America prides itself on her competitive ecosystem: a jungle of companies that have to scratch and crawl their way to the top. The capitalist marketplace is supposed to leave only the fittest, leanest service-providing, product-producing species alive.
However, the telecom industry has managed to carve out a comfortable, competition-free niche, and America has suffered the consequences. How did this happen?
According to Professor Susan Crawford, author of Captive Audience, the decision to allow cable companies to own entertainment content and manage this content’s distribution, the failure to set high standards for broadband speeds, and the relaxed regulatory agenda of the FCC meant companies like Comcast were able to out-package smaller rivals. By controlling content, especially sports, and the cable bringing channels to the screen, Comcast made more attractive offers to customers than rivals and was then able to ratchet up the price of its service. The cellphone market is similarly choked: Verizon and AT&T control 65 percent of the wireless market, and have little incentive to introduce faster connections.
Just 10 years ago, America was a pioneer of telecom, on the forefront of the new internet universe. Now, America is far behind Japan and South Korea (check out this interactive map). 4G LTE, a faster wirelss standard just introduced by the major carriers, has been the standard for connection speed in Japan since 2005! And South Korea and other Pacific Rim nations have reaped the benefits of faster connections, enjoying higher voice quality, better video streaming ability, and other benefits of more rapid data transmission.
Clearly, America needs a healthy, wholesome injection of competition to revitalize the telecom industry. Enter Google’s newest product: Google Fiber. Google Fiber is a fiber-optic network, similar to Verizon FIOS, except it’s several times faster. Fiber transmits data at 1 gigabit per second, allowing instantaneous video streaming and simultaneous uploads and downloads.
American towns are crying out for Google’s new product (Topeka actually changed its name to Google for a short period in the hopes of convincing Google). Google appears to be focusing on smaller cities with burgeoning technology sectors that will probably enable Google to profit both off of use of its fiber-optic network and increased traffic. So far, it has installed Fiber in Kansas City, Kansas; Provo, Utah; and Austin, Texas.
Fiber’s competition’s response was immediate: AT&T responded to Google’s announcement that it would install fiber in Austin by announcing that it, too, would offer 1 gbps speeds. Google says Fiber is profitable at $120/month for TV and connection.
But how quickly it will phase in Fiber across the country, and the full response from competitors remains to be seen. A full one-third of Americans do not have wired access to Internet, according to Professor Crawford, even as Internet becomes central to commerce and studies show that more people, especially Millennials, are spending more time online than, say, driving. Internet is the modern highway, and America’s current infrastructure requires an equivalent of the Highway Act of 1965 to bulk it up.