'Extortion' claims fly, and telecom double-talk hits new heights

While AT&T, Comcast, and Verizon spin and lobby, the U.S. falls further on Internet speeds


The United States did not fare well in the UN Broadband Commission's annual report, released this week. While this nation continues to fall further behind countries in Europe and Asia in rankings for affordability, speed, and subscription rates, telecom giants are busy in Washington battling to maintain the status quo.

At 29Mbps, the United States is 25th in a global ranking of average Internet download speeds, behind such countries as Moldova, Latvia, and Estonia and more than three times slower than global leader Hong Kong. The FCC minimum standard for high-speed broadband is currently set at 4Mbps -- also the average speed of downloads in Iran and Laos. That 4Mbps standard, set back in 2010, is used to measure how well the industry is deploying Internet service to Americans. And AT&T and Verizon are fighting the brave fight to make sure the bar is not raised.

"Given the pace at which the industry is investing in advanced capabilities, there is no present need to redefine 'advanced' capabilities. Consumer behavior strongly reinforces the conclusion that a 10Mbps service exceeds what many Americans need today to enable basic, high-quality transmissions," AT&T said in a filing on the FCC's proposal to raise the definition to 10Mbps. Verizon made similar arguments.

While AT&T and Verizon believe that 4Mbps is fine for many users, FCC chairman Tom Wheeler said earlier this month that "a 25Mbps connection is fast becoming ‘table stakes' in 21st century communications" -- suggesting that the agency's 10Mbps proposal is already outdated. The UN report makes clear that while "in terms of ultra-high-speed broadband, there are still not many consumer apps and services that need Gigabit speeds, such services are on their way. Experience shows that technology typically moves faster than most people anticipate."

In another mediocre showing, the United States fell from 20th to 24th place in wired broadband subscriptions per capita, behind virtually every country in western Europe. The UN report recognized genuine competition as one of the traits common in countries where broadband has been successful, yet in the United States, users are typically faced with a Sophie's choice between, at most, two Internet providers.

Disgruntled users might point to the fact that the No. 1 company (Comcast) and No. 2 company (Time Warner) do not compete in any market as proof that telecom giants have carved up the country and limited choice. To hear Comcast tell it, though, there's plenty of competition.

In a filing to the FCC, defending its pending purchase of Time Warner, Comcast argues that "broadband providers are competing vigorously." It cites Google Fiber (currently available in three cities), municipal broadband (which telecom lobbying has managed to ban in 20 states), and wireless carriers as the sources for this so-called competition.

Want to know what real competition looks like? Turn to Singapore, where three competing companies have launched a price war on gigabit fiber home Internet access and are offering 1Gbps unlimited broadband for less than $40 per month with a two-year contract. That's less than most people in the United States are paying for 10Mbps. U.S. companies, by contrast, are keenly focused on ways to charge users more for the same crappy service.

The FCC is considering whether it should "consider latency and data usage allowances as additional core characteristics of advanced telecommunications capability" when defining high-speed broadband. Predictably, Verizon and AT&T loudly defend their right to charge heavy broadband users extra -- while admitting that congestion is not a problem. But the Internet Association, which includes Amazon, Facebook, Google, Reddit, Twitter, and Yahoo, argues in favor of the FCC monitoring data caps because they "effectively ration consumer use of broadband."

David L. Cohen, executive vice president at Comcast, this week lashed out at business partners and rivals opposed to Comcast's merger with Time Warner, accusing them of "extortion" and saying that "motive can and often does inform credibility." Truer words were never spoken -- but about whom?

Netflix spokesman Jonathan Friedland said, "It is not extortion to demand that Comcast provide its own customers the broadband speeds they've paid for so they can enjoy Netflix. It is extortion when Comcast fails to provide its own customers the broadband speed they've paid for unless Netflix also pays a ransom."

The motive of U.S. telecoms continues to be one of maximizing profit -- at the expense of the country's competitiveness in broadband.

Copyright © 2014 IDG Communications, Inc.

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