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Mercatus Study: U.S. Broadband Secretly Cheap, Secretly Awesome
by Karl Bode 10:39AM Thursday Aug 14 2014
The US broadband industry has spent years now trying to argue the United States broadband market is secretly flawless, awesome and highly competitive, despite the fact that absolutely every independent source of broadband data (from Akamai and the FCC to the OECD and OOkla's Net Index) suggests we're absolutely and utterly mediocre at every metric that counts.

Thanks to napping regulators, apathy, and a poorly-informed public, the lack of competition continues to be the primary reason for our mediocrity. That lack of competition allows companies to lag on network upgrades and improvements to customer support, while engaging in often obnoxious anti-competitive behavior. Most importantly it allows them to work relentlessly to drive prices skyward using everything from completely bogus fees to forcing you to bundle services you don't want.

Yet we've seen a hurricane of disinformation efforts from the industry recently trying to convince the public that there's absolutely nothing wrong. The latest is courtesy of Roslyn Layton and Michael Horney of the Koch Family Foundations funded Mercatus Center, who have penned a new report proclaiming that US broadband is secretly incredibly awesome -- if you look at the data just the right way:
quote:
(the study finds) that the United States is a global leader in broadband, as measured by the level of broadband-enabled economic activity, the number of Internet-based companies, the level of digital exports, and the level of Internet-enabled employment...When price comparisons are adjusted for taxes, network quality, and consumption of data, Ameri­cans enjoy lower unit costs for connectivity.
And if you squint really hard, Uncle Louie looks just like a pony! Your massive Comcast bill isn't high, it's really low if you tilt your head just the right way. What Layton and Horney fail to mention is most of the price data that gets compared doesn't include the bevy of new and unique fees being placed below the line. Include that, and US users still pay more than most other countries, even accounting for Horney and Laytan's fauxcademic magic wands.

The study proceeds to make a series of tenuous logistical leaps, like this one:
quote:
Some critics of US broadband policies argue that America’s speeds lag behind those of other countries, thereby harming innovation. However, if speeds were all that mattered, then the Internet should be dominated by firms from South Korea, Japan, and Hong Kong. Instead, Internet giants like Google, Amazon, and Facebook come from the United States.
The same Google that's entering the broadband market in select cities because they've complained that US broadband connectivity is so poor? Note they don't disagree that the US lags on speeds, they just try to create the strawman argument that speed isn't important because innovative companies still emerge from Silicon Valley (which makes no coherent sense). Here's another gem from the study, this time on competition:
quote:
Competition in the broadband industry is based on the level of technology, not the number of pro­viders.
Right, again because if you measured the level of competition like a normal person (the number of companies actually directly competing against one another), you'd have to notice a glaring lack of competition.

After bizarrely arguing that the US broadband market is perfect, study authors Roslyn Layton and Michael Horney proceed to offer up their solutions toward fixing the market, which oddly include doing most of the things that got us here in the first place (allowing endless mergers, mindlessly deregulating the industry, and focusing on shallow, politically-convenient adoption metrics instead of promoting serious competition).

Massaging statistics until they say exactly what you're being paid to make them say certainly isn't unique. Comcast's top lobbyist David Cohen has made an art form of the practice the last few years. If you admit there's a problem with US broadband competition, then you have to do something about it. That usually involves regulatory policy that actually promotes competition -- instead of just paying empty lip service to the word before burying your head in the sand. Real competition in turn would obviously reduce these company's revenues, making denial and stat manipulation to protect the status quo a profitable endeavor.

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telcodad
Premium
join:2011-09-16
Lincroft, NJ
kudos:15

Must be talking about our secret "Shadow Internet"

:

The Shadow Internet That’s 100 Times Faster Than Google Fiber
By Klint Finley, WIRED.com - June 17, 2014
»www.wired.com/2014/06/esnet/
quote:
While the rest of us send data across the public internet, the space agency uses a shadow network called ESnet, short for Energy Science Network, a set of private pipes that has demonstrated cross-country data transfers of 91 gigabits per second–the fastest of its type ever reported.

