In 1982, rock star Pete Townshend asked Americans to call their cable operators and, "Demand your MTV. I want my MTV!" It's 2014, and two-minute music videos on a cable channel have given way to high-definition movies, concerts and sports streamed live to your TV, computer and phone. So where the heck is my superfast gigabit Internet access? Who do I even call?
We know it's technically feasible. Google Fiber, with speeds up to 100 times faster than the basic broadband provided by your cable or phone company, is already up and running in Kansas City, Mo.; Austin, Texas; and Provo, Utah. And last week, Google announced it's in talks with 34 more cities. Even Chattanooga has gigabit broadband in 56,000 homes and businesses provided by the city-owned electric company, of all things.
Users everywhere rave about gigabit service—Web pages pop onto your screen, videos stream all over the house, maps jump as you move—and this is before any Web company has implemented a specific service that takes advantage of gigabit speeds.
It's economically feasible too. The average access speed in the U.S. is now under 10 megabits per second and costs around $40-$60. Verizon FiOS charges $300 a month for 500 megabit service. Yet Google and others charge just $70 a month for a full gigabit connection, download and upload. VTel in Springfield, Vt., charges $35. Gigabit in Hong Kong was $26 way back in 2011.
So what's America's problem? Why aren't more than a handful of U.S. homes wired for gigabit? Sadly, last week's announcement of Comcast's $45 billion acquisition of Time Warner Cable will set back fiber deployment and gigabit homes for a decade. Comcast's competition-limited future will reside in overcharging more than 30 million customers for bundled cable channels and a growing Internet access business that tops out at maybe 20 megabits per second. It's almost as if they are saying, "You want fiber? Eat some Raisin Bran."
Almost half of Time Warner Cable revenues (and my guess is far more than half their profits) are from Internet access and digital voice. There's not much cable competition. Today, 30% of U.S. homes have either none or one provider of six megabits per second or better Internet access. Another 37% have only two providers, probably a cable company and a phone company duopoly who refuse to compete on price or speed. So cash flow goes toward paying down debt rather than upgrading your home.