Why is broadband more expensive in the US?

Date: 27 Oct 2013 | posted in: Media Coverage, MuniNetworks | 0 Facebooktwitterredditmail

BBC News Magazine, October 27, 2013

Home broadband in the US costs far more than elsewhere. At high speeds, it costs nearly three times as much as in the UK and France, and more than five times as much as in South Korea. Why?

Men’s haircuts, loaves of bread… it is surprising how much more expensive some things are in the US than the UK. Now home broadband can be added to that list.

The price of basic broadband, TV and phone packages – or bundles as they are known – is much higher in American cities than elsewhere, suggests the New America Foundation think tank, which compared hundreds of available packages worldwide.

Looking at some of the cheaper ones available in certain cities, at lower to mid download speeds, San Francisco ($99/£61), New York ($70) and Washington DC ($68) dwarf London ($38), Paris ($35) and Seoul ($15).

Cost of broadband around the world

This research echoes the findings of another report earlier in the summer by the OECD, which compared countries in terms of their broadband-only prices. Across all 10 download speeds and capacities, it consistently ranked the US near the bottom.

For instance, at high speeds of 45 Mbps and over, the OECD report has the US ranked 30th out of 33 countries, with an average price of $90 a month. With phone and TV thrown in, plus some premium channels, these packages often cost $200.


In recent years, the commuting experience in Seoul has suddenly become more enjoyable. The subways may be packed, but the corporate warriors are now armed with the latest smartphones, consumed in their daily ritual of listening to music and watching TV dramas on board.

That’s because the metro system is equipped with free wi-fi. For a country that was flattened 60 years ago by a war that took over a million lives, it’s remarkable how South Korea has turned itself in to an internet powerhouse.


What the suppliers say

  •     Verizon said it provided good value – a triple-play bundle FiOS including high-speed, fibre 500 Mbps internet for roughly $100 to $125 per month, before taxes, fees and other charges for set-top box rentals and premium channels
  •     Comcast said it had increased speeds 12 times in 11 years. “We offer a 105 Mbps service today to more than 50 million homes across the US in 39 states plus the District of Columbia. We also offer our fastest speed tier, 505 Mbps, to millions of homes in the north-east of the United States.”
  •     Time Warner Cable said entry-level pricing for broadband was the second lowest in the world. “Competition is robust and growing, with American consumers enjoying meaningful choices among providers, speeds and pricing. The US broadband network is strong and is only getting stronger.”

These new services have had a positive impact on prices, says Chris Mitchell, director of telecommunications at the Institute for Local Self-Reliance.

“When a community builds its own network it enters the market with a lower price than the incumbents had been offering. Often the incumbent then lowers their price – often even further than the municipal network is offering – so when a community starts offering a service the prices typically drop.

In Lafayette, Louisiana, $35 can get you 15Mbps from the municipal internet service. But only one in 10 US cities have public electricity utilities and 19 states have discouraged or banned communities from building these networks, says Mitchell.


Read the full story here.