Why American Phone, Cable and Internet Bills are so High

This is one of the things I like ranting about, so I'll try not to do that.<p>I also live in an area that will <i>never</i> see high-speed internet. We were sold out by both the feds and our state legislators. You can argue that perhaps these government officials were misled or uniformed, but I remain dubious.<p>We were able to construct an interstate highway system. We were able to wire this country with electricity. We were able to wire it for telephones. The only reason we can't wire it with fiber is because of poor government management of eminent domain. We should kick most of those responsible out of office. To see a bunch of yahoos on TV telling me we need the road paved when most of their constituents don't have enough bandwidth to get high-quality instruction over the web? Or to work over the web? It's the Information Age, bozos. Something is wrong somewhere.<p>The worst part? I do not expect this to get fixed any time in the next couple of decades. Not only is it broken and hurting, but there's no political incentive to fix it. In fact the incentives run the other way.

Report from the field: On Friday I walked into a cell phone shop and told them I wanted a SIM mainly for data. They suggested a prepaid "all you can eat data" SIM good for one month (realistically it alerts at 15 GB usage). €20 ($26 USD). The €20 goes towards pay-per-minute and pay-per-text usage, but who calls or uses non-iMessage these days?<p>Back home, my Verizon bill will be $120 every month with one iPhone 5 and one LTE iPad sharing the same data plan (breakdown: $40 for iPhone 5, $10 for iPad, $70 for unlimited talk/text + 4GB shared data (or, replace $70 with $100 for 10 shared GB data for a grand customer abuse total of $150 every month)). You can't seem to even get non-unlimited voice/text anymore. Let's not bring up the $35 fee per device they charge to "activate" it either -- I don't want to headasplode in this room (it has white walls).<p>Data only, please. For under $3/GB, please. RFN, please, not in another 10 years.

I've read this same article for the past 10 years now and every time I ask the question: what about fees and taxes Europeans pay apart from their bill? The US system is horrible but I think for a complete picture it would be good to know exactly what taxes and fees pay for the infrastructure in other countries.<p>As a kid in Germany every household with a radio or TV had to pay a fee to operate those devices and there was a constant barrage of ads reminding new households to register and pay up. I'm assuming there are also other taxes that flow into building communications networks in Europe.

Don't autoplay the frigging video! (Maybe some editor can modify the title to warn us?)<p>I hate sites that start playing video without my asking. Doubly so ones with loud noise. I have sound on my computer for things that really need to get my attention. Not because some site wants to interrupt me and everyone around me.<p>I wish there was a way to vote this link down so that other people who will be similarly jarred wouldn't have to experience it.

While I don't like paying a lot, and I wish my Internet service were faster, I think the article was sensationalist to the extreme, and remarkably light on facts.<p>The author hasn't provided any reason for us to believe that prices or services <i>should</i> be comparable between countries. First and foremost, prices are dictated by the value that people attach to a product. If Americans value, say, TV more, than economics would predict that Americans would therefore <i>pay</i> more for it.<p>And I think that the examples of telephone prices are cherry-picked based on structural differences, or just plain wrong. Communications rates have plummeted since then. I remember back in '84 people would say, "you've got a long-distance call from Xyz". Today, nobody cares if it's long distance.<p>In the late '80s, when my wife immigrated from China, she could only afford to talk to her parents every month or so, because the international phone rates cost several dollars per minute. Today she talks to her dad -- with video! -- on a whim, because it's <i>free</i>. And the price of telephone-quality audio is negligible (~$0.02/minute).

As others have said, this article was remarkably sensationalist and cherry picked many of their facts.<p>However there is a grain of truth in here - while Europe had MUCH higher internet / phone / cable costs 10 years ago, from what I've learned from my friends over there the price has dropped dramatically. While 'regular' plans are comparable to US plans, the budget operators are incredibly cheap.<p>It's been a similar situation in Australia. We had incredibly high costs, and for many years the value of our internet went BACKWARDS - as the price went up, our data was also heavily restricted. However that trend finally reversed and it's much better value now. When I left Australia I had a 200gb 100mbit internet plan with a home line for $78 a month (and that included a cable modem).<p>I have to say I was pretty shocked at how poor the choice and value is in the US after moving here, particularly in Silicon Valley. Fast internet (&#62; 30mbit) is incredibly unaffordable, and there is huge pressure to have to bundle with cable TV (which I don't want or need).<p>And what's up with the phone plans here?! The only reason I'm not absolutely screaming about it is I'm on a shared plan with my wife - if I were trying to get a phone just for myself the costs would be insane.<p>The biggest kicker is trying to find a good prepaid with data SIM - in Australia you can walk into any 7-11 and buy a SIM card for $2 and then get on a $2/day unlimited phone/data prepaid plan (i.e. you just charge up and then every day you use it another $2 is taken off your tab). There is NOTHING like that here.<p>I'm not sure if it's because of a lack of competition or what - in Australia all networks are now (roughly) compatible with each other, so if you buy a phone on one network it'll work on another. Then you have many many resellers who buy the network access wholesale from the big providers and then resell it. Same for the internet market. That's the only thing I can think of - the US needs to get this happening ASAP.

