AT&T announced at midnight this past Sunday that it's ready to sell internet service over its fiberoptic wires in parts of Kansas City, Leawood, Lenexa, Olathe and Overland Park. This is clearly a challenge to Google Fiber, which already has its service established in the area. AT&T is offering internet connections of up to 1 Gb/s for $70 a month, and paired with a basic TV package, $120 a month. Both of these packages are an exact match to Google's speeds and rates, making it clear that their intention is to fight Google for customers in the area.
Time Warner Cable is still the dominant ISP in Kansas City despite not being able to match the fiberoptic speeds of Google Fiber. However, since Google entered the market, Time Warner has raised its internet speed in the area without raising rates.
This article is great proof of how competition is beneficial to consumers in the ISP industry. Without Google providing a much better service in the Kansas City area, you better believe that Time Warner would have continued providing the same level of service at the same prices. Once Google and AT&T entered the picture Time Warner suddenly "raised speeds" in the area. Is this not indicative that these cable companies are just throttling the speeds and charging bad prices just because they can? I highly doubt that Time Warner suddenly had a network infrastructure overhaul in Kansas City, they just lowered the throttling on their customer's services once competition was introduced.
This is a big problem in the cable industry - there are location-based monopolies which are terrible for consumers. If Time Warner is your only option for internet service, what incentive do they have to increase speeds and reduce prices? They're going to continue to provide service that is less than their capabilities because there's no threat of customers leaving. In this day and age, you simply need internet service; there's no way around it. These companies know that.
In general, ISPs are pretty shady. There are a few solutions that are being discussed to try and fix "unjust" ISP business practices. One ongoing debate is that of net neutrality, in which some believe that there needs to be greater regulation on these cable companies. These regulations will prevent these companies from throttling certain types of traffic. For example, Comcast was found to be intentionally throttling peer-to-peer traffic that was traversing their network. Another company was found to be using "deep packet inspection" (AKA, they looked at the traffic on their network) to discriminate against P2P, FTP, and online games. Aside from the intentional throttling of certain types of traffic, there doesn't seem to be much discussion on the throttling of ALL types of traffic. When you're the only provider in an area, what's stopping these ISPs from providing the bare minimum to consumers for crazy prices? This makes tons of sense from a business perspective.
Should there be greater regulation on ISPs? Should internet service be treated as a utility like power or water seeing that it's mandatory in today's society? Should we just wait for our righteous overlord Google to save us from these greedy tyrants? Am I crazy? I'd like to hear your thoughts about the topic.
http://www.kansascity.com/news/business/technology/article10441850.html
Eric, I definitely agree with ISPs being shady. In the part of New Jersey that I reside, the only cable company that I have access to Cablevision/Optimum. There is zero availability of the fiber optics providers of FiOS and AT&T U-verse, so we are essentially stuck with Cablevision as a hard-wired provider. Everything about Cablevision is mediocre: their Internet speeds don't compare with FiOS and their set-top boxes for TV until just recently had an interface that was a throwback to the late 90's/early 00's. They have also been using the same DVR boxes for at least the past 8-10 years, as every-time I go there to replace a damaged box they give me another of the same type. There's nothing particularly redeeming about their service: it's just there.
ReplyDeleteIf FiOS were an option, my parents would switch immediately. We have only heard positive comments about their service: better picture quality and set-top box, as well as significantly faster upload and download speeds compared to Cablevision. The biggest issue is the fact that we don't have access to FiOS, as there is no fiber in the area. Verizon would have to lay the fiber themselves, and in the process, probably have to get permission for Cablevision to do so. Cablevision would not allow it simply because they want to have a monopoly in the area. It means a larger source of revenue to have an entire town in New Jersey under their grasp, and with this they become complacent; comfortable. They know there is no threat of competition, so they can continue to provide an inferior service as long as there is no FiOS.
There should be no territorial monopolies so that there is incentive for ISPs to improve their service to retain their customers. Right now there is no such incentive. The can continue to raise prices, provide their mediocre service and make their wallets fat.
Eric, I agree also. I think that it is disgusting that ISPs have so much power over everyone and everything. The world has changed so much over the past 20 years thanks to a low-cost, free, and open internet. However, the growth of services and businesses offered through the internet are now at risk because of the stubbornness and greed of ISPs in America. The modern economy and culture has become so dependent on the internet, and the ISPs know this. They can charge so much because we have no alternative. It wasn't until Google Fiber entered the market in Kansas City that an alternative appeared and Time Warner had a perfect Econ textbook reaction to their entry. As a finance major, I can tell you straight forward that the ISPs grip on the price and quality of internet access is only hurting consumers and businesses that use it. The internet should be classified as a public utility. We have become so dependent that it is the only sure-fire answer to the problem. It was regulation that ended the Coal Strikes in 1902, and it will be regulation that ends the ISPs rule over the internet.
ReplyDeleteMonopolies are always bad for consumers. Having regulations on ISPs would be a dream-come-true!
ReplyDelete