The Internet Monopoly

As of December 2016, more than 129 million Americans have only one option for broadband internet service in their area – equating to about 40 percent of the country. Out of these 129 million customers, about 52 million are forced into obtaining internet from known Net Neutrality violators. In total, just over 177 million Americans are stuck with one or more ISPs who have committed Net Neutrality violations. The report, carried out by the Institute For Local Self-Reliance (using data directly from the FCC’s public data) also shows that on the US East Coast, nearly 15 million people will soon be limited to a single broadband provider that has already violated Net Neutrality regulations.

As discussed in my previous post, providers such as Comcast and AT&T have consistently been under pressure from consumers and the FCC for various Net Neutrality violations throughout the past several years. However, the list extends far beyond the major three ISPs (Comcast, Charter/Time Warner and AT&T) (this list https://www.freepress.net/blog/2017/04/25/net-neutrality-violations-brief-history provides an overview of several nationwide and international cases of broadband-provider Net Neutrality violations.

So why is it so important for Americans to have a market protection from Net Neutrality violators? Well, there are several reasons why this “internet monopoly” directly

impacts the American consumer.

  1. They’re in It for the Money.
    It is no secret that American broadband providers are very centralized on revenue and not the consumer. For an internet connection of 25 megabits per second, New Yorkers pay $55 – nearly double that of what residents of London, Seoul and Bucharest pay. Customers in Hong Kong, Seoul, Tokyo and Paris receive connections nearly eight times faster and pay the same price or less than major US cities. Additionally, cable prices have been growing constantly over the past two decades. In 2017, Comcast hiked it’s base cable pricing by $48 and its price increases follow a major trend of consistent price hikes from ISPs that have been growing faster than inflation. This clear focus on profit over consumer rights leaves dangerous room in the absence of net neutrality. If ISPs can charge an extra twenty dollars a month by splitting cable into Comcast or Verizon won’t hesitate to charge extra for access to streaming websites for an extra ten dollars per customer. The lack of ISP options for many people give ISPs the power to hike prices without financial repercussions and with Net Neutrality slowly disappearing, they now have options to increase their revenues while consumers have no other options but to keep cashing larger checks.
  2. Consumer Rights Violations
    The principle concept of Net Neutrality is that both the website/domain receive equal treatment and access/speed to all other websites. Comparatively, the consumer should be able to access every website/service equally. Therefore, many people believe that the equal treatment of internet traffic is a fundamental right. Blocking or slowing access to certain domains has various implications on one’s freedom of expression and access to information. If smaller websites cannot keep up with larger services with ISPs charging more, we risk being limited to websites belonging to companies that can afford to pay off the cable companies to prioritize their content. This, in turn, limits your access to information to what these specific websites offer, and your online speech to their publishing and communication platforms. We could see the internet reduced to social media giants and shopping websites, and we could lose equal access to all the little random, odd corners that make the internet what it is today.
    With these potential changes, consumers will undoubtedly feel as if their rights are being infringed upon, and other than expressing public disagreement (which so far has not achieved any executive action), a majority of Americans will be unable to react due to the limited ISP options as discussed above.

This monopoly on the broadband industry has not only allowed ISPs to raise their prices and potentially abandon the concept of a fair and equal internet, but it has incentivized them to further this process. A large pillar of this issue stems from the statistics above on the lack of freedom in ISP choices. Providing customers with a wider array of choices would allow consumers to boycott larger ISPs and would create a free-market situation, however given the major infrastructure costs and sizes of the existing companies, this is unlikely.

Nevertheless, companies such as Google have taken a role in providing consumers with alternatives. Google Fiber is the company’s approach to giving consumers a faster and more financially viable option. While major ISPs were notably lobbying for the net neutrality vote, Google did, although quietly, express its dismay for the outcome. Unfortunately, the progress with this project has been relatively slow and currently only serves about 400,000 customers and is available in only 9 areas across the country.

