Good internet service is still a luxury in the US

“Home broadband is more important than ever. It’s also seemingly a luxury good.

Just over half of Americans making less than $30,000 a year have home broadband, a service that’s increasingly important for numerous aspects of life, from school to work to socializing. A much higher 92 percent of households bringing in $75,000 or more per year have home broadband, according to a new survey by Pew Research Center.”

“That’s due to the high cost of internet in the United States — about $60 a month — which is more than many Americans can afford. Nearly half of those without broadband don’t have it because they say it’s too expensive, according to the survey. Broadband in the US is more expensive than in many other developed nations.

The crux of the issue is that the US is very large and building out internet infrastructure is expensive, so internet companies are more likely to do so in areas where there are lots of paying customers: wealthier and populous areas. Since internet companies are not regulated like utilities, they have little economic incentive to build out internet to isolated or poorer areas, where there are fewer customers or at least fewer customers who can afford it. The result is a digital divide in which many poorer and more rural Americans lack access to broadband internet.”

“In the meantime, about half of those without broadband say they can do everything they need to do online with their smartphone.”

“People can do plenty of things perfectly fine on a smartphone, but there is an upper limit (try writing and sending a cover letter, toggling through different tabs and apps for work, or even being able to get the same options on your bank’s mobile website as its regular website).

“In most cases, it’s easier to use a bigger screen with a connected computer than it is to use a smartphone. If you don’t have [a computer with broadband], you’re not really plugged into the modern economy,” Rainie said, pointing to how important having a computer with broadband is for things like applying for a job. “The data shows you’re not capable of being the kind of social, political, and economic actor that people who have broadband are able to be,” he added.”

Give everybody the internet

“According to the Federal Communications Commission (FCC), 21 million Americans don’t have access to quality broadband internet, though some estimates suggest that number is much higher, even double. Millions of people simply can’t access broadband because the infrastructure isn’t in place. Then there’s the question of cost — just because a wire runs by someone’s house doesn’t mean they can use it. In 2019, Pew Research found that half of non-broadband users still say they don’t subscribe to the service because it’s too expensive, and nearly one in five households earning $30,000 or less aren’t online. A $60-a-month internet option, about the national average, is only available if you have that $60.

Now the coronavirus pandemic has put into stark relief how crucial it is to have the internet — and how costly it is to be without it. For millions of kids, it means access to an education. For many workers, it means doing their jobs. For patients, it means talking to a doctor. It’s how we access government services, look for work, find our homes, and stay connected in our day-to-day lives.”

“Broadband internet in the United States is not great. It is too slow, too expensive, and it is not everywhere, even in urban areas. Major telecommunications providers have been accused of “digital redlining” in cities such as Cleveland, Detroit, and Dallas, and discriminating against low-income and minority communities. Even where there is a decent internet connection, there’s often only one option for a provider, and customers are left to whatever the whims of that provider are.
The issue is, in part, that much of the country’s internet infrastructure has been left in the hands of the private sector, an atypical scenario relative to other services that require vast infrastructure.

The way it works is that there are fiber optic trunk lines across the US, and from there, other cables branch out. Fiber is fast and pretty much limitless in capacity, but it is also expensive to install — especially in the last mile, the final bit of connection to a business or home. Most people get broadband through coaxial cable networks for that last mile, while others go through DSL that runs on copper phone lines. The former is slow, the latter slower. The US lags behind countries such as South Korea, Japan, and Switzerland when it comes to typical download speeds.”

“For private telecom companies building out broadband, that means making decisions about where to expand based on their bottom lines. Getting the internet to small communities or communities that are unlikely or unable to purchases their services may not be worth the upfront investment. The competitive incentive isn’t there.”

“Telecommunications companies and ISPs are natural monopolies, which means that high infrastructure costs and other barriers to entry give early entrants a big advantage over potential competitors. It costs money to install cable systems, and once one company does it, another one doesn’t want to do it again, nor does the company that made all the investment want to share. Many Republicans and Democrats have taken a lax attitude toward the telecom industry, allowing companies to get big and powerful — the Telecommunications Act of 1996 allowed for an enormous amount of consolidation in the industry. On top of that, at the local level, many municipalities have signed franchise agreements with ISPs to wire up their areas, further locking in monopolies with little negotiating power.

“If you leave these guys to their own devices, they will divide up markets, consolidate, and charge as much as they possibly can,””

“The government has given private companies billions of dollars to try to fund broadband projects, especially on the rural front, but not all of that money has been well spent. Funds have gone to operating costs for existing telecom providers instead of capital costs to build infrastructure outright. Sometimes, companies don’t wind up building out the networks they promise.”

“More than 20 states have laws that ban or put up roadblocks to municipal broadband projects that might allow cities to provide alternatives and compete. The telecom lobby fought hard for these provisions. In deep blue California, a bill to expand broadband access there recently died in the state assembly.”