping into third world status.

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2. 2. yrral86 01:08 PM 10/26/10

   $50 a month? I pay $73. But, they have 3 carriers... I only have one option. Hooray for regional monopolies!

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3. 3. yrral86 01:09 PM 10/26/10

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4. 4. Zog469 01:54 PM 10/26/10

   Not only do we pay more, have fewer choices (regional monopolies, as yrral86 stated), but to top it off...slower speeds. Talk about the US consumer being ripped off.

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5. 5. candide in reply to Zog469 02:23 PM 10/26/10

   All true, and embarrassing for the U.S.
   
   I have the highest speed I can get - 35Mbs symmetric (up & down). This would be 1/3 of what some other countries have, and I probably pay three times as much.

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6. 6. jtdwyer 02:52 PM 10/26/10

   It's a matter of economics an physical reality: it is more costly to provide high speed communications infrastructure to a large geographic region with low population density. Complain all you like, the real costs of high speed internet will be higher in the U.S. than smaller, denser countries like S. Korea and Japan. I can't guarantee that your provider isn't ripping you off, but don't compare them to those in S. Korea.
   
   Now, that one-world government could institute global cost-sharing for all internet access, charging a flat fee and providing regulated equal service for everyone, if that's what's most important in life...

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7. 7. landonthegr8 in reply to jtdwyer 03:14 PM 10/26/10

   I agree not only with everyone else's posts, but I do see your point as well. That said.. in a capitalist environment where supply and demand are almost biblical, is there any excuse for these monopolistic companies not providing the services people want at a fair price? I doubt it very much. This country started the internet, and there is no excuse for the lack of options to choose ISP's, lack of bandwidth, and the ever increasing prices for mediocrity.

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8. 8. yrral86 03:41 PM 10/26/10

   I'll acknowledge that population density has a lot to do with it. However, I have the feeling that the companies are approaching it like this: we can make 10% in NYC and stay competitive, so in WV we will set the prices to make 10% there too. If there was competition, they might accept 5% and still profit, but there is none. I guess I should just consider myself lucky that I can get decent broadband at all. My parents that live an hour away can only get satellite, with it's shitty latency and awesome 500MB/day cap. Want to download an iso of the new Ubuntu release? Ok, but you have to throttle it to download over 2 or 3 days so you can still use the internet for everything else you need to do. Competition is the only thing that separates capitalism from feudalism, and in WV internet service is a feudal system. Luckily, the internet isn't as crucial as land.

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9. 9. dbtinc in reply to jtdwyer 04:02 PM 10/26/10

   but doesn't that mean they have more customers to cover their costs? Don't blame in on the "one world" government, blame it on a US government more interested in protecting the best interests of Comcast and other major donors.

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10. 10. candide 04:05 PM 10/26/10

    Population density is certainly a factor, but I live in one of the most densely populated areas of the US - and until recently had a choice of one provider.
    
    I have a choice of two now (with very similar prices and very similar crappy customer service), but still have mediocre service when compared to some other countries, like the UK.

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11. 11. ruspert 04:35 PM 10/26/10

    If there is any way to speedup and refine the internet it is to stop spammers and spam along with the malware, virus & anti-virus industry. I can see the internet going nowhere with the present situation allowed to exist.

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12. 12. NHMountainMan 05:24 PM 10/26/10

    Much of internet traffic is caused by malware, virii and spam, "DOWNLOADED" from the internet on one way or form.
    
    How about implementing a spyware, antivirus, and malware gateway at every ISP? On connection or file / mail communications from the user to THEIR ISP, something should verify that the objects being transmitted are NOT a virus, malware, or spam. Presto.....clean internet....fast comm's, and everyone's happy.

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13. 13. Accountable 05:52 PM 10/26/10

    I agree that the US is a large and mass. But... 90% of what I get via email every day is neither requested nor desired. If people broke into my home, used my utilities, etc., they'd be jailed as common felons -- if they didn't get a case of lead poisoning first. Why do we continue to allow people to overload the internet and delay what we -- who pay for it -- want? And I do agree with multi-tiered plans. If you want to stare at movies all day long via the internet, you should pay a higher rate. Every day, I doubt more that my interests get any rcognition by the people making these decisions. Spammers and hackers? Jail them. Heavier users, charge them.

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14. 14. candide in reply to NHMountainMan 05:55 PM 10/26/10

    "How about implementing a spyware, antivirus, and malware gateway at every ISP?"
    ...
    Presto.....clean internet....fast comm's, and everyone's happy."
    
    If only it were that easy. Lots of problems with your suggestion:
    
    - Most of the stuff comes from individual machines, "bots", that are controlled. How about everyone have their own AV/Security software and and keep up-to-date on updates?
    - How about Operating systems be built without security vulnerabilities?
    - One persons SPAM is another's marketing email, who gets to draw the line?
    - Plus, the obvious, ISP's are selling services to spammers. Do YOU want to cut off paying customers?
    - Viruses and malware are difficult for even security vendors to identify, they are skillfully developed to look harmless.
    - FYI the #1 country that produces SPAM is the USA, followed by China and Brazil.

