One thing that I'm sure most Americans--regardless of political affiliation--will agree on is the lack of good choices for telecommunications service. Whether it is a landline, a cell phone, or your Internet connection, most areas have no more viable options than you can count on one hand (and sometimes even one finger; you can choose which to use). As a result, prices tend to be high, and service tends to be lacking.
Libertarians and economic conservatives say that the solution is to let the market work these things out, and that consumer needs and demands will ultimately drive the industry to find the best solutions if the government stays out of it. It's the "vote with your dollars" argument, but the real situation is a perfect example of why "vote with your dollars" is often just a load of garbage, put forward by a business interest trying to avoid change, to distract people from real solutions.
Using my own experience as a working example, let's take a look at two separate issues: cell phones, and home Internet access. In each case, we'll examine what the available options are, what has and has not worked, and how the situation can be improved. Readers are invited to share their own experience via the comments, and to provide additional suggestions for making socially and monetarily responsible choices when it comes to telecom service.
Logging On
My first experience shopping for Internet service was in the summer of 2003. I was in college, and my friends and I had rented a house in Santa Cruz, CA. Like many parts of the country, we were at the mercy of a duopoly--competition was between the sole cable provider, and DSL from the phone company. As a result, the choice was between SBC's (now AT&T) available packages and Comcast's. Cable was faster but more expensive, and being poor college students, we opted for AT&T DSL.
The service was not good.
We lost Internet access for several hours at a time at least once every month, and even after upgrading to a higher tier of service, the bandwidth was woefully inadequate for six data-hungry students.
It got even worse when we moved in 2005. Since the account was in my name, I took it with me to my new apartment. I called the company and explained in detail exactly what I wanted to have happen: essentially, I wanted the service transferred to my new apartment, with no changes except to cancel my long distance phone service (which was a separate add-on, and not part of the pricing bundle for phone & Internet service).
When the service was actually set up, I found that they had restarted my contract, and were billing me a higher rate for half the bandwidth. I called SBC several times to get it sorted out, and was eventually told that I could NOT be put back on my old plan, because that wasn't a package that they offered any more. (Keep in mind that I had been in the middle of a contract when this happened, and that they had only taken me off that plan in the first place by error). All they could do was offer to switch me to another plan, which still wasn't as good a deal as what I'd had before, and that they wouldn't do anything about my higher bills to date.
SBC had also lost more than one of my checks, and refused to waive the late fees even when I presented them with evidence that I had, in fact, both written the check and mailed it.
My efforts to straighten out the SBC service stretched several months, well into 2006... which was also around the time the story broke about the Bush administration's illegal wiretap program which AT&T had facilitated.
A bit later, I also came across a very disturbing article about how SBC had negotiated a monopoly in South Africa for the purpose of "having the strength, focus, and freedom necessary" to build a stronger and more robust communications network throughout the continent, by grabbing a controlling stake of the country's only telecom company. Of course, once the contract was in place, they spent the next several years scrapping all the infrastructure plans (the building of which had been the point of giving them control in the first place), and using their monopoly to gouge customers for the same shoddy network they had been using all along.
Fed up, I cancelled the service, and called Comcast.
All I wanted was Internet access. However, due to the way carriers push their services in "bundles," it was actually cheaper ($45 Internet + $13 for local-only cable) to get cable TV and Internet access than to get just Internet access alone ($69). It was more than I wanted to pay, and Comcast has been no saint either (as evidenced by its repeated attempts to undermine PBS, and now its acquisition of NBC is sure to lead to all sorts of new conflict-of-interest situations), but I just could not stand giving AT&T/SBC my money any more.
I only made about $1100 a month at the time working nearly full-time (on top of being a full time student), and my rent and utilities were a fixed $850. Any additional money going to Internet service was money coming out of the grocery fund.
I only had three options:
1. stick with the phone company for service, which had consistently mishandled my account, and provided inferior service
2. pay a bill I could barely afford to the cable company in order to get reliable service
3. not have any Internet service
You can debate whether or not #3 is a viable option for a modern college student living alone; I didn't see it as such. Regardless, the question remained:
How, exactly, am I supposed to "vote with my dollars" here?
