When it comes to Internet access parts of the United States often feel like a third world country. If you live in a small town you may be lucky if you can even get digital subscriber line (DSL) service. Those living in larger cities often have access to high speed cable Internet but that is far from the blazing fast fiber connections that people in other parts of the world and a handful of lucky denizens in the United States enjoy. But why does Internet access in the United States suck? Is it due to a failure of capitalism or market forces? No. As it turns out, the reason Internet access sucks in the United States is the same reason so many things suck, government:
Deploying broadband infrastructure isn’t as simple as merely laying wires underground: that’s the easy part. The hard part — and the reason it often doesn’t happen — is the pre-deployment barriers, which local governments and public utilities make unnecessarily expensive and difficult.
Before building out new networks, Internet Service Providers (ISPs) must negotiate with local governments for access to publicly owned “rights of way” so they can place their wires above and below both public and private property. ISPs also need “pole attachment” contracts with public utilities so they can rent space on utility poles for above-ground wires, or in ducts and conduits for wires laid underground.
The problem? Local governments and their public utilities charge ISPs far more than these things actually cost. For example, rights of way and pole attachments fees can double the cost of network construction.
So the real bottleneck isn’t incumbent providers of broadband, but incumbent providers of rights-of-way. These incumbents — the real monopolists — also have the final say on whether an ISP can build a network. They determine what hoops an ISP must jump through to get approval.
Starting an Internet service provider (ISP) or expanding an existing one normally wouldn’t cost an arm and a leg. Digging trenches and laying cable isn’t exactly rocket science nor is it exorbitant expensive. But receiving permission from municipal governments and their utility companies doesn’t come cheap because they have a monopoly.
If a free market existed in utility provision, ISPs would be able to negotiate cheaper right-of-way agreements when they were needed because most companies would be happy to receive a little extra for letting an ISP utilize already existing infrastructure. And if one utility company didn’t want to lease the use of its infrastructure, an ISP could negotiate a contract with one of that company’s competitors. Another possibility under a free market would be utility companies not even bothering to build infrastructure but leasing the use of infrastructure built by companies that specialize in building and leasing it to utility providers, including ISPs.
However, many municipal governments have granted themselves a monopoly on both utilities and the infrastructure. Without any competition these municipal governments can charge ISPs whatever they want for access to their infrastructure. This ends up hurting the people living in the municipality but municipal governments, like all governments, don’t care about the people they claim dominion over.
If Americans want better Internet they need to either take control of their municipal governments’ infrastructure (which was built with money stolen from taxpayers anyways) or bypass it entirely.