Smith6612
Premium,MVM
join:2008-02-01
North Tonawanda, NY
kudos:24

Re: Must be talking about our secret "Shadow Internet"

Internet2 is a good example of this. That's old news :P
ramsaso

join:2014-01-04
Houston, TX
Reviews:
·AT&T DSL Service

Oh, the Disadvantages of the Mercatus Study

1. America still pays MORE for less service.
2. Our internet speed is slower than Korea or Japan. Isn't the USA no.1 in economic terms?
3. The people doing the study are corrupt and they MUST be getting lots of $$$$ from ISPs all over the nation for that useless piece of shit.
en103

join:2011-05-02
Reviews:
·Time Warner Cable

Re: Oh, the Disadvantages of the Mercatus Study

said by ramsaso:

2. Our internet speed is slower than Korea or Japan. Isn't the USA no.1 in economic terms?

Yes - and USA is #1 (or #2 compared to China) in economic terms because... corporations are making more money off of us because we can charge what we want.

Taxes

@66.249.83.x

-1 recommendation

said by ramsaso:

1. America still pays MORE for less service.

Depends. Many foreign broadband systems are HEAVILY subsidized by government taxes. When socialist countries prices includes those subsidies prices are no longer cheaper than US.

mob
On the next level..
Premium
join:2000-10-07
Reviews:
·SureWest Internet

3 recommendations

Re: Oh, the Disadvantages of the Mercatus Study

Take your BS rabble about "self reliance" and die in a fire. 100% of the large companies in America are addicted to corporate welfare. They love government money more than crackheads in the ghetto. If you want to research, many telecom providers were given huge amounts of welfare to build fiber optic networks. So the companies took the money, then gave the taxpayers a middle finger.

Go shill elsewhere.
--
Ich habe kein Mitleid - Me
You're a daisy if you do. - Doc Holliday
And as always, have nice day.
Kearnstd
Space Elf
Premium
join:2002-01-22
Mullica Hill, NJ
kudos:1

Re: Oh, the Disadvantages of the Mercatus Study

And then the banks played the casino game of mortgage buying and selling and when the dice rolled snakeeyes they borrowed the middle finger from the telecom guys and told America to bend over.

Its funny how its bad for a person to be on welfare and they get called a freeloader, yet when companies get repeated bailouts or an industry gets something like the USF and stiffs the tax payer either way its considered just fine.
--
Filan - Aurin Spellslinger - Pago - Team Legacy

newview
Ex .. Ex .. Exactly
Premium
join:2001-10-01
Parsonsburg, MD
kudos:1

New corporate & political axiom

When the truth is inconvenient, muddy the waters with deception, deceit and dishonesty.

Photonic One

@134.223.230.x

Re: New corporate & political axiom

Actually, its not new, although in the past it was put a bit more succinctly: If you can't dazzle them with brilliance, baffle them with bullsh*t!

el_huason

@108.38.68.x

Re: New corporate & political axiom

said by Photonic One :

If you can't dazzle them with brilliance, baffle them with bullsh*t!

Sad but true

"Only two kinds of human beings can be trusted - dead and extinct. All others must be avoided at all costs" me.
Thanksy

join:2013-04-25
Troy, NY

It's hard to imagine a more textbook example of market failure

I'm not sure why anyone would seriously mount a market-oriented defense of the cable or broadband market.

el_huason

@108.38.68.x

Re: It's hard to imagine a more textbook example of market failure

Simple. The shills and supporters get paid to do it :|

"Only two kinds of human beings can be trusted - dead and extinct. All others must be avoided at all costs" me.

Ericthorn
It only hurts when I laugh
Premium
join:2001-08-10
Paragould, AR

1 recommendation

All you had to see was 'Koch Family'..

.. to know that this would be a load of horseshit.
Kearnstd
Space Elf
Premium
join:2002-01-22
Mullica Hill, NJ
kudos:1

Re: All you had to see was 'Koch Family'..

