19 ms·

Why American Phone, Cable and Internet Bills are so High

244 points by bretpiatt 14y ago

d--b 14y ago
I am very astonished by the comments I read here. That internet is way cheaper and faster in Europe and Japan than it is in the US is a fact, period. And it is not because the governments pay for it. It is because the market competition works there, not here! America is not always where capitalism is best implemented! Antitrusts law should step in and these companies must compete!
mtgx 14y ago
I pay $20 for triple pay, with 100 Mbps Internet.
- edkennedy 14y ago
  Your location would be relevant here.
- muhfuhkuh 14y ago
  Not in the US, I'm assuming. My "triple play" in NC, US was $140, that's with 6Mbps internet (at the time), HD digital cable with no premium channels, and digital phone with unlimited calling in US and Canada. I "downgraded" to 30Mbit Internet. Added Netflix and Amazon Prime for TV and Vonage for phone, saving $50/mo. in the process. I still feel gypped.
- grumps 14y ago
  Yea, I'd like to know where you live. I'm paying 75 for 50 Mbps and basic cable
  - nodrama 14y ago
    8.63 euro or $11.15 for 100Mbps internet in Romania. And that includes 24% VAT.
  - drbawb 14y ago
    Not 50Mbps/50Mbps I take it. What's you're upload speed and ISP? I have TWC in the midwestern US; $65 (up from $50 after the introductory offer lapsed) for 35Mbps/5Mbps. I don't even want faster speeds than that; I just want something resembling symmetrical. I'd be perfectly happy with 15Mbps/15Mbps. I'm waiting for an ISP to offer "x Mbps" and an unlocked modem that lets you divvy up your bandwidth however you want. Hell. I'm waiting for an ISP to offer an unlocked modem.
- grumps 14y ago
  Yea, I'd like to know where you live. I'm paying 75 for 50 Mbps and basic cable
- LVB 14y ago
  I'm assuming you have 6 roommates.
aleyan 14y ago
The article doesn't really answer why the services cost so much. The higher fees aren't going to the margins of the telecoms. Verizon has a revenues of $39.14 per share and earnings of $2.31 per share for the past year.
- bretpiatt 14y ago
  I show $2.89 in earnings for CY2011 and $2.00 in dividends paid for a total of $4.89 on $38.57 in revenue per share, dividends + earnings = 12.6% revenue. That is very high for a mature company in a competitive market. I'll use WalMart as an example -- $132.91 revenue per share, $1.53 in dividends, and $4.74 in EPS for 4.7% of revenue.
  - lrem 14y ago
    12% is high but, if I recall correctly, French telcos are way above that. Some news report from a year ago claimed something about 30%, but I don't remember if it was average or one of the trio. This was about the time the trio lost the fight to prevent government from allowing a fourth competitor to enter the market.
  - wtvanhest 14y ago
    Dividends are paid out of earnings so adding dividends to earnings is not an accurate way to understand a company's finances. Revenues last year were $110,875. Earnings (profit after expenses including depreciation): $2,404 Profit margin was 2.16% for 2011. Walmart did about 3.5% for 2011. Aleyan has a very valid question which is much more interesting than the original story. I would love to hear some people's opinions on why it is so expensive to provide highspeed internet.
  - deleted 14y ago
    [deleted]
- nacker 14y ago
  "The article doesn't really answer why the services cost so much." The video ends with the author explaining that it is due to a cartel of 5 or 6 companies getting together to fix prices with "non-compete" agreements. Where is the government? In bed with them. There is your answer.
btilly 14y ago
Don't autoplay the frigging video! (Maybe some editor can modify the title to warn us?) I hate sites that start playing video without my asking. Doubly so ones with loud noise. I have sound on my computer for things that really need to get my attention. Not because some site wants to interrupt me and everyone around me. I wish there was a way to vote this link down so that other people who will be similarly jarred wouldn't have to experience it.
- srathi 14y ago
  A humble suggestion: use Flashblock extension. It is also effective against flash based ads.
- deleted 14y ago
  [deleted]
- shmerl 14y ago
  If you use Firefox, you can set plugins.click_to_play to true in about:config. Of course it won't help for HTML5 content which starts playing automatically, but it can improve performance with making Flash playable only on demand.
  - pdenya 14y ago
    Chrome has click to play plugins as well, it's hugely improved my browsing even on wifi.
    - jcullen 14y ago
      For reference in chrome 21 this is under settings->show advanced->privacy->content settings->plug-ins->click to play.
      - mauriciob 14y ago
        Or just: chrome://chrome/settings/content > Plug-ins > Click to play.
- 14y ago
zwieback 14y ago
I've read this same article for the past 10 years now and every time I ask the question: what about fees and taxes Europeans pay apart from their bill? The US system is horrible but I think for a complete picture it would be good to know exactly what taxes and fees pay for the infrastructure in other countries. As a kid in Germany every household with a radio or TV had to pay a fee to operate those devices and there was a constant barrage of ads reminding new households to register and pay up. I'm assuming there are also other taxes that flow into building communications networks in Europe.
- mmanfrin 14y ago
  A similar thing happens with the discussion about gas prices, except the schema is reversed. In Europe, infrastructure fees are paid at the pump. In the US, a lot of our income taxes go to paying for those road fees and maintenance.
  - nowarninglabel 14y ago
    I was a bit skeptical that road costs took a lot of our income taxes, so I looked it up. It was, at least, more than I thought it'd be. The U.S. will spend $65.3 billion of income tax payments on ground transportation costs in fiscal 2012, at least half of which is on highway costs.
    - twoodfin 14y ago
      Where do you get that figure? Does "ground transportation" include rail? Wikipedia saith that, as of 2007, 93.5% of the Federal contribution to the Interstate Highway System was funded by gas and vehicle taxes. http://en.wikipedia.org/wiki/Interstate_Highways#Financing http://en.wikipedia.org/wiki/Interstate_Highways#Financing And it notes that 1/6th of gas taxes and other user fee-like financing mechanisms are diverted toward public transit.
      - deleted 14y ago
        [deleted]
CWuestefeld 14y ago
While I don't like paying a lot, and I wish my Internet service were faster, I think the article was sensationalist to the extreme, and remarkably light on facts. The author hasn't provided any reason for us to believe that prices or services should be comparable between countries. First and foremost, prices are dictated by the value that people attach to a product. If Americans value, say, TV more, than economics would predict that Americans would therefore pay more for it. And I think that the examples of telephone prices are cherry-picked based on structural differences, or just plain wrong. Communications rates have plummeted since then. I remember back in '84 people would say, "you've got a long-distance call from Xyz". Today, nobody cares if it's long distance. In the late '80s, when my wife immigrated from China, she could only afford to talk to her parents every month or so, because the international phone rates cost several dollars per minute. Today she talks to her dad -- with video! -- on a whim, because it's free. And the price of telephone-quality audio is negligible (~$0.02/minute).
- mikeash 14y ago
  Prices are only partially dictated by the value that people attach to a product. In a competitive market, prices are dictated heavily be the inherent underlying cost. When a lot of businesses compete with each other, prices get driven down regardless of how much people valeu the stuff, until they hit a point where they can't go down any further. The real problem with US telecommunications is that the market is not really competitive. We have four national cell carriers who appear to be pretty big on collusion, and most places only have one or two options for high-speed home internet access.
  - CWuestefeld 14y ago
    In a competitive market, prices are dictated heavily be the inherent underlying cost. This is false. The relationship between cost and price is weak. At the expensive end, prestige brands push prices of goods to the stratosphere (think women's handbags). At the cheap end, it's still quite common for prices to decline below cost. For example, consider cell phones or video game consoles, and of course the old standby example, razors. Each of these products is sold below production costs, but by using lock-in, the vendor can recover the loss through sales of proprietary goods later (monthly fees; licenses in game sales; razor blades, respectively).
emehrkay 14y ago
> Bandwidth is the new Black Gold
rjsamson 14y ago
What I was hoping to see in this article but didn't (and maybe some HN folks have good ideas on this) is how do we fix it?
- bicknergseng 14y ago
  Sadly, I don't think "how do we fix it?" ever gets the responses it deserves at HN. I imagine it's because anyone with solutions is applying to YC with them. Still, I (and many others who have written blogs along the lines) would love to see HN comments sections filled with more solutions and constructive criticisms and less put downs or complaints for the sake of complaining. Now the question is, how do we fix that?
- netfire 14y ago
