How Ancient Monopolies Keep You from Getting Decent Internet Service

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Many of us tend to assume that here in U.S. we have the most advanced technologies on the planet. So it may be startling to learn that by global Internet standards, numerous experts consider us to be living in something of a Stone Age Internet nation.

The reality is stark. Many countries in the world pay far less for their Internet services than we do, and get much faster and more reliable services in the bargain. While many countries have set a national goal of fiber optics directly connecting every home and business, here in the United States phone companies still are arguing that snail’s pace Net connections should qualify as broadband.

Even when relatively “high” Internet access speeds are available via cable, they tend to be mainly in the downstream direction. For example, I have the highest cable modem speed available in my location here in L.A., which is 300 Mb/s downstream — but only 20 Mb/s up. Obviously, high upstream speeds are important for a range of applications (not just limited to obvious ones like remote data backup). Cable modem speeds are getting better, but the fundamentals of cable system technology continue to dampen upstream speeds.

You might reasonably ask how so many other countries have been able to get much better Internet access to their residents, compared with us here in the country that invented the Internet.

The detailed reasons are complicated technically, legally, and very much politically, but the bottom line is that the Internet ecosystem here in the U.S. has long been rigged against effective competition, a direct outgrowth of early telecommunications monopoly environments.

One example of this may be visible right outside your window.

Have you ever wondered who owns those “telephone” poles throughout your community, or the underground cables and conduits in some towns?

The short answer is: What a mess!

Poles may be owned by power companies, by phone companies, by cable companies, or in some cases by communities themselves — or various combinations thereof. 

The land that these poles are planted in typically is in the form of an “easement” — a specific area of land still owned by the main property owner, but with access and other rights granted by government to various utilities and other firms. It works basically the same way with underground cables and conduits.

As you might imagine, easements can be the subject of complex and varied legal entanglements and disputes, even though most are granted when housing or commercial developments are being initially planned.

But for the sake of our discussion here right now, the most interesting aspect of easements is in older communities (for example, areas built up prior to the AT&T divestiture of 1984).

History matters in this context (as in so many other aspects of life) because when these easements were granted to communications companies back in the day, they were usually “monopoly” grants. That is, while we would probably agree even now that assuming a single water and/or power company would be logical, those historic easements were usually assuming only a single communications (phone) company, or later the original incumbent phone company plus a single cable TV company.

This is incredibly relevant today, because the entities controlling these easements, and that usually own the poles, cables, and conduits that everyone must use to provide landline communications services to homes or businesses, are quite powerfully in the catbird seat.

Here’s why.

In many countries, governments have national Internet plans that provide for robust competition in various ways. But here in the U.S., if you want to bring — for example — high speed fiber Internet to a community, you often have to deal with the incumbent telecom or other utility firms to gain access to those poles and/or underground facilities.

And those firms — like AT&T, Verizon, and the rest of the gang you likely are familiar with — have very little incentive to be particularly cooperative with new competitors bringing in far better services. In fact, the old guard firms have frequently pushed through laws — and/or filed lawsuits — aimed at preventing communities from encouraging or even permitting such competition.

So we find it not uncommon for the incumbents to demand exorbitant “pole attachment” or other access fees, or to delay and obfuscate as long as possible.

It’s important to remember that these incumbent firms typically only control these access assets because of those original monopoly grants from many decades ago — giving them exclusivity that is nonsensical and unfair so many years later. But they’ve become experts at milking every last possible dollar out of the jolly old monopoly days, even now!

If this sounds bad, it gets worse for the captive residents of many apartment buildings and commercial developments.

Building owners and landlords frequently view Internet access as a massive personal profit center, and engage in restrictive shenanigans — some of which can be viewed as illegal — to strike lucrative, and yes, monopoly deals with telecom firms, demanding sweetheart payments for access to their tenants, and treating those tenants as if they were medieval serfs. For more on this particularly seamy side of Internet access, please see Susan Crawford’s excellent recent article: “Dear Landlord: Don’t Rip Me Off When it Comes To Internet Access — When building owners get kickbacks from big providers it’s the tenants who lose.”

You might think that this sorry state of affairs would be pretty much obvious to everyone, but in our toxic political environment that would be very far from the truth.