Ahh pretty much the old saying around the free world when a study that feels bias comes out. Follow the money and you will eventually find the BS supplier.
--
Filan - Aurin Spellslinger - Pago - Team Legacy

syslock
Premium
join:2007-02-03
La La Land
Reviews:
·WOW Internet and..

Tell me another story

There are places still that once you leave the city limits, you have NO
options for broadband. Your stuck with dial up, a cell hot spot or
satellite for internet. No cable or fiber.

Ask the people that know the facts next time.
Oh wait even that's too much to ask.
Kearnstd
Space Elf
Premium
join:2002-01-22
Mullica Hill, NJ
kudos:1

How is competition about technology not choice?

I mean if an area has one supermarket it does not matter if its fully mechanical registers or if androids do the shopping for you and the building is automated to the point it looks like something out of Star Wars, That does not mean your town has better competition compared to a town with three different stores.

Competition comes from having a roughly equal choice. If we look at computers AMD and Intel beat each other differently on benchmarks but in real world normal usage its not a big difference and as such both brands have to find ways to make themselves more appealing beyond claiming better technology than each other. Same thing with Nvidia and ATI(aka AMD now). Samsung and Apple are another example of actual competition.

Currently broadband is more like trying to say a 7-11(the telco) is competition for the supermarket when someone wants to do their full week shopping trip. Because not to use a bad pun but when it comes to broadband the phone company is phoning it in when it comes to effort in competing with the cable company.
--
Filan - Aurin Spellslinger - Pago - Team Legacy

Jason Levine
Premium
join:2001-07-13
USA

1 recommendation

Competition

Competition in the broadband industry is based on the level of technology, not the number of pro­viders.

Here are my options with Internet access:

Time Warner Cable: 5mbps Internet for about $35 a month (actually more since I have TV also - for now - but that would be the price w/o TV).

Verizon DSL: No FIOS here. DSL is an aging technology that Verizon wants to get rid of ASAP. Shouldn't really be counted as competition.

Wireless (e.g. Verizon Wireless, AT&T): Good for occasional use on the go, but would be hideously expensive for normal home use (e.g. regular Netflix viewing).

Dial-up: Um... no.

My only *real* option, therefore is Time Warner Cable. I'm sure the Mercatus Center would love to claim I have all of these options, but that's like saying you have your choice of meals to eat... except that all but one are rancid. Yes, you COULD choose the rancid meal, but why would you?!!!

In addition, it's nice that some areas have fiber. I'm jealous of them and would love to have FTTH. Time Warner Cable, however, feels no competitive pressure because Google opened FTTH access a few states away from where I live. They don't even feel any competitive pressure from FIOS being a couple of towns away from me.

Real competition would be having two or more actual choices, not having different technologies available in different areas - but only one choice actually available to you.
--
-Jason Levine

KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK

1 recommendation

Re: Competition

Oh they would claim you left out bunches of "Viable" choices, like Free Wi-Fi from Starbucks and McDonalds, or Hughesnet Satellite internet, and they would argue that at&t, Verizon, T-Mobile and Sprint operate in your area so that's 4 choices instead of one, etc etc etc

In other words, they would claim you CHOOSE TWC because in reality you have TONS of competition, at least 8 or more. .... but you know the truth.
--
"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini

Flyonthewall

@206.248.154.x

Fear

Mainly fear drives the economic engine in America. Fear of competition, fear of losing money, fear of customers having options. Used to be you have innovation and other shining examples, but now stagnant companies and fudging the reports is how business is conducted to protect revenues. If you had real competition, they'd probably claim America was failing then.

linicx
Caveat Emptor
Premium
join:2002-12-03
United State
Reviews:
·TracFone Wireless
·CenturyLink

Regard-less

Regard-less of who writes the song the tune is the same. Telephone companies deliver cable, wireline, wireless and Internet services to your house and to your mobile devices.

Telephone companies do not compete. They grow and spend billions o defeat competition and defy regulating. They provide just enough speed and services to densely populated areas to make most users happy.