  The main problem seems to be the lack of competition due to restricted infrastructure. In a lot of areas in the US, you only have one company that provides service to the area you live in. In a situation like that, the provider has little motivation to improve the service. This needs to be recognized as monopolistic and the infrastructure needs to be opened up so that it can be used by other providers. Luckily, there is some decent competition in the wireless internet space. As technology continues to improve there, more people will have access to decent internet speeds wirelessly and the wired infrastructure will feel pressure to catch up. Hopefully more options for unlimited data plans will also become available in the near future. As far as the absurd amount TV providers are charging for HD TV, DVR services and the like. Technologies like Netflix, Hulu, Apple and others are providing more internet-based services that provide this type of On-demand service at a much more reasonable price. I hope more content will become available on these types of services as more people realize how much better of a user experience it is over watching normal network TV (even with DVR).
  - rjsamson 14y ago
    Yeah, I think more and better competition is the answer but I'm not sure what the best way is to get there. More regulation? Less? We do, for the most part, have pretty good baseline infrastructure in the US. The infrastructure part of the problem is the 'last mile' piece, but in my mind this is something that can be easily accomplished by new, locally based entities. I think that municipally owned broadband is a really interesting option - GreenLight in Wilson, NC has had some good success: http://www.wilsonnc.org/living/fiberopticnetwork/greenlighthistory/ http://www.wilsonnc.org/living/fiberopticnetwork/greenlighth... - but they have had to fight off lobbying efforts by TimeWarner Cable and others to make such municipally owned efforts illegal, and the legality of such services is still on a State by State basis. So - I guess another question might be, how do we make Community owned broadband an attractive option across the country?
nckbz 14y ago
The saddest part about this, for us in Canada, is that when we see any American advertised cell phone or internet deals our natural response is "Damn, those Americans got it good over there." I pay around 90 a month for 200 minutes and 4gb of data with unlimited texting under Rogers. Canadian plans are a joke. Seeing this article with a $38.00 plan for phone, internet, and TV is just completely unfathomable for me. :P
- bryanlarsen 14y ago
  Mobilicity and/or Wind Mobile not available in your city? $45 a month for "unlimited" data, NA voice and global text. Of course in a few years the big three will purchase them ala Fido and PCS and it will back to the status quo, but in the meantime I am enjoying sane cell phone rates.
  - dholowiski 14y ago
    I haven't checked mobilcity, but Wind Mobile is only available in a few cities (and not very far outside of the cities) over here in western canada.
    - jarek 14y ago
      Mobilicity's network is even smaller geographically, but both are excellent options for those covered.
      - dholowiski 14y ago
        I think this actually has something to do with why we pay so much for this kind of service in Canada. Our population is so thinly spread (other than a few major cities, who do have these cheap alternatives) that I bet if they even tried to cover second tier cities, they'd lose money. European countries have the advantage of being really small.
        jarek 14y ago
krenoten 14y ago
I've been horrified by my experience after moving to NYC. I have been unable to find any providers that offer upstream of > 5 Mbps, and my current provider, time warner, supplies a locked down cable modem that doesn't allow me to port forward anything. Apparently I can trick it into giving me access to a control panel by resetting it with the cable unplugged, but I've been unable to access the internet after trying to put the damned thing into bridge mode. I would pay double or triple what I used to pay verizon for 25/25 symmetrical service before moving to NYC. Does anyone know of a provider that can offer something like this for less than $150/mo in NYC??? I'm considering getting a VPS just to tunnel to so I can access my home services at a steady domain...
- drbawb 14y ago
  A possibly cheaper option would be to get an unlocked cable modem that is compatible with their service. In my area anyways, I can go to my TWC "PayXPress" portal (e.g: your online billing control panel) and on their support page they list links for compatible hardware. Another suggestion: instead of bridge mode, look for an option called "RG Passthrough" or "Gateway Passthrough" or even just "RG enable"... then get your own router and wire the router's WAN port to the 1st ethernet port on your cable modem. My motorola surfboard SBG-6850 has this option; and it works while bridge mode fails. I only use it because they want $5/mo to enable wireless on my cable modem. That's right, they want $5/mo to enable some hardware I already have.
  - montecarl 14y ago
    I remember a time when MODEMs were just that and nothing else. I would be miserable if my ISP forced a router and wireless access point on me. Cheap routers that have to be reset once a week shouldn't be forced on anyone. My $50 Linksys WRT54GL goes years between resets and then it is only because I am moving.
- durkadurkadurka 14y ago
  im in the same fucked up situation as you in NYC with time warner. there's other isp's on my block and rcn said they would wire the building for free, but clarke mgmt sucks balls and said no. were you able to find a modem that worked on their networks?
seiji 14y ago
Report from the field: On Friday I walked into a cell phone shop and told them I wanted a SIM mainly for data. They suggested a prepaid "all you can eat data" SIM good for one month (realistically it alerts at 15 GB usage). €20 ($26 USD). The €20 goes towards pay-per-minute and pay-per-text usage, but who calls or uses non-iMessage these days? Back home, my Verizon bill will be $120 every month with one iPhone 5 and one LTE iPad sharing the same data plan (breakdown: $40 for iPhone 5, $10 for iPad, $70 for unlimited talk/text + 4GB shared data (or, replace $70 with $100 for 10 shared GB data for a grand customer abuse total of $150 every month)). You can't seem to even get non-unlimited voice/text anymore. Let's not bring up the $35 fee per device they charge to "activate" it either -- I don't want to headasplode in this room (it has white walls). Data only, please. For under $3/GB, please. RFN, please, not in another 10 years.
- semenko 14y ago
  To be fair, you can get similar costs in the US, but most people opt for subsidized phones (and the associated contracts). I have a prepaid mostly-data SIM for $30/month via T-Mobile prepaid (http://prepaid-phones.t-mobile.com/ http://prepaid-phones.t-mobile.com/). Maybe we'll see more consumers move that way around Google's (rumored) November 5th phone launch.
  - X-Istence 14y ago
    If I want to use the iPhone 4S on T-Mobile's network I am stuck using edge only because of incompatibility between the GSM networks (thank you FCC!) and which bands are available to whom. If I were to want a plan with AT&T that offered me what I have now (450 minutes a month, 2 GB of data and unlimited texting) I'd still be out 90 USD per month whether I purchased my own device or not because AT&T doesn't do discounts for bring your own device customers (T-Mobile contract customers can get a discount for bring your own device, or at least that was the case when I was a customer with them. Knocked $20 off the price off a contract). I'd be more than happy to purchase a phone outright and pay MUCH less per month. My sister has an unlimited data plan, 400 minutes a month and unlimited texting for a grand total of 40 EUR in The Netherlands with T-Mobile. She doesn't talk much, but texts and iMessages a crap ton and uses about 6 GB's of data on average listening to streamable music and online radio stations. At the current exchange rate that is 50 USD. Do note that her phone is subsidized as well, also it comes unlocked so she can move carrier when her contract is up without issues. I pay 90 USD and get only 2 GB of data a month. How does this even make sense?
ck2 14y ago
There is only one cable and one phone company in my city. Our prices are terrible and guaranteed to go up each year. But with cellphone companies, there are usually three or four of them and prices are still bad. So I am not sure why the market doesn't "correct itself".
- mikeryan 14y ago
  Most of the "low cost" cell carriers in the US actually lease bandwidth from the larger carriers or are subsidiary of the larger carrier, for example Boost and Virgin Mobile are wholly owned subsidiaries of Sprint. Point being there's not as many carriers as you think their are.
RandallBrown 14y ago
The infrastructure in those other countries is considerably less expensive to set up. The US is HUGE. For a company to have nationwide coverage they need to invest a TON in infrastructure. It's not surprising to me that our services are so much more expensive than the rest of the world. I didn't realize the difference was as big as it was though. It's surprising because even though internet/tv is sort of expensive here, it isn't at all cost prohibitive for the majority of Americans.
- autarch 14y ago
  That might explain high costs for some users (or subsidies, which I believe we have for rural access). It doesn't explain why these costs would be high in urban areas.
  - RandallBrown 14y ago
    My ATT plan doesn't cost any different based on where I live. I guess my comcast plan might, but as far as I can tell, I saw the same deals when I lived in Michigan as I do now in Washington.
- talmand 14y ago
