Facing Growing Pressure To Suck Less, Big Telecom Claims Broadband Is Super Cheap (It Is Decidedly Not)
from the reality-is-what-I-say-it-is dept
Despite some bold but vague promises, it's still not clear exactly where the Biden administration is going to fall on broadband policy. While the administration is promising a $100 billion investment and "bold action" on broadband, it's also oddly in no rush to appoint a permanent FCC boss, or restore the FCC consumer protection authority gutted during the Trump administration. There's also a lot of telecom industry lobbyists standing in the long stretch between the administration's promises on broadband, and actual implementation.
COVID put an extremely bright light on the US' expensive and mediocre broadband, applying more political pressure on lawmakers and regional monopolies than they've seen in a long while. That's compounded by the very correct sense that as everybody has hyperventilated over "big tech," "big telecom" has gotten away with a pretty large heist the last few years when it comes to enjoying mindless deregulation and massive tax breaks in exchange for, well, absolutely nothing.
Enter consumer groups, which have been trying to apply more pressure by highlighting the very real cost of rampant regional monopolization, and all the empty promises of the Ajit Pai era. Free Press, for example, recently released a study (based largely on data from the Bureau of Labor Statistics) showing that during the last four years, broadband prices grew at four times the rate of inflation during the Trump era.
AT&T, Comcast, Verizon, and Charter (Spectrum) lobbyists haven't much liked that, and have been trying to circulate misleading studies of their own claiming that if you tilt your head and look at U.S. broadband pricing just so, it's an incredible and growing value:
"The cable industry's top lobby group, NCTA–The Internet & Television Association, this week accused advocacy groups of using "cherry-picked data." But the cable group's claims that prices are going down is contradicted by US government data showing that Americans are paying more every year. The cable lobby's argument that prices are going down relies on the price per megabit rather than the average price that consumers pay each month."
By that logic, Americans should feel lucky that they're not paying $2,800 a month for 100Mbps service. But obviously, the bandwidth needs of Americans and the bandwidth capabilities of broadband networks have steadily increased over time, even as ISPs' costs have dropped, just as the capabilities of smartphones, processors, and other technology products inexorably increase over time."
One of the primary ways telecom giants sock captive consumers with endlessly higher prices (then pretend they're not doing this) is the use of misleading fees and surcharges that only show up when you get your bill. So of course if you only look at the advertised price (which many industry studies do), or only look at the price per megabit, you'll get decidedly different pictures than what you'll see on actual consumer bills. But most objective studies have made it clear for many years that US consumers pay some of the highest prices for broadband in the developed world thanks to limited competition and regional monopolization.
Neither party has been seriously willing to challenge massive, politically powerful telecom monopolies. The industry's worst nightmare is meaningful rate regulation. But while that's often bandied about as some sort of apocalyptic bogeyman and ever-present threat, the reality is that's never been a serious consideration under either party. Even net neutrality rules, the now dead attempt at something vaguely resembling telecom monopoly oversight, went well out of its way to avoid ever meaningfully regulating the telecom sector when it comes to price via forbearance and large regulatory carve outs.
It's just not politically productive to seriously challenge, say, AT&T, a company that slathers Congress in campaign contributions and happily spies on your own citizens for you. And while the Biden administration is at least initially promising to change that narrative and lower consumer broadband prices via "bold action," it's still not really clear how that's going to actually happen, or if good intentions will survive the telecom industry lobbying and disinformation gauntlet.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: broadband, competition, fees, prices
Reader Comments
Subscribe: RSS
View by: Time | Thread
i assume they are comparing the price to the cost of a private trip to the International Space Station? there cant be much else that is even close!
[ link to this | view in chronology ]
Re:
I take it you weren't around when an ISDN line with 64kbps that was billed per minute was a great step forward from analog phone lines.
With that setup you'd probably have to pay about 10 minutes' worth for cookies and ads and other crap occupying an average "modern" web page.
And a minute on the phone was not as readily affordable then.
[ link to this | view in chronology ]
Re: Re:
I take it you're not from the NANPA area, where ISDN was a "great step forward" only for those who weren't paying the bill themselves—notably, voice actors and children of telephone company employees. Otherwise, "a minute" on the phone wasn't a relevant cost, because ISPs were almost always a local call and therefore incurred no telephone charges beyond the monthly fee.
Even adjusting for inflation, families are likely paying quite a bit more for telephone service now, assuming no long-distance costs.
[ link to this | view in chronology ]
Re: Re: Re:
Correct.
It was well into DSL times before local calls in Germany became zero-cost. In ISDN times, you paid about DM0.23 (probably about 8¢ at that time) every 6 minutes per B channel.
[ link to this | view in chronology ]
Broadband is cheap...
The fees are not. Good luck finding out how much they are before you pay.
[ link to this | view in chronology ]
Re: Broadband is cheap...
"Not good" is putting it mildly. When they aren't legally mandated and aren't shown prior to billing, the word is "Fraudulent".
[ link to this | view in chronology ]
'limited competition and regional monopolization'
you forgot to add the amount the 'big 4' pay to congress persons, lawmakers and security services that do whatever they have to to ensure that the service given is not only extremely expensive, is far from good (consistent only in that it breaks continually), cant cope with the number of customers using it at any one time, that customer services is just as bad as the service itself and the top bods are paid an absolute fortune, not for what they do to give a good service but for how much they can cream out of the government coffers!!
[ link to this | view in chronology ]
Given their vast resources and expertise, normal broadband (100mbps - 1gbps) should be able to cost $25/month and still let them earn gobs of cash. The infrastructure lasts for years/decades, and the wholesale cost of data plummets in price every year.
Prices of $75-100/month should be reserved for 10gbps+ plans.
[ link to this | view in chronology ]
Re:
You can get that for $45 a month prepaid from Comcast, even less if you're low-income, and their wifi is now free to all.
[ link to this | view in chronology ]
In the '90s, it used to cost less than that for unlimited dialup. It occupied a phone line all the time, so if you wanted incoming calls, you'd effectively have to pay another $20/month for a dedicated line. Still, cheaper than now for a "top of the line" connection (and nobody ever complained I was running near capacity for 700 hours a month, and the operators hadn't yet figured out how to optimize costs).
Look at old computer ads, though. Everything's cheaper now, without adjusting for inflation. I remember my father paying like 2 thousand dollars for a "good" PC circa 1990. Those 1990 dollars would be worth 4 thousand now, but it's hard to spend more than 2 thousand for a really great PC.
In other words, I think your $25/month is being really generous to the ISPs. "Low-end" 100mbps should probably be more like $15/month, with $75/month being more for small/medium business-class services.
[ link to this | view in chronology ]
Re:
Because there was this unheard of thing called competition! If ISPs had to compete with each other to offer service over regulated infrastructure, we would have super fast super cheap internet just like everywhere else.
[ link to this | view in chronology ]
Re:
Those computers were such a quantum leap that they paid for themselves with the labor they saved and enabled. Just like a taxi can turn a car profitable.
The price of tech always drops, as it has since Pong ($200 in 1973, $10 in 1975), calculators, VCRs, etc. By 1998 a top machine was about $650.
[ link to this | view in chronology ]