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15. 15. jtdwyer 06:36 PM 10/26/10

    My earlier comment seemed necessary to balance the discussion.
    
    I don't disagree with majority of the preceding comments, especially regarding the benefits of competition, but it won't help if the competitors can't (fairly) make a profit. My customer service is atrocious, too, and there's fiber to the home across the street from me but I can't get it because of some neighbors' credit ratings...
    
    My 'one world' remark was intended only to point out that if this is seem as a multinational 'fairness' issue there's really only one solution. Well, I guess we could bomb their internet, maybe using EMI?

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16. 16. jtdwyer 06:48 PM 10/26/10

    I do think there is a fundamental distinction between using internet bandwidth for enhanced communication and informational content, another of convenient personal access to movies.
    
    The video download business is a direct for-profit industry that is taking enormous advantage of the local 'free' bandwidth infrastructure. In my opinion such bulk data transfers could be identified and relegated to lower priority usage charge bandwidth partitions. In that way your neighbors movie rentals would not interfere with your quick searches, etc.

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17. 17. sethdayal 03:07 PM 10/27/10

    According to Time Warner their profit on broadband is over 3000% with their ancient antiquated cable equipment.
    
    http://www.wired.com/epicenter/2009/04/time-warner-c-1/
    
    Look at the chart from time warner's 2008 annual report 8.4 million customers, $4.2B revenue, costs $146M . Works out to a cost of a little over a buck a month a customer. When you look at the tiny bit of mass produced equipment required on top of existing , television, telephony applications it's easy to see why.
    
    Lots of room for a nonprofit or municipal utility to provide service at for a few bucks a month.
    
    Using public power infrastructure, a dirt cheap fiber to the block network could be installed in every city, town and village with wireless N 2/5 Ghz access points at each block node. From that block node, signal can be distributed via 1 GigE copper to most subscribers and fiber to the rare more distant ones.Portable users or folks who can't afford a wired connection can connect at 100+ Mbps with WiFi. Upfront costs would be around $30 per wireless user a $100 more for wired and a few $ monthly for O&M assuming universal access.
    
    The FCC now recognizes that low speed smart meters would be a component on the broadband network they envision. The small incremental cost of the high speed network over the low speed smart meter net power companies are planning, pays for broadband network for a extra few dollars a month per subscriber.
    
    Citizens could also do it for themselves with a cheap open-mesh router for $25 which lets them share their internet and secure the home network at the same time. The more plugged in, the more they mesh up. No fuss no programming just plug em in. Open-mesh allows restricting the amount of bandwidth available to neighbors. Contributors can also require logins, resell it if desired, restrict on mac addresses, and boot heavy users.
    
    Stick it to em folks.

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18. 18. jtdwyer 03:10 PM 10/27/10

    Some of the performance claims for other countries' service is not very realistic.
    
    A BBC article from 2007 reports that the advertised standard internet connection speeds, when tested by speedtest.net, generally produce dramatically lower speeds than advertised: clustered around 1-10Mbps:
    http://news.bbc.co.uk/2/hi/technology/7098992.stm
    
    Speedtest.net has their test rankings by country for both download and upload speeds. South Korea leads all download speeds at 34Mbps, followed by other relatively small (dense) countries as Latvia, Lithuania, the Republic of Moldova, Andorra, Aland Islands, etc. The U.S. brings up the rear of their list at just over 10Mbps. Please see at:
    http://speedtest.net/global.php#0

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19. 19. gmpurkat 04:57 PM 10/27/10

    The U.S. teleco's mismanaged their businesses..this, the associated "tech wreck" of circa 2000 and the financial crisis of 2008-2009 have left he U.S. unable to raise the capital necesssary to build out a robust internet infrastructure. This leaves us at a disctinct disadvantage in an intensely competitive global economic contest. Our short term orientation on things like the next quarters earning per share is/will cost us in the long term.

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20. 20. jtdwyer in reply to gmpurkat 05:58 PM 10/27/10

    Again, there is some validity in your comments, but do not ignore the inescapable reality that the per capita cost of providing high speed network infrastructure to a large geographically disperse population is fundamentally greater than a small country with a dense population.
    
    For geographic comparison purposes, the aforementioned Speedtest.net download speed rankings include:
    U.S. #29 @ 10.17 Mbps
    Russia #27 @ 11.36 Mbps
    China #80 @ 3.46 Mbps
    Argentina #96 @ 2.69 Mbps

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21. 21. electric38 03:56 PM 10/28/10

    Just one more reason why why the average citizen needs to be using rooftop solar (and carports). This frees up energy use for data. As all educational resources go on-line, so will the need for language translation software and interactive media.
    
    http://www.allianceforrenewableenergy.org/2010/10/germany-adds-nearly-1-of-electricity-supply-with-solar-in-eight-months.html

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22. 22. jtdwyer in reply to electric38 05:39 PM 10/28/10

    Somehow I fail to see how solar energy addresses internet service issues... Will it also mend my socks?

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