  I would agree with this except for the fact most people don't even talk about nationwide with this issue. You can look at any major metropolitan area in the US where a great deal of infrastructure is already built and the options vs price is dismal as compared to the rest of the world. Also, as the article points out, the telcos were given subsidies for years to build this infrastructure of which they did little outside of big cities. Building cool stuff in big cities is highly visible and good PR, doing it in small town USA is not quite as PR worthy. Never mind the fact that we have seen several examples of big cable doing everything they can to prevent new infrastructure from being built because they would have to compete with it. Adding insult to injury is that many times this is against small towns that big cable has written off as not worth the investment in the first place. Thankfully I think we're finally seeing a shift against this kind of thing. But even then there are still complaints over the pricing part. If an area doesn't have the infrastructure then that's fine, charge a proper fee for what they do have access to. I'm sure there are plenty of examples of people paying $30 for 10Mb service while an hour down the road people are paying $30 for 2Mb service. This is just internet though, pricing structure over cable TV is seriously screwed up but not just because of cable companies. The companies that create the content have a big hand in that fiasco as well.
mech4bg 14y ago
As others have said, this article was remarkably sensationalist and cherry picked many of their facts. However there is a grain of truth in here - while Europe had MUCH higher internet / phone / cable costs 10 years ago, from what I've learned from my friends over there the price has dropped dramatically. While 'regular' plans are comparable to US plans, the budget operators are incredibly cheap. It's been a similar situation in Australia. We had incredibly high costs, and for many years the value of our internet went BACKWARDS - as the price went up, our data was also heavily restricted. However that trend finally reversed and it's much better value now. When I left Australia I had a 200gb 100mbit internet plan with a home line for $78 a month (and that included a cable modem). I have to say I was pretty shocked at how poor the choice and value is in the US after moving here, particularly in Silicon Valley. Fast internet (> 30mbit) is incredibly unaffordable, and there is huge pressure to have to bundle with cable TV (which I don't want or need). And what's up with the phone plans here?! The only reason I'm not absolutely screaming about it is I'm on a shared plan with my wife - if I were trying to get a phone just for myself the costs would be insane. The biggest kicker is trying to find a good prepaid with data SIM - in Australia you can walk into any 7-11 and buy a SIM card for $2 and then get on a $2/day unlimited phone/data prepaid plan (i.e. you just charge up and then every day you use it another $2 is taken off your tab). There is NOTHING like that here. I'm not sure if it's because of a lack of competition or what - in Australia all networks are now (roughly) compatible with each other, so if you buy a phone on one network it'll work on another. Then you have many many resellers who buy the network access wholesale from the big providers and then resell it. Same for the internet market. That's the only thing I can think of - the US needs to get this happening ASAP.
- Jacqued 14y ago
  One thing that is not mentioned is that in some European countries (like in France where I live), there is no limit to the amount of data transfer you can use in a month -- that is, on the home optic fiber lines, not on the mobile ones. I have a $30 100Mbps plan, and if I want to download 10 TB in a month, there is no additional charge for that. Mobile plans cost around $20-25 and are tipically capped at 3GB per month. But don't worry, we're still complaining very much, that the lines are too slow and expensive.
Timmy_C 14y ago
In Seattle we have a startup called Spectrum Networks which offers 100mbps fiber and microwave internet to a small set of condos and apartments. Last I checked, it was a 9 person operation. I don't see why more startups like this haven't cropped up in other towns.
- talmand 14y ago
  Off the top of my head, three reasons. Local government doesn't allow competition against the big company they have some form of agreement with. Big company buys them out to shut them down so they don't have to compete with it. Big company crushes them via pricing reduction (until competition is gone so it goes back up), sicks the lawyers on them (doesn't matter if valid or not, defending oneself in court is expensive), or a highly expensive negative PR campaign. It all depends on the state, county, and/or city. What can work in one area might not be feasible or legal in other areas. It's a huge multi-headed issue in the US.
  - seiji 14y ago
    Disclaimer: I used to work at a wireless ISP and I am going to decorate your comment. Oddly, local government has no say over it. As long as you can legally place antennas and/or dishes in the right spots, you can do whatever you like. You can run on crappy 2.4GHz or 5GHz radios or use more fancy FCC leased spectrum 30GHz-60GHz radios or even line-of-sight optical lasers. You will typically run a 20Mbps to 1Gbps connection to an apartment/condo complex then feed individual units from there (i.e. each customer isn't getting their own wireless connection unless you are a fancy business paying for that level of service). Big companies don't care much about tiny ISPs here and there. What's more likely is the biggest of the tiny ISPs will buy you to goose their numbers. If your tiny ISP is aggressive in servicing buildings, you may see Comcast running counter promotions against your pricing. Welcome to the free market.
    - talmand 14y ago
      You know, you are quite right. My thinking with the local government bit is in terms of normal cable service, not this type of wireless service.
aidenn0 14y ago
And how much per minute was long-distance in 1984? In the early 80s almost all the profit from telephone service was in the long-distance service. For example, 1980: in today's dollars, it was over $1 PER MINUTE to call New York from Los Angeles.
- fennecfoxen 14y ago
  Fun story. The university I went to used to buy long-distance minutes in bulk at 12 cents, sell them at 25 cents, and made a million bucks a year off of students calling home. Now they buy them at 3, sell them at 5, and everyone uses cell phones so there aren't any landlines in the dorms so emergency and "too much ice, class cancelled" notifications and the campus phone directory are a disaster... also, the IT department is out a million bucks a year. But they're working on it, they say.
Ntrails 14y ago
"America has gone from #1 in Internet speed (when we invented it) to 29th in the world and falling." I beg your pardon?
- dlan1000 14y ago
  Which part exactly are you contesting?
  - Ntrails 14y ago
    America inventing the internet?
njharman 14y ago
Because we as a nation are willfully delusional as to how corrupt our government and corporations are. How much buying regulation and legislation is standard part of business.
njharman 14y ago
Because we as a nation are willfully delusional as to how corrupt our government and corporations are. How much buying regulation and legislation is standard part of business.
thebigkick 14y ago
Did the interviewer say "information super highway"?
pkandathil 14y ago
Couple of reasons why it's more expensive here: 1) Area and population density: Countries like Japan have a small area with a very high population density. This drives, infrastructure costs down and the return on it high because you have a lot of users. 2) Minimum wage in the US: The cost of labor in the US is quite high hence it costs more to build out infrastructure than it does in other countries.
- gergles 14y ago
  People continually try to use density as some sort of an excuse for the ludicrously under-spec broadband deployments in the US. Why do NYC, SF, Boston, Chicago, and LA all still have the same shitty service as the rest of the country? SF is far more dense than the totality of any European country and only has the same monopolistic, overpriced, underperforming, punitively-capped service as the rest of the US (except for the lucky people who live in the 20 webpass buildings.)
- mratzloff 14y ago
  Japan, France, Australia, and Britain (a sampling of countries being discussed) all have minimum wages that are comparable to or in excess of the United States.
gregsq 14y ago
It is expensive in the US compared to the other two countries I get sims for, the UK and Australia. In the UK I can get a sim and monthly plan for my iPhone for around £6, which gives me what I need. In Australia it's about $30 for a month. In the US it was either H2O at $50 a month or StraightTalk from Walmart for $45. I recently moved my girlfriends grandfathered AT&T iPhone plan on to StraightTalk for a saving of about $50 pm. A 2 gig limit on data compared to her grandfathered unlimited, but thats OK. The US is expensive. No doubt about it.
codgercoder 14y ago
simplest answer: the 1996 Telecom Deregulation Act. Sold as a way to bring real competition after the breakup of ATT, what it did instead was: 1) coax Baby Boomer money into the stock market, causing the Telecom boom, with all the mis-investing that a boom entails, 2) build a lot of infrastructure with the new money, that the incumbent companies didn't have the stomach for, 3) free up the baby Bells from much regulation, but not enforce the "play fair" rules to allow upstarts to use the extant infrastructure, and 4) crash the boom, allowing the incumbents to pick up intrastructure for cents on the dollar. Instead of a rebirth following the crash, as is usual, in which the newcomers get to pick through the remains of the last boom, the remants mostly got gobbled up by the incumbents (even ATT, absorbed by SBC). So the landscape looks much like it did originally, except now the old incumbents control the Internet, instead of just the phone system. Innovation is largely coming on top of the Internet, instead of in providing it.
codegeek 14y ago
I lived in Hong Kong for about 18 months temporarily as an expat from the US. I was astonished that for about 300 HKD (< 40 USD), I could get unlimited data and a new iphone with contract. The only catch: contracts are usually 18 months or longer. But even then, it is dirt cheap compared to US. Same with cable.
