Is Regulated Internet Too Costly?

By Jamilah King Apr 09, 2010

With the recently revived broadband debate gaining steam after this week’s landmark ruling against net neutrality, one question lies at the heart of all the in-fighting: Will a regulated Internet cost users more money? Cost is often cited as the primary barrier to increasing broadband adoption, particularly in communities of color. The FCC’s broadband plan set a goal for 100 million homes in the US to have high speed broadband by 2015. Currently, an estimated 93 million people in this country don’t have broadband access. According to the New York Times, it typically costs $100 per month for broadband access at the speeds recommended by the FCC — far more money than the average working family of color can afford. Opponents of net neutrality think that regulation means higher prices, and that low- income and communities of color will be hit the hardest. In a memo to employees dated back in October, AT&T urged employees to send the FCC letters in opposition to regulation. One point they made was this:

"The ‘net neutrality’ rules as reported will jeopardize the very goals supported by the Obama administration that every American have access to high-speed Internet services no matter where they live or their economic circumstance. That goal can’t be met with rules that halt private investment in broadband infrastructure. And the jobs associated with that investment will be lost at a time when the country can least afford it.

Though some question their motives, representatives from some the nation’s most powerful Civil Rights organizations tend to agree with AT&T’s position. Last year 23 Civil Rights groups signed a letter to FCC chairman Julius Genachowski in opposition to net neutrality. They argued that any regulation would drive up prices and ultimately keep broadband out of the communities most in need. Supporters of net neutrality, particularly those from the netroots community, think the opposite is true. "Internet service providers are already making huge profits, and if they believed that investing in low-income communities made good business sense, they would already be doing it," representatives from ColorofChange wrote yesterday in a newsletter to supporters. "The idea that making even more money is suddenly going to make them care about our communities is ridiculous." So who’s right? "It’s a waiting game," says Joel Kelsey, policy analyst for Consumer’s Union, an advocacy group based in DC. "We’re all trying to develop a long-term broadband strategy for bringing down costs." Kelsey did note that the two options on the table are derived from basic economic principles. The first would be to drive up competition, which invariably decreases prices. Though telecom companies really like this first option, it’s unclear how competitive that market would actually get. Which leads to the second option that advocates are pushing: to decide that the Internet isn’t a feasibly competitive place, and have government regulate prices. Though Kelsey says that both options could have significant short-term impact, the problem with driving up competition may be a physical one. Since the Internet is made up of actual fiber optic cables laid in the ground, you can’t really have multiple companies laying new cables on top of one another (think of it like a highway system). Even though the system is currently set up to allow multiple Internet service providers to feed off of that one infrastructure, Kelsey thinks it’s unlikely there will be more than half a dozen companies competing against each other.