Dennis RomeroSome partisans think that no government is good government, especially when it comes to business. A hands-off policy means that entrepreneurs are free to blossom and shoppers are free to chose.
But one downside to Washington's no-show attitude toward some industries is that some businesses become too successful and create near-monopolies. That appears to be the case when it comes to the internet business in cities like L.A., where Angelenos have relatively few choices.
A new report, The Cost of Connectivity 2014, from New America's Open Technology Institute, concludes that L.A. has among the slowest, most expensive internet services in the industrialized world.
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Consumers in places like Tokyo, Seoul and Paris can download a movie in seven seconds. In L.A. that same movie will take more than a minute to download, and the cost to do it even that slow is $299.99 a month, the report says.
The only U.S. cities that provided overseas-like internet speed and value—Kansas City, Chattanooga, Tennessee—had local-government-run service. Yeah, the big, bad government does this better than corporate giants, few of which have seen any upside to investing billions in faster networks.
In places like Seoul, the internet is actually subsidized. You know, because it's actually good for the people—and for the rapidly evolving tech business.
The Open Technology Institute says that when local governments get in the internet business, “our research shows that these locally-owned networks tend to deliver better value to their customers when compared on a price-per-megabit basis to competing cable and telecom providers in their own cities.”
The report looked at 24 cities in the United States and overseas and found that American towns generally fared poorly. And just think, the internet was essentially invented here (at UCLA, in fact, with the government's help).
Credit: New America
Seoul, Hong Kong and Tokyo were the world's “speed leaders” for internet downloads, according to the analysis. L.A. tied for 12th place.
The price of service for a speed at which you could load a typical YouTube video (1.3 seconds) is nearly twice as much in Los Angeles ($54) as it is in Seoul ($28), ranking L.A. near the bottom by that metric.
For the average price of a 25-to-50 mbps plan, in fact, L.A.'s $69.98 came in second to last place, according to the report.
In 2002 the Federal Communications Commission decided that the internet was not the same as telecommunications and thus would not come under the purview of its regulation.
The apparent result is that there are really only a handful of internet service provider (ISP) choices in cities like L.A., and the service and quality often sucks—for big bucks.
For speedy, broadband service that runs at 25 megabits per second, three-fourths of America homes have one or no options for service, the FCC found last month.
The New York Times recently pondered the role that government hasn't played in the internet business, with Columbia Law School professor Tim Wu concluding this:
It’s just very simple economics. The average [American] market has one or two serious Internet providers, and they set their prices at monopoly or duopoly pricing.
This might be a case where you can blame too little government, not too much, for your sluggish internet service.
As Hollywood plugs into the world of streaming movies and television, this could have even deeper implications for an industry town like Los Angeles.
Then again, the big Hollywood players—and keep in mind here, government haters, that we just gave the entertainment industry $1.6 billion of our money—are some of the very same companies (Time Warner, Comcast) that run (or ruin) your internet connection.
Discuss.
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