- mratzloff 14y ago
  In my experience US contracts are often 24 months.
kin 14y ago
We're super behind. I can't wait until Google expands their Fiber to more cities so they can get fiber in every household.
tomrod 14y ago
When I bought my first landline in the mid-2000s the cost was $40 a month for local service. 75% of that charge was local and state fees. My first phone call was an automated telemarketer. 98% of my calls after that were also telemarketers of one form or anther. Ads started stressing me out, and I ceased being so nice to cold callers. The landline lasted maybe two months before I figured a cell would be cheaper and less annoying.
kevinSuttle 14y ago
It all comes down to greed and gouging. Period. There's too much money being made to stop it now. I'm all for capitalism and making money by working hard, but this is the opposite of that. Inferior product, astronomical rates. These are industries strangleheld by a few gigantic companies, and that, my friends, is bad for everyone.
dawernik 14y ago
The problem with a lot of the comments here is that the participants use logic, while typical Americans do not. The main point is really about lack of transparency by providers and complacency by consumers... Compounded by an industry that has gotten into bed with government. The market will eventually correct as phone, cable, and internet services continue to be individually picked off by best of breed pure plays that create simple service with transparent business models. May take a while, but it will happen.
devGabriel 14y ago
You guys think that is expensive? You don't know Brazil...
DanielBMarkham 14y ago
This is one of the things I like ranting about, so I'll try not to do that. I also live in an area that will never see high-speed internet. We were sold out by both the feds and our state legislators. You can argue that perhaps these government officials were misled or uniformed, but I remain dubious. We were able to construct an interstate highway system. We were able to wire this country with electricity. We were able to wire it for telephones. The only reason we can't wire it with fiber is because of poor government management of eminent domain. We should kick most of those responsible out of office. To see a bunch of yahoos on TV telling me we need the road paved when most of their constituents don't have enough bandwidth to get high-quality instruction over the web? Or to work over the web? It's the Information Age, bozos. Something is wrong somewhere. The worst part? I do not expect this to get fixed any time in the next couple of decades. Not only is it broken and hurting, but there's no political incentive to fix it. In fact the incentives run the other way.
- MordinSolus 14y ago
  So you're saying that the government, either knowingly or unknowingly, made decisions that, in the long run, adversely affected its citizens? No kidding.
  - nessus42 14y ago
    'Cuz all those other countries that got it better, did so with a pure, laissez-faire market, free of any government intervention.
    - astrodust 14y ago
      Like France.
    - MordinSolus 14y ago
      Can you provide a single example of such a country? Regardless, free-market capitalism is not predicated on freedom from government intervention; in fact, a government is necessary in order to protect the freedoms of the individual. That should be the purpose of the government: protecting the freedom of its citizens. Creating an environment that allows voluntary trade of goods and services to exist. Not picking winners or losers. Not imposing regulations that create monopolies. Not encouraging bad behavior by banks. Not rewarding bad decisions by auto manufacturers. Not being in bed with unions and corporations alike. Here's how I think about it: What can one corporation do to a person? Not much. What can one government do to a person? Take away his freedom, imprison him, and / or kill him. Would I rather have flawed, power abusing individuals the power to impose their will over an entire country, or just their company? Would I rather centralize power in a way that is not accountable to anyone, or would I rather have power be decentralized and much more accountable to me? No one is arguing for no government. But we are looking at the present state of affairs and the reasons we got here, and then looking at the past and seeing what happened then and why... and we're realizing that, for the most part, more government is bad.
hansy 14y ago
OK so assuming Americans do end up paying way more for less in the phone, cable, and internet departments, what's the solution? I can't recall one month when my parents, both highly educated and cautious, aren't griping about some "strange" or "unknown" charge creeping up into their phone bill. They've even tried different plans on different networks over the years to find the most economical package for the family. When I ask them which network they like the best, they always reply with, "it's not about which network is the best, but about which one sucks the least." And internet? I'm tired of hearing how overseas ISPs are just better (speed to cost ratio) than the ones here. I guess I'm just crossing my fingers waiting to see what happens with Google Fiber, but I seriously hate putting all my eggs in one basket.
Karunamon 14y ago
Hosting on this continent is pretty much a ripoff as well.. one can reasonably assume something is terribly wrong if pricing is broken up to that level. Anecdote alert: I recently moved from a stateside provider to one in Germany. A dedicated server, quad core, 8 gigs, 1TB transfer out was running me around $120 a month from my usual provider. The German host has me set up on the same CPU, but with 32 gigs and 10TB transfer out for less than $80. 400% more memory and 1000% more bandwidth for a $40/mo reduction in cost. The pricing on stateside dedicated servers wasn't out of the ordinary either. If anything, I've seen virtual servers be on the same level, with dedicated servers even more absurd.
brg1007 14y ago
As Bulgaria came into discussion, let me give you a short glimpse at what the biggest cable company in Romania (4th rank in Akamai average peak connection speed 2012) has to offer. For about 25 USD you will get: - 100Mbps Internet access fiber optic, - +100 TV channels including HBO, HBOGo, - one 3G data SIM with 3GB/month, - access to various WIFI hotspots around the country, - 1 phone landline with various free minutes. All this infrastructure for this network was build in the past 15 years and it is national. Romania is as big as Oregon State. In my opinion the prices in US for triple-play are as the article states very very high.
- bmunro 14y ago
  It makes sense to compare US prices with western/northern Europe, as they are similarly rich/developed. But to compare prices in the USA with those in eastern Europe doesn't seem right. In nominal terms, the GDP per capita of the USA is 6 times that of Romania, and 4 times by purchasing power parity.
hpguy 14y ago
I came from a developing country and among the things I miss about it is low cost phone, cable and internet. Basically $25/month vs $150 I'm paying now for pretty similar quality of service. That has puzzled me a great deal, shouldn't tech cost be much higher in a developing country than in the #1 technology country in the world.
blasteye 14y ago
Ummm, Google Fiber had to pay over 10k per customer. This article sites around 3k per customer in gross. So they expect the ISPs to just eat up a 7k difference which will take over 1-2 decades to recoup?
GlennS 14y ago
The USA is very sparsely populated compared to South Korea, Japan, or most of Europe. The Ukraine (mentioned in the video), is a really big chunk of land with a smaller population than the UK, but still appears to have more than twice the population density of the USA (eyeballing wikipedia numbers). This is obviously a big deal for any infrastructure project. I'm not saying this is the whole (or even the main part) of the explanation, but it needs to be taken into account at least. In my opinion it certainly wouldn't excuse poor service in towns with 100k+ people. When it comes down to it, internet access is crucial now, and it does enable other parts of the economy to flourish. If the government needs to step in to give it a push, it seems worth it in this case? After all, what is a government for if not planning for the long-term when individuals and corporations can't?
bickfordb 14y ago
I have considered this a lot and the problem appears to be mostly a policy problem boiling down to the two following issues: * Right of way laws in localities make it difficult to deploy cabling of any sort. Starting a network operator is incredibly difficult legally even if you have the capital. Also, counties often grant monopolies to particular cable companies and do not allow other operators to enter the market. * It's a popular economic thought (and apparently one the FCC subscribes to) that CLEC/wholesale style systems do not incentivize network infrastructure maintainers to keep pace with technological advancements. As a result the FCC has granted control to vertically integrated operators like ATT/Verizon/Comcast.
Aloha 14y ago
One thing that this article missed out on: Prior to 1984 Business telephone users cross subsidized Residential users, both thru higher local access rates, and higher LD rates.
deleted 14y ago
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tsotha 14y ago
Not a very good article. He's thrown together a bunch of unrelated statistics and left out some pretty important information, like the total cost in the landline example. I remember paying $1/minute to call someone 50 miles away before ATT was broken up. The question I have is whether or not wireless carriers pay for spectrum in other countries. Verizon paid over $17B for spectrum, and that money is going to have to come from somewhere.

