U.S. Internet Speeds — Slow and Expensive?

  |   jim's digital lab

As someone who has worked with several of Silicon Valley’s best-known companies during my time in the tech sector, I learned early on that browser developers, Cloud-based service providers, App developers and anyone building next generation web access platforms are at the mercy of those who hold the keys to our technology future.

One of those keys is controlled by the Internet Corporation for Assigned Names and Numbers (ICANN). This International organization manages domain names such as .com, .biz, .net and other domain registration categories. They also control the numeric system called IP addresses that routes all server traffic from computer-to-computer so that you can actually reach a website by typing the name or clicking on a link. The recent news is that the Obama Administration is considering relinquishing control of that organization to the International community, including Russia and China. We’ll leave the politics of this proposal for others to debate.

It is true that domain names and IP addresses are technically transparent to consumers who just want to get ON the Internet to consume content, communicate and conduct business. That leads us to perhaps the most important key to our collective enjoyment of the Internet: online speeds and cost. Faster speeds enable real-time video streaming for multi-party video conferences, rapid movie downloads (measured in seconds rather than minutes), remote access work-from-anywhere options and online video gaming. The importance of these benefits pales in comparison to even more important benefits such online education, medical diagnostics and remote healthcare support.

The U.S. created the very first iteration of the Internet as we know it today under a governmental agency called DARPA…as a fail-safe communications infrastructure during the Cold War. Today, the U.S. has a majority of the most important technology companies in the world…Microsoft, Apple, Cisco, Oracle, Google and others…all of which are doing extensive work to enable an even more pervasive use of the Internet. While the U.S. does not have a lock on the most brilliant technology experts around the world, many of those smart people actually do work for U.S. companies either in Silicon Valley or in remote outposts such as Bangalore and Shenzhen. So, with the brains, brawn and financial strength of all these companies, why does the U.S. lag so far behind in Internet speeds into the office or home, and why do we pay such exorbitant prices for the higher speed and bandwidth that we buy? You can blame it on the gatekeepers: cable companies, telcos and satellite service providers. This cabal ruthlessly carves areas of exclusivity for themselves through negotiations at the municipal and state level. For example, when was the last time you were able to make a home Internet cable company decision from among the likes of Cox, Cablevision or Time Warner as competitors here in the Greater Phoenix market? Answer: never!

A recent report from the Organization of Economic Co-operation and Development’s Science, Technology and Industry division, covering the Top 10 countries in the world with Internet download speeds exceeding 45 megabits per second, compared Internet speeds and relative costs. The chart at the very top of this post may (or may not) surprise you. While some strides are in fact being made to increase the Internet speeds we enjoy here in the U.S., prices are unfortunately rising significantly in absolute terms. Why is it that the U.S. has about 60% of the Internet speed of South Korea (Korea at 90 megabits/second download speed vs. our 52+ mbps), while our cost in the U.S. is 5x greater than that which South Koreans pay? South Korea and other countries are moving quickly to embed fiber optic cable into homes and businesses, but the U.S. has barely scratched the surface because of the investments companies have already made in laying outdated coax and copper wiring. When you realize that smaller countries such as Slovakia, Estonia and Slovenia have better rankings than the U.S. in this OECD report, it’s clear that we are way behind the technology/price curve. Lack of competition is not helping us break out of this woeful performance.

I’ll give Verizon credit for executing on its longer-term strategy for FiOS which is a bundled fiber-only network for phones, television and Internet access services. But, the roll-out requires cash at high costs-per-mile and it will take years and years before we see this option offered in our backyard. Google has announced its own Google Fiber project, and Phoenix may become one of its test markets. But, again, it may take a decade before fiber options are widely available into your home. In countries like South Korea and Japan, Fiber to the Home (FTTH) has been an ongoing technology imperative for many years, and these countries and their technology partners are on the bleeding edge in terms of financial investment and commitment. There are currently 9 countries better positioned than the U.S. in this OECD report.

The competitiveness, productivity and security of the U.S. in a global economy is under serious pressure. It’s about time that consumer and business groups begin to address this issue before it’s too late.