Zoonar GmbH—Alamy
By Jacob Davidson
January 16, 2015

If you’re sick of your internet service provider, you’re hardly alone. Comcast, the largest service provider in the U.S., has won the Consumerist‘s “Worst Company in America” title twice, most recently in 2014. Time Warner Cable, the giant competitor with which Comcast hopes to merge, made it to the semi-finals. (MONEY was once part of the same company as Time Warner Cable, but that was several corporate spin-offs ago.)

That dissatisfaction is not surprising given that comparative studies consistently show Americans have the worst internet service in the developed world. The Open Technology Institute’s most recent Cost of Connectivity report summarized its findings like this: “The data that we have collected in the past three years demonstrates that the majority of U.S. cities surveyed lag behind their international peers, paying more money for slower Internet access.”

That’s not really where you want to be with something as important as access to the web.

Service providers could make our download speeds faster, but they would need to spend a lot of money upgrading equipment—something they currently seem disinclined to do. The reason, according to many experts? A simple lack of competition. FCC data from 2013 shows 55% of American households have no choice in their broadband provider, and the agency has said Comcast will be the only broadband provider for nearly two-thirds of consumers if the company is allowed to merge with Time Warner Cable. Don’t like your service? Too bad. There’s a good chance you have nowhere else to go.

What about those “net neutrality” rules proposed by President Obama in November? They’ll prevent ISPs from flagrantly abusing captive subscribers—by blocking competitors’ sites, for example—but won’t fix the underlying issue. As long as customers don’t have a choice in providers, mediocre or worse service is here to stay. “[The need for] net neutrality is a symptom,” said Vishal Misra, an associate professor of computer science at Columbia University and an expert on the economics of internet service provision. “The real problem is lack of competition and that’s where the solution should be.”

A “public option”

A possible solution may be on the horizon. On Wednesday, President Obama announced that he would ask the FCC to push back on laws in 19 states that prevent cities from building their own municipal broadband networks. He also outlined a number of other initiatives that promote community-supported broadband and help municipalities improve their internet service.

As NPR notes, it is unclear if the FCC has the authority to preempt state regulations. But a renewed focus on a “public option” for internet service could create the kind of competition that would finally drive down prices and improve service. The White House points out that cities with public broadband, like Chattanooga, Tennessee, tend to have much higher speeds than areas with fewer options.

 

Two popular ideas for increasing competition are local loop unbundling—forcing existing service providers to lease their infrastructure to competing providers—and municipalities coming together to create their own infrastructure. Columbia’s Misra, who has authored a paper comparing both alternatives, says his research shows that a public network will create the best outcomes.

The reason? Misra argues that local loop unbundling, though better for consumers than no competition at all, relies too much on the main service provider—the one who owns the pipes—to act in a benevolent fashion.

Misra recalls that when internet was delivered via telephone wires, a service still subject to unbundling regulations in the U.S., there were complaints that infrastructure owners were negligent in maintaining parts of their network. Even in the U.K., an unbundling success story, it took a highly aggressive regulator years to stop the nation’s major fiber owner, British Telecom, from keeping other companies off its network with inflated rates and other anti-competitive tactics.

“Last mile unbundling has been tried and there were performance problems,” says Misra. “A publicly owned infrastructure is much better.”

The best of both worlds?

It turns out a public option could also be a boon for private industry. Should a city choose, it could implement its own form of local-loop unbundling by opening its internet infrastructure to private service providers, getting the benefits of unbundling without the harms. That’s something cities like Stockholm, Sweden and Ammon, Idaho have done to great success.

“We build the road, and we let anybody that wants to use them use them,” Bruce Patterson, Ammon’s technology director, told the Institute for Local Self-Reliance when describing his town’s fiber.

Even for those wary of government-run internet service admit public infrastructure could be positive for consumers. Corynne McSherry, a director at EFF specializing in net neutrality, is too concerned about privacy issues to fully endorse a public ISP. But she admits public fiber rented to private companies could keep broadband providers honest. “What that does is create lots of competition, but the government isn’t my service provider,” says McSherry. “That’s when you’ll have better service because people are competing for your business.”

Even with the president’s support, widespread municipal internet is still far away. But the fact that Republicans in states like Tennessee and Iowa have embraced the idea of publicly funded internet should give its supporters hope.

“In today’s world, people need these services in order to survive, much less thrive,” said Janice Bowling, a Republican state senator from Tullahoma, TN, speaking to Watchdog.org about bill that would expand government-owned internet to rural areas. “It has become the electricity of the 21st century to have adequate broadband access.”

A previous version of this article said a Comcast/Time Warner Cable merger would increase the number of consumers with no choice in broadband providers to two-thirds of Americans. The FCC says a merger would indeed result in two-thirds of U.S. households having only one broadband provider, but this is not likely to be an increase.

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