244 points by bretpiatt 14y ago

d--b 14y ago

I am very astonished by the comments I read here. That internet is way cheaper and faster in Europe and Japan than it is in the US is a fact, period. And it is not because the governments pay for it. It is because the market competition works there, not here! America is not always where capitalism is best implemented! Antitrusts law should step in and these companies must compete!

mtgx 14y ago

I pay $20 for triple pay, with 100 Mbps Internet.

edkennedy 14y ago
Your location would be relevant here.
muhfuhkuh 14y ago
Not in the US, I'm assuming. My "triple play" in NC, US was $140, that's with 6Mbps internet (at the time), HD digital cable with no premium channels, and digital phone with unlimited calling in US and Canada. I "downgraded" to 30Mbit Internet. Added Netflix and Amazon Prime for TV and Vonage for phone, saving $50/mo. in the process. I still feel gypped.
grumps 14y ago
Yea, I'd like to know where you live. I'm paying 75 for 50 Mbps and basic cable
- nodrama 14y ago
  8.63 euro or $11.15 for 100Mbps internet in Romania. And that includes 24% VAT.
- drbawb 14y ago
  Not 50Mbps/50Mbps I take it. What's you're upload speed and ISP? I have TWC in the midwestern US; $65 (up from $50 after the introductory offer lapsed) for 35Mbps/5Mbps. I don't even want faster speeds than that; I just want something resembling symmetrical. I'd be perfectly happy with 15Mbps/15Mbps. I'm waiting for an ISP to offer "x Mbps" and an unlocked modem that lets you divvy up your bandwidth however you want. Hell. I'm waiting for an ISP to offer an unlocked modem.
grumps 14y ago
Yea, I'd like to know where you live. I'm paying 75 for 50 Mbps and basic cable
LVB 14y ago
I'm assuming you have 6 roommates.

aleyan 14y ago

The article doesn't really answer why the services cost so much. The higher fees aren't going to the margins of the telecoms. Verizon has a revenues of $39.14 per share and earnings of $2.31 per share for the past year.

bretpiatt 14y ago
I show $2.89 in earnings for CY2011 and $2.00 in dividends paid for a total of $4.89 on $38.57 in revenue per share, dividends + earnings = 12.6% revenue. That is very high for a mature company in a competitive market. I'll use WalMart as an example -- $132.91 revenue per share, $1.53 in dividends, and $4.74 in EPS for 4.7% of revenue.
- lrem 14y ago
  12% is high but, if I recall correctly, French telcos are way above that. Some news report from a year ago claimed something about 30%, but I don't remember if it was average or one of the trio. This was about the time the trio lost the fight to prevent government from allowing a fourth competitor to enter the market.
- wtvanhest 14y ago
  Dividends are paid out of earnings so adding dividends to earnings is not an accurate way to understand a company's finances. Revenues last year were $110,875. Earnings (profit after expenses including depreciation): $2,404 Profit margin was 2.16% for 2011. Walmart did about 3.5% for 2011. Aleyan has a very valid question which is much more interesting than the original story. I would love to hear some people's opinions on why it is so expensive to provide highspeed internet.
- deleted 14y ago
  [deleted]
nacker 14y ago
"The article doesn't really answer why the services cost so much." The video ends with the author explaining that it is due to a cartel of 5 or 6 companies getting together to fix prices with "non-compete" agreements. Where is the government? In bed with them. There is your answer.

btilly 14y ago

Don't autoplay the frigging video! (Maybe some editor can modify the title to warn us?) I hate sites that start playing video without my asking. Doubly so ones with loud noise. I have sound on my computer for things that really need to get my attention. Not because some site wants to interrupt me and everyone around me. I wish there was a way to vote this link down so that other people who will be similarly jarred wouldn't have to experience it.

srathi 14y ago
A humble suggestion: use Flashblock extension. It is also effective against flash based ads.
deleted 14y ago
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shmerl 14y ago
If you use Firefox, you can set plugins.click_to_play to true in about:config. Of course it won't help for HTML5 content which starts playing automatically, but it can improve performance with making Flash playable only on demand.
- pdenya 14y ago
  Chrome has click to play plugins as well, it's hugely improved my browsing even on wifi.
  - jcullen 14y ago
    For reference in chrome 21 this is under settings->show advanced->privacy->content settings->plug-ins->click to play.
    - mauriciob 14y ago
      Or just: chrome://chrome/settings/content > Plug-ins > Click to play.
14y ago

zwieback 14y ago

I've read this same article for the past 10 years now and every time I ask the question: what about fees and taxes Europeans pay apart from their bill? The US system is horrible but I think for a complete picture it would be good to know exactly what taxes and fees pay for the infrastructure in other countries. As a kid in Germany every household with a radio or TV had to pay a fee to operate those devices and there was a constant barrage of ads reminding new households to register and pay up. I'm assuming there are also other taxes that flow into building communications networks in Europe.

mmanfrin 14y ago
A similar thing happens with the discussion about gas prices, except the schema is reversed. In Europe, infrastructure fees are paid at the pump. In the US, a lot of our income taxes go to paying for those road fees and maintenance.
- nowarninglabel 14y ago
  I was a bit skeptical that road costs took a lot of our income taxes, so I looked it up. It was, at least, more than I thought it'd be. The U.S. will spend $65.3 billion of income tax payments on ground transportation costs in fiscal 2012, at least half of which is on highway costs.
  - twoodfin 14y ago
    Where do you get that figure? Does "ground transportation" include rail? Wikipedia saith that, as of 2007, 93.5% of the Federal contribution to the Interstate Highway System was funded by gas and vehicle taxes. http://en.wikipedia.org/wiki/Interstate_Highways#Financing http://en.wikipedia.org/wiki/Interstate_Highways#Financing And it notes that 1/6th of gas taxes and other user fee-like financing mechanisms are diverted toward public transit.
    - deleted 14y ago
      [deleted]

CWuestefeld 14y ago

While I don't like paying a lot, and I wish my Internet service were faster, I think the article was sensationalist to the extreme, and remarkably light on facts. The author hasn't provided any reason for us to believe that prices or services should be comparable between countries. First and foremost, prices are dictated by the value that people attach to a product. If Americans value, say, TV more, than economics would predict that Americans would therefore pay more for it. And I think that the examples of telephone prices are cherry-picked based on structural differences, or just plain wrong. Communications rates have plummeted since then. I remember back in '84 people would say, "you've got a long-distance call from Xyz". Today, nobody cares if it's long distance. In the late '80s, when my wife immigrated from China, she could only afford to talk to her parents every month or so, because the international phone rates cost several dollars per minute. Today she talks to her dad -- with video! -- on a whim, because it's free. And the price of telephone-quality audio is negligible (~$0.02/minute).

mikeash 14y ago
Prices are only partially dictated by the value that people attach to a product. In a competitive market, prices are dictated heavily be the inherent underlying cost. When a lot of businesses compete with each other, prices get driven down regardless of how much people valeu the stuff, until they hit a point where they can't go down any further. The real problem with US telecommunications is that the market is not really competitive. We have four national cell carriers who appear to be pretty big on collusion, and most places only have one or two options for high-speed home internet access.
- CWuestefeld 14y ago
  In a competitive market, prices are dictated heavily be the inherent underlying cost. This is false. The relationship between cost and price is weak. At the expensive end, prestige brands push prices of goods to the stratosphere (think women's handbags). At the cheap end, it's still quite common for prices to decline below cost. For example, consider cell phones or video game consoles, and of course the old standby example, razors. Each of these products is sold below production costs, but by using lock-in, the vendor can recover the loss through sales of proprietary goods later (monthly fees; licenses in game sales; razor blades, respectively).

emehrkay 14y ago

> Bandwidth is the new Black Gold

rjsamson 14y ago

What I was hoping to see in this article but didn't (and maybe some HN folks have good ideas on this) is how do we fix it?

