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To expand broadband, cultivate real competition

By Joel Dreyfuss

Federal Communications Commission Chairman Julius Genachowski told a congressional committee yesterday that he is determined to expand broadband Internet access, even though his authority to regulate it has been put into question by a court ruling. And Sen. Jay Rockefeller (D-W. Va.) promised to support the FCC. But a better way to expand broadband access in the U.S. is to create real competition.

While we like to think that we have the best of all possible worlds in America, my experience in France suggests otherwise. Three years ago, I needed to set up communications in a Paris apartment. From the start, I realized the game was completely different. In most U.S. cities, you have two and a half choices: the cable TV operator, the phone company and, maybe, a third Internet Service Provider (ISP), either someone who rents bandwidth from one of the other two or a satellite provider. In Paris, I had eight to 10 choices, including Orange, a subsidiary of France Telecom, the government phone monopoly.

Most of the French Internet access providers offered "triple-play" bundles: Internet, phone and television. They also provided download speeds much faster than those typically offered to residential customers in the U.S.: 20 megabits, more than three times faster than the typical offer from cable providers in America.

But the real surprise was price: 30 Euros (around $41) a month for all three. That got me 70 to 80 standard TV channels, high-speed internet access and unlimited phone calls to 70 countries. For the equivalent services in the U.S. (and no free international calls), my bill is about $150, more than three times more expensive.

Time Warner is currently offering a $99-a-month bundle in the New York area, with phone service limited to the U.S. and much slower Internet access than I get from Free, the French company I signed up with. And the price of the Time Warner bundle is only guaranteed for a year. It surely will rise to current "market" rates. Verizon has been rolling out its FiOS (fiber optics) service, which promises Internet data speeds similar to what I get in France, but, again, the cheapest bundle advertised is more than double what I pay in France.

Why so much focus on speed? The data rate has become more important as consumers watch more videos on their PC’s or telecommute to work. Video conference calls have become commonplace between workers at the office and at home. All these activities require larger pipes than the slow, artificially constrained pathways that U.S. consumers have been offered up to now.

How were the French able to get such a bargain? Because those socialist, cheese-eating, Jerry Lewis-loving, warned-us-that-Iraq-was-a-mistake French managed to create real competition in Internet service that the U.S never has. To be competitive, independent ISP’s needed to "co-locate" their equipment on the premises of the companies that controlled the internet trunk lines: the phone and cable companies.

But the phone and cable companies discovered early on that they could block or frustrate independent ISP’s with impunity. Many ISP startups went out of business trying to get connected or paying exorbitant connection fees. The result is that Americans have slow, expensive Internet service. Genachowski should take a trip to Paris and check out what a real competitive market looks like. April is a particularly good time for a visit.

By Joel Dreyfuss  | April 15, 2010; 1:58 PM ET
Categories:  Dreyfuss  | Tags:  Joel Dreyfuss  
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Comments

Joel, i agree with you wholeheartedly. I worked for Time Warner for a time and it was a real eye opener. There is no competition with cable. the cable companies get together and divide up the country. When Adelphia and other cable companies went bust, Time Warner and Comcast got together and divided up the properties. Where there was overlap, they even traded areas. Where does this leave the consumers. Stuck. I too, have the bundle. i am paying 110 for the bundle with no premium channels. What has happened to anti trust laws in this country?

Posted by: Mollybeejay | April 15, 2010 11:18 PM | Report abuse

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