“Information and data is the oil of our era,” explained telecom policy expert Susan Crawford at the New America Foundation on Thursday. “We’ve got a few very large companies serving shareholders but not necessarily sharing our interest.” Crawford was drawing a parallel between the robber barons and oil magnates of the 19th century and today’s 21st century telecom and cable companies at an event to discuss her new book, Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age. The book highlights the ways in which a series of mergers, consolidations, and failures in antitrust law have led to an oligopoly within the American broadband market. This lack of competition has had grave consequences on American consumers, allowing companies to charge more money for limited services. Crawford notes in the book that developed nations who have leveraged policy in favor of broadband competition enjoy much cheaper and faster broadband access, and that American innovation and economic competitiveness are at stake.
“Truly high-speed wired Internet access is as basic to innovation, economic growth, social communication, and the country’s competitiveness as electricity was a century ago,” Crawford writes in the book, “but a limited number of Americans have access to it, many can’t afford it, and the country has handed control of it over to Comcast and a few other companies.”
Crawford is a law professor and is currently a Fellow at the Roosevelt Institute, where she spearheads the Institute's work on promoting universal and affordable high-speed Internet access. She previously served as Special Assistant to the President for Science, Technology, and Innovation Policy.
In her work, Crawford examines the problems with the US broadband market, often drawing parallels to what is happening in other countries. To illustrate the problems here, Crawford recalled her January visit to South Korea –– a nation where high-speed broadband is widely available at low cost.
“People [in Seoul] told me that coming to America was like taking a rural vacation,” she said. “Life slows down when you come to America.”
In contrast to many Asian and European markets, America’s Internet is generally slower and more expensive. Discussing this problem with Open Technology Institute (OTI) Director Sascha Meinrath, Crawford acknowledged the work OTI has done in this field as well, noting our Cost of Connectivity study last year: It found that in a comparison of retail broadband plans across 22 cities worldwide, American consumers are paying more for worse Internet options than their international peers.
Throughout the evening, Crawford stressed the need for greater competition in the U.S. broadband market as a solution.
“We believed that the magic of the marketplace would protect us when it came to high-speed internet access,” Crawford explained, “that we’d find a way to have telephone connections compete with cable modem connections, that they would be roughly the same price, and they’d be battling with each other. [We thought that dynamic] would provide access to all Americans as well as keep prices down to protect consumers. ... It turns out that we were wrong.”
Crawford noted that for broadband speeds of 25 Mbps or greater consumers only have one real choice: cable. She pointed out that Comcast and Time Warner have essentially divided up the wireline markets in the United States while Verizon and AT&T have shifted their focus to wireless service provision, leaving more than 80 percent of American consumers with few, if any, choices in providers.
This lack of competition in the market can lead to a number of headaches for consumers, like data usage caps. These allow providers to charge additional fees when consumers go over their monthly data limits. The providers claim the fees are there to manage network congestion and benefit consumers– but that rationale is false. OTI has released several papers examining how data caps are not about congestion or “fairness” but instead about generating more revenue from consumers. Crawford emphasized that seeking higher profits does not make these companies “bad,” but that in the current uncompetitive market, their behavior has resulted in American consumers paying extremely high prices for a service that is becoming as essential to our lives as a basic utility.
Crawford closed the evening with some recommendations for how the U.S. can improve its broadband situation. One way lawmakers can help: Enable communities to build their own local fiber optic broadband networks. Federal policymakers should preempt state laws that ban communities from building networks--laws that are often passed with backing from telecom industry lobbyists.
In the near future, Crawford urges policymakers and the public to fight for an America where every household has access to a broadband connection with 100 Mbps download and upload speeds as a “basic” service.
“Even though you need a wired high-speed internet connection in order to get a fine education, to apply for a job… to get the best healthcare available, to… start that new business,” she said, “we don’t have the kind of universal, world-class access that the country that started this whole thing --the Internet--should have.”
This piece was cross-posted from In the Tank, the New America Foundation's blog.
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OTI Director Sascha Meinrath and telecom policy expert Susan Crawford discuss her book, Captive Audience, at the New America Foundation on February 28, 2013.