bicknergseng 14y ago
Sadly, I don't think "how do we fix it?" ever gets the responses it deserves at HN. I imagine it's because anyone with solutions is applying to YC with them. Still, I (and many others who have written blogs along the lines) would love to see HN comments sections filled with more solutions and constructive criticisms and less put downs or complaints for the sake of complaining. Now the question is, how do we fix that?
netfire 14y ago
The main problem seems to be the lack of competition due to restricted infrastructure. In a lot of areas in the US, you only have one company that provides service to the area you live in. In a situation like that, the provider has little motivation to improve the service. This needs to be recognized as monopolistic and the infrastructure needs to be opened up so that it can be used by other providers. Luckily, there is some decent competition in the wireless internet space. As technology continues to improve there, more people will have access to decent internet speeds wirelessly and the wired infrastructure will feel pressure to catch up. Hopefully more options for unlimited data plans will also become available in the near future. As far as the absurd amount TV providers are charging for HD TV, DVR services and the like. Technologies like Netflix, Hulu, Apple and others are providing more internet-based services that provide this type of On-demand service at a much more reasonable price. I hope more content will become available on these types of services as more people realize how much better of a user experience it is over watching normal network TV (even with DVR).
- rjsamson 14y ago
  Yeah, I think more and better competition is the answer but I'm not sure what the best way is to get there. More regulation? Less? We do, for the most part, have pretty good baseline infrastructure in the US. The infrastructure part of the problem is the 'last mile' piece, but in my mind this is something that can be easily accomplished by new, locally based entities. I think that municipally owned broadband is a really interesting option - GreenLight in Wilson, NC has had some good success: http://www.wilsonnc.org/living/fiberopticnetwork/greenlighthistory/ http://www.wilsonnc.org/living/fiberopticnetwork/greenlighth... - but they have had to fight off lobbying efforts by TimeWarner Cable and others to make such municipally owned efforts illegal, and the legality of such services is still on a State by State basis. So - I guess another question might be, how do we make Community owned broadband an attractive option across the country?

nckbz 14y ago

The saddest part about this, for us in Canada, is that when we see any American advertised cell phone or internet deals our natural response is "Damn, those Americans got it good over there." I pay around 90 a month for 200 minutes and 4gb of data with unlimited texting under Rogers. Canadian plans are a joke. Seeing this article with a $38.00 plan for phone, internet, and TV is just completely unfathomable for me. :P

bryanlarsen 14y ago
Mobilicity and/or Wind Mobile not available in your city? $45 a month for "unlimited" data, NA voice and global text. Of course in a few years the big three will purchase them ala Fido and PCS and it will back to the status quo, but in the meantime I am enjoying sane cell phone rates.
- dholowiski 14y ago
  I haven't checked mobilcity, but Wind Mobile is only available in a few cities (and not very far outside of the cities) over here in western canada.
  - jarek 14y ago
    Mobilicity's network is even smaller geographically, but both are excellent options for those covered.
    - dholowiski 14y ago
      I think this actually has something to do with why we pay so much for this kind of service in Canada. Our population is so thinly spread (other than a few major cities, who do have these cheap alternatives) that I bet if they even tried to cover second tier cities, they'd lose money. European countries have the advantage of being really small.
      - jarek 14y ago

krenoten 14y ago

I've been horrified by my experience after moving to NYC. I have been unable to find any providers that offer upstream of > 5 Mbps, and my current provider, time warner, supplies a locked down cable modem that doesn't allow me to port forward anything. Apparently I can trick it into giving me access to a control panel by resetting it with the cable unplugged, but I've been unable to access the internet after trying to put the damned thing into bridge mode. I would pay double or triple what I used to pay verizon for 25/25 symmetrical service before moving to NYC. Does anyone know of a provider that can offer something like this for less than $150/mo in NYC??? I'm considering getting a VPS just to tunnel to so I can access my home services at a steady domain...

drbawb 14y ago
A possibly cheaper option would be to get an unlocked cable modem that is compatible with their service. In my area anyways, I can go to my TWC "PayXPress" portal (e.g: your online billing control panel) and on their support page they list links for compatible hardware. Another suggestion: instead of bridge mode, look for an option called "RG Passthrough" or "Gateway Passthrough" or even just "RG enable"... then get your own router and wire the router's WAN port to the 1st ethernet port on your cable modem. My motorola surfboard SBG-6850 has this option; and it works while bridge mode fails. I only use it because they want $5/mo to enable wireless on my cable modem. That's right, they want $5/mo to enable some hardware I already have.
- montecarl 14y ago
  I remember a time when MODEMs were just that and nothing else. I would be miserable if my ISP forced a router and wireless access point on me. Cheap routers that have to be reset once a week shouldn't be forced on anyone. My $50 Linksys WRT54GL goes years between resets and then it is only because I am moving.
durkadurkadurka 14y ago
im in the same fucked up situation as you in NYC with time warner. there's other isp's on my block and rcn said they would wire the building for free, but clarke mgmt sucks balls and said no. were you able to find a modem that worked on their networks?

seiji 14y ago

Report from the field: On Friday I walked into a cell phone shop and told them I wanted a SIM mainly for data. They suggested a prepaid "all you can eat data" SIM good for one month (realistically it alerts at 15 GB usage). €20 ($26 USD). The €20 goes towards pay-per-minute and pay-per-text usage, but who calls or uses non-iMessage these days? Back home, my Verizon bill will be $120 every month with one iPhone 5 and one LTE iPad sharing the same data plan (breakdown: $40 for iPhone 5, $10 for iPad, $70 for unlimited talk/text + 4GB shared data (or, replace $70 with $100 for 10 shared GB data for a grand customer abuse total of $150 every month)). You can't seem to even get non-unlimited voice/text anymore. Let's not bring up the $35 fee per device they charge to "activate" it either -- I don't want to headasplode in this room (it has white walls). Data only, please. For under $3/GB, please. RFN, please, not in another 10 years.

semenko 14y ago
To be fair, you can get similar costs in the US, but most people opt for subsidized phones (and the associated contracts). I have a prepaid mostly-data SIM for $30/month via T-Mobile prepaid (http://prepaid-phones.t-mobile.com/ http://prepaid-phones.t-mobile.com/). Maybe we'll see more consumers move that way around Google's (rumored) November 5th phone launch.
- X-Istence 14y ago
  If I want to use the iPhone 4S on T-Mobile's network I am stuck using edge only because of incompatibility between the GSM networks (thank you FCC!) and which bands are available to whom. If I were to want a plan with AT&T that offered me what I have now (450 minutes a month, 2 GB of data and unlimited texting) I'd still be out 90 USD per month whether I purchased my own device or not because AT&T doesn't do discounts for bring your own device customers (T-Mobile contract customers can get a discount for bring your own device, or at least that was the case when I was a customer with them. Knocked $20 off the price off a contract). I'd be more than happy to purchase a phone outright and pay MUCH less per month. My sister has an unlimited data plan, 400 minutes a month and unlimited texting for a grand total of 40 EUR in The Netherlands with T-Mobile. She doesn't talk much, but texts and iMessages a crap ton and uses about 6 GB's of data on average listening to streamable music and online radio stations. At the current exchange rate that is 50 USD. Do note that her phone is subsidized as well, also it comes unlocked so she can move carrier when her contract is up without issues. I pay 90 USD and get only 2 GB of data a month. How does this even make sense?

ck2 14y ago

There is only one cable and one phone company in my city. Our prices are terrible and guaranteed to go up each year. But with cellphone companies, there are usually three or four of them and prices are still bad. So I am not sure why the market doesn't "correct itself".

mikeryan 14y ago
Most of the "low cost" cell carriers in the US actually lease bandwidth from the larger carriers or are subsidiary of the larger carrier, for example Boost and Virgin Mobile are wholly owned subsidiaries of Sprint. Point being there's not as many carriers as you think their are.