Granted, the service I got from Comcast was much better than that which I had received from AT&T, and (except for the price) I ended up being reasonably satisfied with it. But I have heard just as many complaints from dissatisfied Comcast customers; what were my options if Comcast had been problematic as well, or if I had lived a little further up in the hills, where Comcast didn't provide service?
Many parts of the US face this same sort of duopoly when it comes to Internet service providers (ISPs), and many fear that cable's apparent triumph over DSL will lead to outright monopolies in several markets.
Providers are already starting to flex that "you've-got-no-other-options" muscle in a number of ways. Pricing has long since stagnated, and rather than spend valuable research money on building a network that can keep up with the changing needs of an increasingly connected populace, ISPs are increasingly choosing to interfere with your traffic and privacy to prevent network strain. The next step in this path is moving to billing for data use (like a gas or water meter) rather than having a set monthly fee for an open pipe. Cellular carriers have already started doing this (more on that in a bit), and most ISPs have already implemented data "caps" in their contracts, which will slow you down or even cut you off if you use more than a predetermined amount of bandwidth in a month.
Is it any wonder that the United States has fallen well behind other countries when it comes to both the speed and affordability of its Internet access?
(source: Communication Workers of America via CNET)
Looking forward, all we need to do is point to the growth of technologies like YouTubeand Netflix streaming (now the #1 source of Internet traffic)--and the implications that a "metered" Internet could have on services like that--to see how this change will interfere with future innovation.
Back when Internet service was new and dial-up based, there were many different options. As a result, most providers' rates quickly dropped through competition and maturing technology. However, once the larger companies started to gobble up the smaller ones, those options were reduced and prices stopped dropping. By the time cable and DSL were mature and practical, a handful of companies controlled most of the market, and the situation has only gotten worse since.
This is not the result of the government "meddling" in the market; quite the contrary, this is what happens in the natural life cycle of a capitalist market. A new type of product or service emerges, which a wide swath of the population wants or needs. Many competitors start out, and once a few frontrunners emerge, they start using their positions of advantage to further reduce or engulf competition, until you wind up with all the power concentrated in very few sources. A free market inherently corrupts if allowed to follow its natural course; the "vote with your dollars" argument is only viable when you're discussing a market in its infancy.
Here, then, is the true value of the interplay between capitalism and government regulation: strong government regulations against anticompetitive practices can help arrest a market to a certain degree in its many-but-smaller-options stages, preventing it from reaching oligarchical maturity.
Of course, businesses would argue (and to a degree, rightly so) that forcing them to stay as a pool of small and separate competitors can significantly interfere with a product or service's ability to become ubiquitous and to develop standards.
We'll take a closer look at that problem in...
The Tale of the Telephone
While I love keeping up with new technology, I am usually a bit slow to actually adopt. It took me until the iPod Touch to buy an MP3 player, for example, because I wanted to wait and get a device that could do everything I wanted from a digital pocket gadget, and do it in a way that was easy to use and well integrated. And it wasn't until after I abandoned my land line as a result of dumping SBC that I decided to get a cell phone.
Choosing my service was a giant headache the first time around, and it has gotten no easier since.
I have my issues with cell phones... or more accurately, with the cellular market. As with the ISP market, the choice of cellular carriers continues to narrow. AT&T's acquisition of T-Mobile, when approved (which I hope--but don't seriously believe--will be rejected), will leave only three major players in the US market: AT&T, Sprint, and Verizon. All three companies have had countless issues of privacy violations and other abusive behavior, and each has other attendant issues that would cause a a conscientious, "vote with your dollars" consumer to look elsewhere. However, with only three major companies that have differing coverage maps (reducing your real choice in some areas to two, or even one), there seems to be no easy answer.
I will say this openly: I hate AT&T. Almost dogmatically at this point. However, as a public education employee, I am a member of the AFT. Why is this relevant? All cell phones that the AFT issues to its officers have to be AT&T phones, because of the major carriers in the United States, AT&T is the only one that is unionized. So already we run into the first headache: do I go with my overwhelmingly negative personal experience and turn my back to AT&T, or do I support my union brethren and go with the only service whose workers are union-represented?
Ultimately I rejected AT&T as an option, in large part because of a practical concern: their network is notoriously awful in the San Francisco bay area, where I live.
