Internet connectivity is essential for carrying out day-to-day tasks, no matter where you live in the world. The cloud brings numerous benefits, including the ease of watching television online, looking up information within seconds, working remotely, taking classes on the web from the comfort of your home, interacting with friends and family through social networking platforms, purchasing premium products and services online, so on and so forth.
However, the bounties of this next-generation technology come at a high cost, especially if you happen to live in the United States. There are only a handful of services like Cox internet that stay within the affordable margin. The case is entirely different for other market providers. Though the rate of internet provision has progressed magnanimously since the last decade, with nine-in-ten Americans getting easy broadband access, the prices have peaked enough to worry an average consumer. This brings us to the main question: Why is internet service in the US overpriced? Let’s find out the possible reasons below.
A Look at the Statistics
Multiple companies have carried out a comparison between the average internet cost in the U.S. and other countries of the world. They have shown that the basic broadband price in America exceeds the range set by other nations. And, if you are brave enough to reach for higher download speeds, you will ultimately have to pay three times more than the people in France and the UK, and five times more than those who live in South Korea. As per the BBC, here’s an approximate price breakdown that might give you an idea of how much you are paying for your internet per month:
|Cities||Download Speed||Average Monthly Cost|
|New York||Lower to Mid||$70|
|San Francisco||Lower to Mid||$99|
|Washington DC||Lower to Mid||$68|
|London||Lower to Mid||$38|
|Paris||Lower to Mid||$35|
|Seoul||Lower to Mid||$15|
Not only that, the United States ranks at 30 out of 33 countries on the scale of providing at least 45 Mbps download speeds to the people. Even though some American providers dial down the cost of standalone internet service in bundles, or advertise it so, people are eventually forced to take $200 out of their pockets every month for internet, TV, and phone combined. The case is worst for those who reside in low-broadband access areas and face the monopoly of wanton ISPs.
Why is Internet Service in the US Overpriced? | Possible Reasons
There may be many reasons as to why you have to bear with high internet costs in the U.S. The following are our estimations:
Low Concentration of Internet Service Providers
Competition is healthy for every economy. It works out perfectly well in favor of the consumers. A high market competition drives internet service providers to expand their customer base with low-cost offers. It also weeds out poor performers. However, in the U.S., there is an obvious shortage of ISPs per square mile. According to a study, half of the Americans have only two ISP options in their area. If they want higher speeds, the choices go down to one. The increasing demand for faster broadband paired with low concentration and market competition limits the supply and leads the internet service providers to do as they please – offer sub-par internet for a huge price.
We have talked about the ISP monopoly before. Let us delve further into it. In the U.S., private interest groups back powerful internet service providers to keep the market trend going in their favor. This makes it incredibly difficult for new ISPs to enter the arena, and most of them even go bankrupt on the first run. Without the presence of more ISPs to level the field, the incumbent entities stay in place and keep the internet costs high for consumers.
High Investment Price
The geographical terrain in the United States is quite uneven. So, the up-front costs of laying down new lines, getting the permit for construction and deploying advanced network equipment amounts to hundreds of thousands of dollars, which dissuades the investors and prevents internet service providers from expanding broadband access, pumping supply, and eventually, lowering internet costs for the people.
As this post clarifies, the state of the internet is dismal in the United States as compared to other countries. Though there are millions of internet users in America, the lack of ISP competition, high initial costs of production, and internet lobbying keep the price of internet service too expensive to afford for average consumers. On the other hand, it is also true that the barriers against lower broadband prices are being lifted as we speak, so there may be some hope for us, after all.