RandallBrown 14y ago

The infrastructure in those other countries is considerably less expensive to set up. The US is HUGE. For a company to have nationwide coverage they need to invest a TON in infrastructure. It's not surprising to me that our services are so much more expensive than the rest of the world. I didn't realize the difference was as big as it was though. It's surprising because even though internet/tv is sort of expensive here, it isn't at all cost prohibitive for the majority of Americans.

autarch 14y ago
That might explain high costs for some users (or subsidies, which I believe we have for rural access). It doesn't explain why these costs would be high in urban areas.
- RandallBrown 14y ago
  My ATT plan doesn't cost any different based on where I live. I guess my comcast plan might, but as far as I can tell, I saw the same deals when I lived in Michigan as I do now in Washington.
talmand 14y ago
I would agree with this except for the fact most people don't even talk about nationwide with this issue. You can look at any major metropolitan area in the US where a great deal of infrastructure is already built and the options vs price is dismal as compared to the rest of the world. Also, as the article points out, the telcos were given subsidies for years to build this infrastructure of which they did little outside of big cities. Building cool stuff in big cities is highly visible and good PR, doing it in small town USA is not quite as PR worthy. Never mind the fact that we have seen several examples of big cable doing everything they can to prevent new infrastructure from being built because they would have to compete with it. Adding insult to injury is that many times this is against small towns that big cable has written off as not worth the investment in the first place. Thankfully I think we're finally seeing a shift against this kind of thing. But even then there are still complaints over the pricing part. If an area doesn't have the infrastructure then that's fine, charge a proper fee for what they do have access to. I'm sure there are plenty of examples of people paying $30 for 10Mb service while an hour down the road people are paying $30 for 2Mb service. This is just internet though, pricing structure over cable TV is seriously screwed up but not just because of cable companies. The companies that create the content have a big hand in that fiasco as well.

mech4bg 14y ago

As others have said, this article was remarkably sensationalist and cherry picked many of their facts. However there is a grain of truth in here - while Europe had MUCH higher internet / phone / cable costs 10 years ago, from what I've learned from my friends over there the price has dropped dramatically. While 'regular' plans are comparable to US plans, the budget operators are incredibly cheap. It's been a similar situation in Australia. We had incredibly high costs, and for many years the value of our internet went BACKWARDS - as the price went up, our data was also heavily restricted. However that trend finally reversed and it's much better value now. When I left Australia I had a 200gb 100mbit internet plan with a home line for $78 a month (and that included a cable modem). I have to say I was pretty shocked at how poor the choice and value is in the US after moving here, particularly in Silicon Valley. Fast internet (> 30mbit) is incredibly unaffordable, and there is huge pressure to have to bundle with cable TV (which I don't want or need). And what's up with the phone plans here?! The only reason I'm not absolutely screaming about it is I'm on a shared plan with my wife - if I were trying to get a phone just for myself the costs would be insane. The biggest kicker is trying to find a good prepaid with data SIM - in Australia you can walk into any 7-11 and buy a SIM card for $2 and then get on a $2/day unlimited phone/data prepaid plan (i.e. you just charge up and then every day you use it another $2 is taken off your tab). There is NOTHING like that here. I'm not sure if it's because of a lack of competition or what - in Australia all networks are now (roughly) compatible with each other, so if you buy a phone on one network it'll work on another. Then you have many many resellers who buy the network access wholesale from the big providers and then resell it. Same for the internet market. That's the only thing I can think of - the US needs to get this happening ASAP.

Jacqued 14y ago
One thing that is not mentioned is that in some European countries (like in France where I live), there is no limit to the amount of data transfer you can use in a month -- that is, on the home optic fiber lines, not on the mobile ones. I have a $30 100Mbps plan, and if I want to download 10 TB in a month, there is no additional charge for that. Mobile plans cost around $20-25 and are tipically capped at 3GB per month. But don't worry, we're still complaining very much, that the lines are too slow and expensive.

Timmy_C 14y ago

In Seattle we have a startup called Spectrum Networks which offers 100mbps fiber and microwave internet to a small set of condos and apartments. Last I checked, it was a 9 person operation. I don't see why more startups like this haven't cropped up in other towns.

talmand 14y ago
Off the top of my head, three reasons. Local government doesn't allow competition against the big company they have some form of agreement with. Big company buys them out to shut them down so they don't have to compete with it. Big company crushes them via pricing reduction (until competition is gone so it goes back up), sicks the lawyers on them (doesn't matter if valid or not, defending oneself in court is expensive), or a highly expensive negative PR campaign. It all depends on the state, county, and/or city. What can work in one area might not be feasible or legal in other areas. It's a huge multi-headed issue in the US.
- seiji 14y ago
  Disclaimer: I used to work at a wireless ISP and I am going to decorate your comment. Oddly, local government has no say over it. As long as you can legally place antennas and/or dishes in the right spots, you can do whatever you like. You can run on crappy 2.4GHz or 5GHz radios or use more fancy FCC leased spectrum 30GHz-60GHz radios or even line-of-sight optical lasers. You will typically run a 20Mbps to 1Gbps connection to an apartment/condo complex then feed individual units from there (i.e. each customer isn't getting their own wireless connection unless you are a fancy business paying for that level of service). Big companies don't care much about tiny ISPs here and there. What's more likely is the biggest of the tiny ISPs will buy you to goose their numbers. If your tiny ISP is aggressive in servicing buildings, you may see Comcast running counter promotions against your pricing. Welcome to the free market.
  - talmand 14y ago
    You know, you are quite right. My thinking with the local government bit is in terms of normal cable service, not this type of wireless service.

aidenn0 14y ago

And how much per minute was long-distance in 1984? In the early 80s almost all the profit from telephone service was in the long-distance service. For example, 1980: in today's dollars, it was over $1 PER MINUTE to call New York from Los Angeles.

fennecfoxen 14y ago
Fun story. The university I went to used to buy long-distance minutes in bulk at 12 cents, sell them at 25 cents, and made a million bucks a year off of students calling home. Now they buy them at 3, sell them at 5, and everyone uses cell phones so there aren't any landlines in the dorms so emergency and "too much ice, class cancelled" notifications and the campus phone directory are a disaster... also, the IT department is out a million bucks a year. But they're working on it, they say.

Ntrails 14y ago

"America has gone from #1 in Internet speed (when we invented it) to 29th in the world and falling." I beg your pardon?

dlan1000 14y ago
Which part exactly are you contesting?
- Ntrails 14y ago
  America inventing the internet?

njharman 14y ago

Because we as a nation are willfully delusional as to how corrupt our government and corporations are. How much buying regulation and legislation is standard part of business.

njharman 14y ago

Because we as a nation are willfully delusional as to how corrupt our government and corporations are. How much buying regulation and legislation is standard part of business.

thebigkick 14y ago

Did the interviewer say "information super highway"?

pkandathil 14y ago

Couple of reasons why it's more expensive here: 1) Area and population density: Countries like Japan have a small area with a very high population density. This drives, infrastructure costs down and the return on it high because you have a lot of users. 2) Minimum wage in the US: The cost of labor in the US is quite high hence it costs more to build out infrastructure than it does in other countries.

gergles 14y ago
People continually try to use density as some sort of an excuse for the ludicrously under-spec broadband deployments in the US. Why do NYC, SF, Boston, Chicago, and LA all still have the same shitty service as the rest of the country? SF is far more dense than the totality of any European country and only has the same monopolistic, overpriced, underperforming, punitively-capped service as the rest of the US (except for the lucky people who live in the 20 webpass buildings.)
mratzloff 14y ago
Japan, France, Australia, and Britain (a sampling of countries being discussed) all have minimum wages that are comparable to or in excess of the United States.

gregsq 14y ago

It is expensive in the US compared to the other two countries I get sims for, the UK and Australia. In the UK I can get a sim and monthly plan for my iPhone for around £6, which gives me what I need. In Australia it's about $30 for a month. In the US it was either H2O at $50 a month or StraightTalk from Walmart for $45. I recently moved my girlfriends grandfathered AT&T iPhone plan on to StraightTalk for a saving of about $50 pm. A 2 gig limit on data compared to her grandfathered unlimited, but thats OK. The US is expensive. No doubt about it.

codgercoder 14y ago

simplest answer: the 1996 Telecom Deregulation Act. Sold as a way to bring real competition after the breakup of ATT, what it did instead was: 1) coax Baby Boomer money into the stock market, causing the Telecom boom, with all the mis-investing that a boom entails, 2) build a lot of infrastructure with the new money, that the incumbent companies didn't have the stomach for, 3) free up the baby Bells from much regulation, but not enforce the "play fair" rules to allow upstarts to use the extant infrastructure, and 4) crash the boom, allowing the incumbents to pick up intrastructure for cents on the dollar. Instead of a rebirth following the crash, as is usual, in which the newcomers get to pick through the remains of the last boom, the remants mostly got gobbled up by the incumbents (even ATT, absorbed by SBC). So the landscape looks much like it did originally, except now the old incumbents control the Internet, instead of just the phone system. Innovation is largely coming on top of the Internet, instead of in providing it.

