Broadband in the U.S. is overpriced

Not too surprising given the near monopoly status of the industry.

From the link:

The reasons for the stagnation of U.S. broadband are multifactorial, but one of the authors, Shane Greenstein, argues that the 2003 decision allowing the broadband industry to regulate itself has caused much of the stagnation.

(For perspective, check out how much faster most of Europe and Asia is than the U.S., when it comes to broadband.)

Greenstein says that by now, broadband companies should have paid off almost all the costs associated with building out their infrastructure.

“We are approaching the end of the first buildout, so competitive pressures should have led to price drops by now, if there are any. Like many observers, I expected to see prices drop by now, and I am surprised they have not,”Greenstein told Kelogg Insight, a house organ for the university.

This means that broadband companies are now operating their broadband as almost “pure profit,” devoting only a small fraction of subscriber revenues to maintenance.

Without new entries on the market — most urban areas have at most two different broadband suppliers to choose from, the phone company and the cable company — Greenstein argues there is no incentive to lower prices.

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