Internet Service Providers in The United States

In an ever increasingly connected and fast-paced world, it has become more and more pressing that we have access to high-speed internet connections. Although the United States was one of the first pioneers for the world wide web, they currently place 10^th in average internet connection speeds. There are a few reasons why the United States has been slow to adopt new connectivity technologies, such as fiber optic cables. First, the United States is a wide spanning land mass with populations dispersed throughout, connecting so many people over such long distances requires massive investments in infrastructure. Second, the United States allows public companies to sell internet access as a private good and not as a utility. This allows these private companies to provide different levels of service and holds them accountable to private shareholders who’s primary objective is to get a return on their investment. Finally, the United States has allowed these private companies to essentially become monopolies, which lowers competition and disincentives these companies from making large infrastructure investments.

               Many of the countries that place above the United States for internet connectivity are densely populated and geographically are much smaller areas than the United States. The United States has a population of approximately 325.7 million people, spread out over a geographic region of 3.797 million square miles. The combination of the large population spread out over such a wide land mass makes it difficult for Internet Service Providers to provide internet access to everybody in a way that is still profitable for their shareholders. A widespread problem for Internet Service Providers is known as the last mile, this problem basically explains that building out the highways for the internet isn’t the hard part, however connecting all the residential neighborhoods is extremely difficult and costly. The cost to connect the major hubs of the United States was subsidized by the Federal government, however these Internet Service Providers have put off connecting all the residential neighborhoods because such an undertaking would be extremely costly. This hurts their position with their shareholders and because of the monopolistic nature of the industry, they don’t feel the need to do so due to the low levels of competition they experience.

               Due to the nature of public companies, they are held responsible to their shareholders to provide them with a return on their investment. This means that investments in infrastructure that would not be cost-efficient, such as connecting residential neighborhoods throughout, cannot be undertaken without questioning by their shareholders. Shareholders would rather the company hold on to that money and invest it in more cost-efficient and investments that would make the company more money. In other countries, such as Sweden, internet access is subsidized by the government and is treated as a utility rather than as a private good. This meant that a healthy amount of competition and publicly funded investments in the infrastructure allowed these countries to build out their internet infrastructure and provide internet access in a more consumer friendly way. Internet access has become so essential to the day to day life of both individuals and businesses and treating it as anything less than a utility makes it quite inefficient.

               In the United States, there’s an incredible amount of regulation and laws put in place that raise the barrier of entry for internet service providers. This means that a few companies own the access rights to a majority of the internet infrastructure that currently exists. The cost for a new internet service provider to build out a new set of cables to provide internet access is so high that even the highly profitable company Alphabet Inc, which is the parent company of Google, is unable to make the required investments. If one of the most profitable companies is unable to compete with the monopoly that existing internet service providers have, then the level of competition that can exist for the existing internet service providers is almost nonexistent.

Sources: 

https://en.wikipedia.org/wiki/List_of_countries_by_Internet_connection_speeds

http://www.businessinsider.com/internet-isps-competition-net-neutrality-ajit-pai-fcc-2017-4

https://motherboard.vice.com/en_us/article/bjdjd4/100-million-americans-only-have-one-isp-option-internet-broadband-net-neutrality