In fact, there are many in Congress who don’t see any consumer problems here at all. Whether or not one chooses to consider these access issues under the “network neutrality” umbrella, many politicians who have long enjoyed the “generosity” of the incumbent telecom firms are lined up to block any attempts to improve the competitive landscape for Internet consumers, thereby condemning us to continued laughingstock status in the eyes of most other countries.

We do have some power though — in the voting booth. These issues tend to have local, state, and often federal components, and we’re unlikely to see significant improvements while lapdog beneficiaries of dominant Big Telecom remain in political control.

Or perhaps you’re satisfied with exorbitant prices and “Flintstones-class” Internet access throughput. Frankly, this far into the 21st century, I strongly believe that we can do much better than having so many of us running at bare feet pedal power Internet speeds.

Yabba dabba doo!

–Lauren–
I have consulted to Google, but I am not currently doing so — my opinions expressed here are mine alone.

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6 thoughts on “How Ancient Monopolies Keep You from Getting Decent Internet Service”

  1. Here in Minneapolis we have an upstart company – USI Internet – a local company – trying to bring BB to the city. But the incumbents have created a regulatory environment – just as you say – that virtually makes it impossible for them to use the regular power poles. So they’re having to bury their fiber under the boulevards – very expensive -but they’re doing it – slowly.

  2. I fully agree with the issue of the big telecoms, but I’m not sure I agree that foreign countries provide a better competitive environment which is keeping their prices down. I travel around Europe and the Americas fairly regularly, and what I see is either the government owns the telecom system, or the government regulates the prices charged by the private telecoms.

    Telecom systems, water, roads, power and cable systems are all natural monopolies because of the overwhelming first mover advantage. The government regulates the electric rates, and water rates; builds the roads themselves; so why not just state he maximum charge a household will pay for Internet service? And the price could be much lower for much slower speeds.

    The overwhelming issue, is of course and as you mention, the utterly corrupt political class in this country.

    1. Whether Internet access prices are kept low and services robust via competition, government regulation, or some combination of both doesn’t matter much to most consumers. They just want decent service at a decent price. And clearly, in some countries government mandates for the sharing of landline Internet access infrastructure by multiple providers have also played a major role — that’s a clear competitive benefit in the mix that simply doesn’t exist here in the U.S. (attempts were made to go that route here, but they were destroyed by the politicians).

  3. In the SF Bay Area, in the ’90’s (i believe), Covad tried to build an alternative high-speed internet. Every place that i could get Covad for myself or for my clients, the service was fantastic. But, AT&T decided to keep their monopoly, despite court orders, and delayed, delayed, and delayed. Any change of service could take weeks, not minutes. I had to move my customers to safer, established, monopoly ISPs, and Covad died.

    AT&T is simply extending that courtesy to Google.

    My question to Lauren is… aren’t practically all of US urban areas already wired with “dark” fiber? I remember seeing maps of fiber trunks and feeders, years ago (not to the door, but large swathes of main line territory). It seems that AT&T is making so much money as it is, they see no reason to light up any of the already built infrastructure. But if a competitor somehow managed to get in to an area, all the monopoly would have to do is push a button and “compete” almost immediately. Heck of a system.

    1. Depends. Overall, there’s a hell of a lot more interurban dark fiber than intraurban, particularly when we focus on already built up urban areas. The situation is better in some downtown zones, where “abandoned” fiber may still be in place from relatively recent efforts, but move out to the suburbs or beyond and there’s usually no fiber there at all, except under the control of the incumbents, and likely to be “fiber to the terminal” if anything (e.g. AT&T U-verse, cable companies’ distribution networks that do “last mile” as coax, and the like). Newer business and housing developments often have requirements for fiber in the approvals, but that’s a fairly small chunk overall. I’m speaking of the USA case here with all this, not the very, very different situations that exist in many other countries that make us look like a third-world Internet backwater by comparison.

  4. Your post on 9/7/16 about Google getting access to poles in Nashville caught my eye. I live just south of Nashville, and this battle has been going on for some time. AT&T of course is trying to keep Google off of their poles. They cite “safety reasons”, thinking that this should be sufficient to keep Google off the poles. But, to their credit, the Nashville Metro Council saw through that lame attempt at stopping competition. AT&T will sue (or at least they are threatening to sue). I hope that if they do, the courts will see through their sad attempt at squashing competition.

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