As Bulgaria came into discussion, let me give you a short glimpse at what the biggest cable company in Romania (4th rank in Akamai average peak connection speed 2012) has to offer. For about 25 USD you will get: - 100Mbps Internet access fiber optic, - +100 TV channels including HBO, HBOGo, - one 3G data SIM with 3GB/month, - access to various WIFI hotspots around the country, - 1 phone landline with various free minutes.<p>All this infrastructure for this network was build in the past 15 years and it is national. Romania is as big as Oregon State.<p>In my opinion the prices in US for triple-play are as the article states very very high.

I've been horrified by my experience after moving to NYC. I have been unable to find any providers that offer upstream of &#62; 5 Mbps, and my current provider, time warner, supplies a locked down cable modem that doesn't allow me to port forward anything. Apparently I can trick it into giving me access to a control panel by resetting it with the cable unplugged, but I've been unable to access the internet after trying to put the damned thing into bridge mode.<p>I would pay double or triple what I used to pay verizon for 25/25 symmetrical service before moving to NYC. Does anyone know of a provider that can offer something like this for less than $150/mo in NYC??? I'm considering getting a VPS just to tunnel to so I can access my home services at a steady domain...

The saddest part about this, for us in Canada, is that when we see any American advertised cell phone or internet deals our natural response is "Damn, those Americans got it good over there." I pay around 90 a month for 200 minutes and 4gb of data with unlimited texting under Rogers. Canadian plans are a joke. Seeing this article with a $38.00 plan for phone, internet, and TV is just completely unfathomable for me. :P

I am very astonished by the comments I read here. That internet is way cheaper and faster in Europe and Japan than it is in the US is a fact, period. And it is not because the governments pay for it. It is because the market competition works there, not here! America is not always where capitalism is best implemented! Antitrusts law should step in and these companies must compete!

The article doesn't really answer why the services cost so much. The higher fees aren't going to the margins of the telecoms. Verizon has a revenues of $39.14 per share and earnings of $2.31 per share for the past year.

The infrastructure in those other countries is considerably less expensive to set up. The US is HUGE. For a company to have nationwide coverage they need to invest a TON in infrastructure. It's not surprising to me that our services are so much more expensive than the rest of the world.<p>I didn't realize the difference was as big as it was though. It's surprising because even though internet/tv is sort of expensive here, it isn't at all cost prohibitive for the majority of Americans.

What I was hoping to see in this article but didn't (and maybe some HN folks have good ideas on this) is <i>how</i> do we fix it?

simplest answer: the 1996 Telecom Deregulation Act. Sold as a way to bring real competition after the breakup of ATT, what it did instead was: 1) coax Baby Boomer money into the stock market, causing the Telecom boom, with all the mis-investing that a boom entails, 2) build a lot of infrastructure with the new money, that the incumbent companies didn't have the stomach for, 3) free up the baby Bells from much regulation, but not enforce the "play fair" rules to allow upstarts to use the extant infrastructure, and 4) crash the boom, allowing the incumbents to pick up intrastructure for cents on the dollar. Instead of a rebirth following the crash, as is usual, in which the newcomers get to pick through the remains of the last boom, the remants mostly got gobbled up by the incumbents (even ATT, absorbed by SBC). So the landscape looks much like it did originally, except now the old incumbents control the Internet, instead of just the phone system. Innovation is largely coming on top of the Internet, instead of in providing it.

Hosting on this continent is pretty much a ripoff as well.. one can reasonably assume something is terribly wrong if pricing is broken up to that level.<p>Anecdote alert: I recently moved from a stateside provider to one in Germany. A dedicated server, quad core, 8 gigs, 1TB transfer out was running me around $120 a month from my usual provider.<p>The German host has me set up on the same CPU, but with 32 gigs and 10TB transfer out for less than $80.<p>400% more memory and 1000% more bandwidth for a $40/mo reduction in cost. The pricing on stateside dedicated servers wasn't out of the ordinary either. If anything, I've seen virtual servers be on the same level, with dedicated servers even more absurd.

Because we as a nation are willfully delusional as to how corrupt our government and corporations are. How much buying regulation and legislation is standard part of business.

It is expensive in the US compared to the other two countries I get sims for, the UK and Australia.<p>In the UK I can get a sim and monthly plan for my iPhone for around £6, which gives me what I need. In Australia it's about $30 for a month. In the US it was either H2O at $50 a month or StraightTalk from Walmart for $45. I recently moved my girlfriends grandfathered AT&#38;T iPhone plan on to StraightTalk for a saving of about $50 pm. A 2 gig limit on data compared to her grandfathered unlimited, but thats OK.<p>The US is expensive. No doubt about it.

It all comes down to greed and gouging. Period. There's too much money being made to stop it now. I'm all for capitalism and making money by working hard, but this is the opposite of that. Inferior product, astronomical rates. These are industries strangleheld by a few gigantic companies, and that, my friends, is bad for everyone.

