Monday, May 19, 2008

You can't spell "high speed" with "U.S."

Excellent article in the Wall Street Journal today (Net Gain) that lays out pretty starkly why high speed Internet service in the U.S. largely - well let's just say it -- sucks.

Unfortunately, the piece by Christopher Rhoads is going to be behind a pay wall for many, so some quick facts and figures:
  • Average monthly cost per megabit of speed:
    • U.S. $12.60
    • Japan $3.09, France $3.70, U.K. $5.29 (selected prices)
  • Percentage of households with broadband
    • U.S. 57%
    • South Korea 93%, Iceland 83%, Switzerland 74% (selected countries)
  • Average broadband download speeds
    • U.S. 4.9 Megabits/sec.
    • Average of 21 countgries 9.2 Mbs
    • Japan 63.6, S. Korea 49.5, Canada 7.6, Germany 6.0, U.K. 2.6
As Rhoads points out, upload speeds, which are critical for high-tech businesses and research, are even slower -- far slower -- in the U.S.

The article is built around the attempt by Chattanooga to lay its own fiber-optic system, part of which already is in place and brings vastly higher speeds to some local businesses. Comcast has sued the city to stop the project, arguing that it is an unfair cross-subsidy and use of taxpayer money.

Both Comcast and AT&T say they are improving their networks. Check it out:
  • A Comcast spokeswoman says the company recently increased its speeds for small businesses to 16 megabits a second in many markets, including in Chattanooga, and upload speeds to two megabits.
  • AT&T (the other major provider in Chattanooga) says it now offers small businesses a download speed of six megabits a second, and upload of 512 kilobits a second.
Whoa there, Hoss. Speed kills! 512 kbs uploads. Impressive - not. 2 Mbs is not all that impressive either.

Imagine, just imagine, what newspapers and TV stations might be facing if the U.S. had speeds as in much of the rest of the developed world. If they haven't sent the cable and telcom companies flowers, they should. Then they should get very scared and very busy because these speeds will come -- eventually.

The telcom and cable companies have explanations -- other countries are more densely populated, for instance, and so it's cheaper to serve them. Verizon and AT&T are rolling out very high speed fiber in some cities and Comcast is moving toward a much faster system, but it is too little and too slow if we don't want to watch the rest of the world speed by.

Verizon's top speed of 30 Mbs down and 15 Mbs up will set you back $140/month. That's still $9.33 per Mbs. AT&T's top speed is 10 Mbps up and 1.5 down. It's hard to figure a price since AT&T is bundling it with various TV services in packages that range from $77 per month to more than $132. (Let's assume the lowest cost and next-to-highest speed of 6 Mbs, which is probably unrealistic since prices start at $77 -- but that's still $12.83 per Mbs. And using the entirely unrealistic highest-speed, lowest price comparison, that's still $7.70.)

The cost remains a huge barrier. As noted here back in January, at least one group (in Louisville) has cited high telecommunications costs as one of the contributing factors to the home foreclosure mess.

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