Unlike other countries that adopted a hands-on policy and regulate services within their borders, the United States does not. FCC is in the middle between ICANN and telco while our "Woe Is Me DO NOTHING" Congress sits on their collective thumb and ignores We The People who elect them and pay their salary.

It's a perpetual game of "Hold 'Em". It won't end until someone finds the fortitude to stop it. I don't think any of us will live to see it.

--
Mac: No windows, No Gates, Apple inside

Roslyn L

@87.61.133.x

-3 recommendations

Report Author Responds to Bode's Comments

Dear Karl,

Thank you for comments. You make some assertions about our report, so I appreciate your courtesy to allow me to respond.

1. You declare the data from >shallow, politically-convenient adoption metrics instead of promoting serious competition>>. Here is my value judgment: I care more about whether people adopt broadband than whether regulators have a job. Many EU countries and regulators have devoted the last decade to creating what you call competition, and there is still a situation in countries such as Italy where one-third of the people have never used the internet. The European Commissions own 2014 Digital Scoreboard »europa.eu/rapid/press-release_IP···9_en.htm notes that some 40% of the EU workforce has insufficient digital skills. Indeed some 100 million Europeans have never used the Internet. That being said, I favor the precious funds of taxpayers be focused on educating people that to creating artificial competition in the broadband market. If you are the person who supposedly the consumer advocate, I regret that you do not agree.

6. I do not know the Koch brothers. As far as I know they, have nothing to do with telecommunications. They certainly have nothing to do with this report. However I notice that your website has a number of sponsors. Does this mean that you are in the pocket of the airline and financial services company that advertise on your website? I am sure the answer is no, but your assertion that the funders of Mercatus, whomever they may be, somehow influence our research is as true as the claim that advertisers on your websites influence your blogs.
BiggA

join:2005-11-23
EARTH

1 recommendation

Re: Report Author Responds to Bode's Comments

What? Your response is just as ridiculous and nonsensical as the report. You're trying to distract from the severe lack of competition that we have by spewing off stuff about digital literacy. Sure, digital literacy is important. It also has little to do with competition to deliver internet services.

Karl's quote "which makes no coherent sense" pretty much sums it all up. It gets even worse with the part about how competition somehow doesn't mean competition. No, competition means competition. The definition of competition is multiple providers COMPETING against each other to deliver services cheaper, better, more reliably, etc. In much of the US broadband market, there is effectively ZERO competition, and even in most parts that do have two strong providers (i.e. FIOS and a cable provider), they act as a duopoly, "competing" with stupid pissing matches like CableVision's 15-tuner DVR, which led to the 12-tuner Verizon DVR, which led to the 15-tuner Comcast DVR, which they all advertise heavily, and yet few people want to or can pay for, while all charging absurdly high rates, offering poor service, etc. Few markets have truly competitive players like RCN.

I had never heard of the Mercatus Center before, but after reading this, it is completely discredited in my view because of this one garbage report.

Anything the Koch brothers are behind is BAD, BAD, BAD. Although I'd have to say their involvement in telecom isn't nearly as bad as their continuing efforts to destroy the planet by selling more of their carbon-heavy fossil fuels. The Koch brothers are probably the two most evil people on the planet.

KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK
Doesn't change the fact that your report is, well, garbage. Value is terrible for broadband here, competition is woefully inadequate or non-existent, speeds are slower, prices higher, caps, throttling, and we get hit with below the line fees as well as contracts and other garbage to keep us locked in.

LTE as your main internet is a joke, so we're left with 2 choices or less. It's ridiculous situation for the USA to be in. Corporatism at it's finest.
--
"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini

v6movement

@206.51.28.x

Re: Report Author Responds to Bode's Comments

said by KrK:

Doesn't change the fact that your report is, well, garbage. Value is terrible for broadband here, competition is woefully inadequate or non-existent, speeds are slower, prices higher, caps, throttling, and we get hit with below the line fees as well as contracts and other garbage to keep us locked in.

LTE as your main internet is a joke, so we're left with 2 choices or less. It's ridiculous situation for the USA to be in. Corporatism at it's finest.