codegeek 14y ago

I lived in Hong Kong for about 18 months temporarily as an expat from the US. I was astonished that for about 300 HKD (< 40 USD), I could get unlimited data and a new iphone with contract. The only catch: contracts are usually 18 months or longer. But even then, it is dirt cheap compared to US. Same with cable.

mratzloff 14y ago
In my experience US contracts are often 24 months.

kin 14y ago

We're super behind. I can't wait until Google expands their Fiber to more cities so they can get fiber in every household.

tomrod 14y ago

When I bought my first landline in the mid-2000s the cost was $40 a month for local service. 75% of that charge was local and state fees. My first phone call was an automated telemarketer. 98% of my calls after that were also telemarketers of one form or anther. Ads started stressing me out, and I ceased being so nice to cold callers. The landline lasted maybe two months before I figured a cell would be cheaper and less annoying.

kevinSuttle 14y ago

It all comes down to greed and gouging. Period. There's too much money being made to stop it now. I'm all for capitalism and making money by working hard, but this is the opposite of that. Inferior product, astronomical rates. These are industries strangleheld by a few gigantic companies, and that, my friends, is bad for everyone.

dawernik 14y ago

The problem with a lot of the comments here is that the participants use logic, while typical Americans do not. The main point is really about lack of transparency by providers and complacency by consumers... Compounded by an industry that has gotten into bed with government. The market will eventually correct as phone, cable, and internet services continue to be individually picked off by best of breed pure plays that create simple service with transparent business models. May take a while, but it will happen.

devGabriel 14y ago

You guys think that is expensive? You don't know Brazil...

DanielBMarkham 14y ago

This is one of the things I like ranting about, so I'll try not to do that. I also live in an area that will never see high-speed internet. We were sold out by both the feds and our state legislators. You can argue that perhaps these government officials were misled or uniformed, but I remain dubious. We were able to construct an interstate highway system. We were able to wire this country with electricity. We were able to wire it for telephones. The only reason we can't wire it with fiber is because of poor government management of eminent domain. We should kick most of those responsible out of office. To see a bunch of yahoos on TV telling me we need the road paved when most of their constituents don't have enough bandwidth to get high-quality instruction over the web? Or to work over the web? It's the Information Age, bozos. Something is wrong somewhere. The worst part? I do not expect this to get fixed any time in the next couple of decades. Not only is it broken and hurting, but there's no political incentive to fix it. In fact the incentives run the other way.

MordinSolus 14y ago
So you're saying that the government, either knowingly or unknowingly, made decisions that, in the long run, adversely affected its citizens? No kidding.
- nessus42 14y ago
  'Cuz all those other countries that got it better, did so with a pure, laissez-faire market, free of any government intervention.
  - astrodust 14y ago
    Like France.
  - MordinSolus 14y ago
    Can you provide a single example of such a country? Regardless, free-market capitalism is not predicated on freedom from government intervention; in fact, a government is necessary in order to protect the freedoms of the individual. That should be the purpose of the government: protecting the freedom of its citizens. Creating an environment that allows voluntary trade of goods and services to exist. Not picking winners or losers. Not imposing regulations that create monopolies. Not encouraging bad behavior by banks. Not rewarding bad decisions by auto manufacturers. Not being in bed with unions and corporations alike. Here's how I think about it: What can one corporation do to a person? Not much. What can one government do to a person? Take away his freedom, imprison him, and / or kill him. Would I rather have flawed, power abusing individuals the power to impose their will over an entire country, or just their company? Would I rather centralize power in a way that is not accountable to anyone, or would I rather have power be decentralized and much more accountable to me? No one is arguing for no government. But we are looking at the present state of affairs and the reasons we got here, and then looking at the past and seeing what happened then and why... and we're realizing that, for the most part, more government is bad.

hansy 14y ago

OK so assuming Americans do end up paying way more for less in the phone, cable, and internet departments, what's the solution? I can't recall one month when my parents, both highly educated and cautious, aren't griping about some "strange" or "unknown" charge creeping up into their phone bill. They've even tried different plans on different networks over the years to find the most economical package for the family. When I ask them which network they like the best, they always reply with, "it's not about which network is the best, but about which one sucks the least." And internet? I'm tired of hearing how overseas ISPs are just better (speed to cost ratio) than the ones here. I guess I'm just crossing my fingers waiting to see what happens with Google Fiber, but I seriously hate putting all my eggs in one basket.

Karunamon 14y ago

Hosting on this continent is pretty much a ripoff as well.. one can reasonably assume something is terribly wrong if pricing is broken up to that level. Anecdote alert: I recently moved from a stateside provider to one in Germany. A dedicated server, quad core, 8 gigs, 1TB transfer out was running me around $120 a month from my usual provider. The German host has me set up on the same CPU, but with 32 gigs and 10TB transfer out for less than $80. 400% more memory and 1000% more bandwidth for a $40/mo reduction in cost. The pricing on stateside dedicated servers wasn't out of the ordinary either. If anything, I've seen virtual servers be on the same level, with dedicated servers even more absurd.

brg1007 14y ago

As Bulgaria came into discussion, let me give you a short glimpse at what the biggest cable company in Romania (4th rank in Akamai average peak connection speed 2012) has to offer. For about 25 USD you will get: - 100Mbps Internet access fiber optic, - +100 TV channels including HBO, HBOGo, - one 3G data SIM with 3GB/month, - access to various WIFI hotspots around the country, - 1 phone landline with various free minutes. All this infrastructure for this network was build in the past 15 years and it is national. Romania is as big as Oregon State. In my opinion the prices in US for triple-play are as the article states very very high.

bmunro 14y ago
It makes sense to compare US prices with western/northern Europe, as they are similarly rich/developed. But to compare prices in the USA with those in eastern Europe doesn't seem right. In nominal terms, the GDP per capita of the USA is 6 times that of Romania, and 4 times by purchasing power parity.

hpguy 14y ago

I came from a developing country and among the things I miss about it is low cost phone, cable and internet. Basically $25/month vs $150 I'm paying now for pretty similar quality of service. That has puzzled me a great deal, shouldn't tech cost be much higher in a developing country than in the #1 technology country in the world.

blasteye 14y ago

Ummm, Google Fiber had to pay over 10k per customer. This article sites around 3k per customer in gross. So they expect the ISPs to just eat up a 7k difference which will take over 1-2 decades to recoup?

GlennS 14y ago

The USA is very sparsely populated compared to South Korea, Japan, or most of Europe. The Ukraine (mentioned in the video), is a really big chunk of land with a smaller population than the UK, but still appears to have more than twice the population density of the USA (eyeballing wikipedia numbers). This is obviously a big deal for any infrastructure project. I'm not saying this is the whole (or even the main part) of the explanation, but it needs to be taken into account at least. In my opinion it certainly wouldn't excuse poor service in towns with 100k+ people. When it comes down to it, internet access is crucial now, and it does enable other parts of the economy to flourish. If the government needs to step in to give it a push, it seems worth it in this case? After all, what is a government for if not planning for the long-term when individuals and corporations can't?

bickfordb 14y ago

I have considered this a lot and the problem appears to be mostly a policy problem boiling down to the two following issues: * Right of way laws in localities make it difficult to deploy cabling of any sort. Starting a network operator is incredibly difficult legally even if you have the capital. Also, counties often grant monopolies to particular cable companies and do not allow other operators to enter the market. * It's a popular economic thought (and apparently one the FCC subscribes to) that CLEC/wholesale style systems do not incentivize network infrastructure maintainers to keep pace with technological advancements. As a result the FCC has granted control to vertically integrated operators like ATT/Verizon/Comcast.

Aloha 14y ago

One thing that this article missed out on: Prior to 1984 Business telephone users cross subsidized Residential users, both thru higher local access rates, and higher LD rates.

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tsotha 14y ago

Not a very good article. He's thrown together a bunch of unrelated statistics and left out some pretty important information, like the total cost in the landline example. I remember paying $1/minute to call someone 50 miles away before ATT was broken up. The question I have is whether or not wireless carriers pay for spectrum in other countries. Verizon paid over $17B for spectrum, and that money is going to have to come from somewhere.