Cable Discord

As an American transplant in Paris, Glenside's Rob Hower discovered the dirty, little not-really-a-secret of the U.S. broadband market: Most of us pay much more than consumers in the rest of the developed world for the high-speed data at the heart of so much 21st-century culture and commerce.

Hower's bill for a combination of Internet, cable TV, and phone service dropped by about two-thirds when he crossed the Atlantic - an "American pricing scandal," he said in a recent e-mail. He likened his experience to that of fellow ex-pat Chris O'Brien, who predicted last year in Venturebeat that U.S. readers would cry to hear what he was getting in France for his $63-a-month "quad play": 100-megabit-per-second Internet, 250 cable channels, home telephone with unlimited international calling, and a mobile phone with unlimited calls and 3 gigabytes of data each month.

Such stories are backed by evidence, including three years of "Cost of Connectivity" studies by the New America Foundation's Open Technology Institute. The big question isn't whether U.S. customers are getting squeezed by oligopolistic network owners such as Comcast and AT&T. What we should be asking is why - and, more to the point, what we can do to fix it.

Actually, the "why" isn't hard to spot behind a tiresome ideological divide.

American network owners are doing what any business with pricing power would do when they raise rates at about twice the rate of inflation. They're testing the limits of what the market will bear. Since most Americans lack even two choices for true high-speed broadband, that turns out to be quite a lot - though, ironically, cable's high prices are pushing many Americans to "cut the cord" and training younger ones to never connect it.

Why are prices lower elsewhere? Open Technology Institute senior policy counsel Sarah Morris says a key reason is that other governments have done more to foster competition. In France, for example, regulators moved a dozen years ago to force state-owned France Telecom to let new rivals lease access to its network - much as early U.S. broadband competition thrived when companies such as Earthlink offered DSL service over local phone companies' lines.

U.S. regulators took a different turn, driven by wishful belief in unfettered markets, no matter the evidence or history. Is it really any surprise that cable and phone companies - all tracing roots to monopoly networks built long before anyone imagined using them for Internet data - dominate U.S. broadband?

Even so, thanks to the Supreme Court's 2005 Brand X decision and policy choices during the Bush administration, neither cable companies nor phone companies can be required to share their networks with competitors.

That could change, of course, if Congress decided to amend our telecom laws - not something to count on when companies such as Comcast maintain some of Washington's largest armies of lobbyists.

Still, some key changes are possible.

Under Chairman Tom Wheeler, the Federal Communications Commission recently moved to preempt state laws that block the expansion of municipally owned broadband networks. Like Google Fiber's gigabit network in Kansas City, a publicly owned network in Chattanooga, Tenn., offers a model for what more vibrant competition can deliver - especially if the FCC can clear the way for more such "public option" networks.

Tighter price-transparency rules could also help. In a July 9 letter to Wheeler, four U.S. senators - presidential candidate Bernie Sanders of Vermont along with Al Franken (D., Minn), Elizabeth Warren (D., Mass.) and Edward J. Markey (D., Mass.) - complained that "consumers are often unaware of the various fees that are tacked on to their monthly bills," such as a Time Warner cable-modem rental fee they said has doubled, to $8 a month, since 2012.

Philadelphia consumers have a rare opportunity to win important changes, too, says Hannah Sassaman, a media activist who has been pushing city officials to seek concessions in return for renewing Comcast's four city franchises.

I've told you before about Sassaman's argument that Comcast should come forward with more support for city schools and infrastructure. Everybody would benefit, she says, if local grads could aspire to tech jobs at Comcast "rather than having to have three fast-food jobs that don't provide a living wage or health care."

But Sassaman sees a bigger picture, too - and sounds much like a Silicon Valley venture capitalist when she talks about the Internet's "transformational power."

Her latest plea: a boost to the paltry 5-megabit speed of Comcast's Internet Essentials, a $10-a-month plan open to families with kids who qualify for free school lunches. Comcast recently touted its decision to accelerate its Performance and Blast plans - Blast, to 150 megabits. Meanwhile, IE offers service far short of today's standards - barely useful for addressing the nation's "homework gap."

In Paris and other world-class cities, customers can buy gigabit-level service for less than $40 a month. Can't Comcast do better in the city it calls home?

215-854-2776@jeffgelles

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