Just wait 'till the foolish crackheads come out making their asinine comments rationalizing why you have lots of "options" and how you're crazy for thinking otherwise. If so many North American consumers minds were not so beyond twisted and they actually gave a shit we'd probably be in a better situation but when so many people are so twisted and/or don't care of course these companies can get away with the BS they are.

el_huason

@108.38.68.x
Said the incurable lying shill that tries to distract everyone with worthless, useless asides >;p

"Only two kinds of human beings can be trusted - dead and extinct. All others must be avoided at all costs" me.
Kearnstd
Space Elf
Premium
join:2002-01-22
Mullica Hill, NJ
kudos:1
Care to explain where the value and competition is? There is no value or competition in my region. Verizon offers only 3mbit DSL against Comcast's DOCSIS3. That is not competition. Unless you consider bringing a Yugo to an F1 race competition.
--
Filan - Aurin Spellslinger - Pago - Team Legacy

cork1958
Cork
Premium
join:2000-02-26

Re: Report Author Responds to Bode's Comments

It's amazing how many people think that is even remotely close to any type of competition, isn't it?
--
The Firefox alternative.
»www.mozilla.org/projects/seamonkey/

v6movement

@206.51.28.x
said by Kearnstd:

Care to explain where the value and competition is? There is no value or competition in my region. Verizon offers only 3mbit DSL against Comcast's DOCSIS3. That is not competition. Unless you consider bringing a Yugo to an F1 race competition.

and the DOCSIS3 network is not even close to an F1 car. It's more like a GT car. Broadband networks in most areas have a long way to go to reach high speeds.
BiggA

join:2005-11-23
EARTH

Re: Report Author Responds to Bode's Comments

Try telling that to TWC's 300/20 tier. I hate TWC, they are a horrible company, far worse than Comcast, but their 300/20 tier has much faster downloads at a reasonable price than even FIOS. They've built well ahead of the demand curve, which is good. By the time anyone figures out what to do with 100mbps, much less 300mbps, they will have 500 or more.

v6movement

@206.51.28.x

Re: Report Author Responds to Bode's Comments

said by BiggA:

Try telling that to TWC's 300/20 tier. I hate TWC, they are a horrible company, far worse than Comcast, but their 300/20 tier has much faster downloads at a reasonable price than even FIOS.

That is still not F1 car speeds. That is GT car speeds, and especially with how poorly provisioned cable networks typically are so users will see slowdowns during peak hours; which is all out of greed from the cable providers.

said by BiggA:

They've built well ahead of the demand curve, which is good. By the time anyone figures out what to do with 100mbps, much less 300mbps, they will have 500 or more.

Completely irrelevant claptrap.
BiggA

join:2005-11-23
EARTH

Re: Report Author Responds to Bode's Comments

said by v6movement :

That is still not F1 car speeds. That is GT car speeds, and especially with how poorly provisioned cable networks typically are so users will see slowdowns during peak hours; which is all out of greed from the cable providers.

I guess you can look at Google Fiber and say that everyone should be building gigabit. I'm not sure that's the case. The best real-world wifi networks out there can push maybe 100-150mbps, most can't hit 50. So even the GT car is way overpowered for the small track that it's driving on. Sure, you could wire in gigabit ethernet, but even then the websites on the other end can't push those sorts of speeds. Gigabit is great for LAN transfers though...

And so what if the 300mbps internet slows down a bit? It would still be pretty darn good at 1/4 the speed.

said by v6movement :

Completely irrelevant claptrap.

No, it's not at all. It's relevant in the sense that they are building ahead of what we need today. That's good.
Kearnstd
Space Elf
Premium
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Mullica Hill, NJ
kudos:1
I just picked a random shitty slow car and random type of racing with really fast cars to make a point.
--
Filan - Aurin Spellslinger - Pago - Team Legacy

tim_k
Buttons, Bows, Beamer, Shadow, Kasey
Premium,VIP
join:2002-02-02
Stewartstown, PA
kudos:40

uninformed public

It doesn't help that the big Telcom's have an army of paid lobbyists and paid off politicians spouting misinformation.