I came from a developing country and among the things I miss about it is low cost phone, cable and internet. Basically $25/month vs $150 I'm paying now for pretty similar quality of service. That has puzzled me a great deal, shouldn't tech cost be much higher in a developing country than in the #1 technology country in the world.

The USA is very sparsely populated compared to South Korea, Japan, or most of Europe. The Ukraine (mentioned in the video), is a really big chunk of land with a smaller population than the UK, but still appears to have more than twice the population density of the USA (eyeballing wikipedia numbers). This is obviously a big deal for any infrastructure project.<p>I'm not saying this is the whole (or even the main part) of the explanation, but it needs to be taken into account at least. In my opinion it certainly wouldn't excuse poor service in towns with 100k+ people.<p>When it comes down to it, internet access is crucial now, and it does enable other parts of the economy to flourish. If the government needs to step in to give it a push, it seems worth it in this case? After all, what is a government for if not planning for the long-term when individuals and corporations can't?

I lived in Hong Kong for about 18 months temporarily as an expat from the US. I was astonished that for about 300 HKD (&#60; 40 USD), I could get unlimited data and a new iphone with contract. The only catch: contracts are usually 18 months or longer. But even then, it is dirt cheap compared to US.<p>Same with cable.

OK so assuming Americans do end up paying way more for less in the phone, cable, and internet departments, what's the solution?<p>I can't recall one month when my parents, both highly educated and cautious, aren't griping about some "strange" or "unknown" charge creeping up into their phone bill. They've even tried different plans on different networks over the years to find the most economical package for the family. When I ask them which network they like the best, they always reply with, "it's not about which network is the best, but about which one sucks the least."<p>And internet? I'm tired of hearing how overseas ISPs are just better (speed to cost ratio) than the ones here. I guess I'm just crossing my fingers waiting to see what happens with Google Fiber, but I seriously hate putting all my eggs in one basket.

In Seattle we have a startup called Spectrum Networks which offers 100mbps fiber and microwave internet to a small set of condos and apartments. Last I checked, it was a 9 person operation. I don't see why more startups like this haven't cropped up in other towns.

I have considered this a lot and the problem appears to be mostly a policy problem boiling down to the two following issues:<p>* Right of way laws in localities make it difficult to deploy cabling of any sort. Starting a network operator is incredibly difficult legally even if you have the capital. Also, counties often grant monopolies to particular cable companies and do not allow other operators to enter the market.<p>* It's a popular economic thought (and apparently one the FCC subscribes to) that CLEC/wholesale style systems do not incentivize network infrastructure maintainers to keep pace with technological advancements. As a result the FCC has granted control to vertically integrated operators like ATT/Verizon/Comcast.

There is only one cable and one phone company in my city.<p>Our prices are terrible and guaranteed to go up each year.<p>But with cellphone companies, there are usually three or four of them and prices are still bad. So I am not sure why the market doesn't "correct itself".

The problem with a lot of the comments here is that the participants use logic, while typical Americans do not. The main point is really about lack of transparency by providers and complacency by consumers... Compounded by an industry that has gotten into bed with government.<p>The market will eventually correct as phone, cable, and internet services continue to be individually picked off by best of breed pure plays that create simple service with transparent business models. May take a while, but it will happen.

Not a very good article. He's thrown together a bunch of unrelated statistics and left out some pretty important information, like the total cost in the landline example. I remember paying $1/minute to call someone 50 miles away before ATT was broken up.<p>The question I have is whether or not wireless carriers pay for spectrum in other countries. Verizon paid over $17B for spectrum, and that money is going to have to come from somewhere.

One thing that this article missed out on:<p>Prior to 1984 Business telephone users cross subsidized Residential users, both thru higher local access rates, and higher LD rates.

When I bought my first landline in the mid-2000s the cost was $40 a month for local service. 75% of that charge was local and state fees.<p>My first phone call was an automated telemarketer. 98% of my calls after that were also telemarketers of one form or anther. Ads started stressing me out, and I ceased being so nice to cold callers.<p>The landline lasted maybe two months before I figured a cell would be cheaper and less annoying.

And how much per minute was long-distance in 1984? In the early 80s almost all the profit from telephone service was in the long-distance service. For example, 1980: in today's dollars, it was over $1 PER MINUTE to call New York from Los Angeles.

Ummm, Google Fiber had to pay over 10k per customer. This article sites around 3k per customer in gross.<p>So they expect the ISPs to just eat up a 7k difference which will take over 1-2 decades to recoup?

We're super behind. I can't wait until Google expands their Fiber to more cities so they can get fiber in every household.

You guys think that is expensive? You don't know Brazil...

Did the interviewer say "information super highway"?

I pay $20 for triple pay, with 100 Mbps Internet.

&#62; Bandwidth is the new Black Gold

"America has gone from #1 in Internet speed (when we invented it) to 29th in the world and falling."<p>I beg your pardon?

Couple of reasons why it's more expensive here: 1) Area and population density: Countries like Japan have a small area with a very high population density. This drives, infrastructure costs down and the return on it high because you have a lot of users.<p>2) Minimum wage in the US: The cost of labor in the US is quite high hence it costs more to build out infrastructure than it does in other countries.