While this issue predominantly affects the net neutrality debate, unfortunately I don’t believe that we will see change here given the strong hold on the industry. However, with Net Neutrality regulations in place, there are at least strong restrictions in place to help prevent future violations.

 

https://ilsr.org/repealing-net-neutrality-puts-177-million-americans-at-risk/

https://www.pbs.org/newshour/world/internet-u-s-compare-globally-hint-slower-expensive

https://www.extremetech.com/internet/240942-comcast-cable-costs-jump-48-per-year-thanks-increased-fees

https://www.hrw.org/news/2017/12/13/protect-open-internet-us

https://www.freepress.net/blog/2014/04/14/comcasts-wallet-lightening-ways

4 thoughts on “The Internet Monopoly

  1. To my understanding, Net Neutrality was first introduced in 2015. Prior to this legislation, it was not an established policy, thus companies did not have to abide by its provisions. Since this is the case, what make the repeal of Net Neutrality, only 3 short years later, so terrible? Have the circumstances within the industry changed? Are the companies less able to function within the free market system? It is just unclear to me what the difference is in the situation between 2015 and today.
    Aside from this, if there is a major monopoly issue, this leads me to think that the government might impose some sort of price control on the ISPs to keep the internet affordable for users. In a case such as this, a price ceiling could be set below the equilibrium market price which would restrict the ability of the ISPs to price things however they please. This, however, might be a far-fetched concept given that the government was the body that allowed for the repeal of Net Neutrality and the FCC is clearly in favor of an unrestricted market situation.
    In terms of the idea of Google, starting an affordable internet accessibility option, I think this is an extremely valuable and beneficial action to multiple parties involved, Google and the people of the United States. By providing a cheaper internet option, people will not only go through Google to access the internet, they will associate a sense of trust with the Google brand as a company that has the best interest of the people in mind. This could potentially boost Google sales in various facets, some examples being increases in sales of Google Pixels, Google Home systems, Google merchandise, and Google stock. The major downfall of Google’s plan to provide affordable internet is obviously accessibility. As you stated in your article a select few locations have access to Google Fiber, the internet platform used by Google. This would pose an issue to those outside of these areas. But with all hope, Google may be able to expand their boundaries to reach more people of the U.S. providing them with affordable internet access.

    • To quickly respond to your first point, the concept of Net Neutrality has been around for longer than 2015. The term was coined in 2003 in a paper by professor Tim Wu. Back in 2005, there was a court case which essentially determined that Net Neutrality could not be upheld unless broadband carriers were reclassified under the Telecommunications Act. In 2015, that reclassification finally happened (although it was recently reversed). However, the battle for Net Neutrality has been taking place since shortly after the internet went mainstream.

  2. Absolutely agree that this is a huge issue. ISPs can do whatever they want and many consumers have no choice. One potential solution which has been explored is allowing cities to build their own broadband networks. These networks would be maintained by local governments and would provide service to their constituents at potentially faster speeds and at a potentially reduced cost. A system like this would give consumers a second option, and could pressure the major ISPs into competing. However, many states have legislation which explicitly prevents this, despite the fact that the majority of Americans support the idea [1]. Perhaps with the (somewhat) recent surge of interest in Net Neutrality, more people will support this system and laws will be passed to allow it. Until then, ISP monopolies are a major threat to a free and open internet.

    [1] https://www.theverge.com/2017/4/10/15245166/americans-want-municipal-broadband-pew-survey

  3. If our military were to come home and seize all the property of the fatcats that we’ve endured for so long to pay off this ridiculous debt we’re in (i.e. http://usdebtclock.org) and maybe get them off the streets so the rest of us could be safe…..no wait, I got a better one: IF AMERICA HAD FREE ENTERPRISE we’d ALL be dropping the monopoly internet providers like hotcakes. What is RACKETEERING? What is PROFITEERING? Where the hell is our military when WE need them (oh yeah, tucked away overseas so the predators can run amok here).
    Signed, outraged

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