That leaves Verizon and Sprint. When I first chose a phone, there had been a recent boom of what were known as MVNOs, or "virtual" phone companies that resold access to one of the major carriers' networks with their own devices and rate plans. At the time, I chose to go with Helio, a now-defunct company owned in part by the Korean telecom that controls EarthLink, which ran on the Sprint network. I chose them because their pricing matched my usage: I don't actually talk on the phone very much, but I did want mobile Internet access for email on the road, for on-the-fly trip planning, and because (like a growing number of Americans) most of my long-distance communication happens online rather than by phone or mail. Helio had a comparatively cheap "unlimited data" plan, which I could pair with a low number of monthly phone minutes. However, for a variety of reasons, the vast majority of these have long since closed their nonexistent doors.
With Virgin Mobile's sale to Sprint, the only significant MVNO left that I'm aware of is Credo Mobile. I'm sure many people here are already familiar with Credo; like Helio and Virgin Mobile, they run on the Sprint network--but unlike those companies, Credo puts an emphasis on being a "green" company and on promoting progressive policies.
So when my old provider went belly-up, I strongly considered a switch to Credo. However, I was planning a major road trip that summer, and it was important that I had a device that had good Internet and email access, good map and navigation software (with GPS hardware), and a decent camera. Ideally I wanted either an iPhone or one of a couple of higher-end Android phones.
As you are probably aware, the iPhone was still an AT&T exclusive at the time, and Credo suffered the same problem as most MVNOs: an abysmal selection of smartphones and high-end devices. I turned away from Credo with a sigh, and signed a Verizon contract in order to choose from better phones. And now that the iPhone is available on Verizon, I have been making plans to get an iPhone 5 whenever it comes out.
However, none of the major carriers (Verizon included) have pricing plans that really meet my needs. I talk little and I text even less, but I use a fair amount of data. Verizon's talk plans start at 450 minutes (at least twice as many as I need) for $40. And now, Verizon has announced that it is phasing out unlimited data plans. That's the opposite of what I need! But who do I turn to? AT&T has already phased out unlimited data, and with its two competitors moving in this direction, I'm sure it's only a matter of time before Sprint follows suit.
I am currently still with Verizon, but my bill is currently higher than I would like due to minutes I don't even use, and I am about to lose my unlimited data, which I DO use. I am honestly not sure what to do at this point, and the future looks bleak.
So as you can see, there are several big issues in choosing a cellular service, which can be difficult to reconcile:
- pricing and plan structure
- network quality and coverage
- device availability
- corporate behavior
There is no good option that covers all of these bases. Even three out of four is looking unrealistic, based on how much of the market has been absorbed by just a few hugely powerful entities.
So what can we do?
We've been here before, of course. Practically from the birth of the telephone through much of the 20th Century, the American Bell Telephone Company ("Ma Bell," the original AT&T) had an almost universal stranglehold on US telecommunications. If you wanted telephone service, your choice was Ma Bell or no phone. And since they controlled everything, they were able to force their own draconian terms on consumers: you could only connect to the Bell System using a Bell-approved device, which they would not sell you--they would only rent you a phone. (This latter point was later undone by Hush-a-Phone v. United States and the later Carterfone decision, which forced Bell to allow customers to use their own devices). As a result, rates were exhorbitant, innovation was stifled, and customers were essentially a captive audience.
Now it can be argued that the best solution here is to use regulation to force competition and arrest the development of the market, as explained above in "Logging On." There is also a second option.
Private industry argues that monopoly-busting is bad, because the power and ubiquity of a large, mature, and comprehensive organization is the most efficient way to set up a wide-reaching and consistent network. This is the argument SBC used to take control of South Africa's network, which they subsequently abused... but there is a grain of truth to it. The danger of using government to force companies to stay small and competitive is that you will end up with a sea of different, non-compatible networks and technologies. Now, I don't expect every device to be supported everywhere forever--for example, our home phone (pictured at the top of the article) is nearing 100 years old, and we had to connect it to a custom-built converter box in order for it to work on today's network. It became incompatible with modern phone lines decades ago due to a fundamental change (and significant upgrade) in the telephone system. Technology moves on. But without a unifying force, you can end up with a sea of frustrating incompatibility and interoperability problems.
Ostensibly it is the FCC's job to establish and enforce communications standards to ensure this doesn't happen, but repeated weakening of the agency's power coupled with the ongoing question of how to keep Ma Bell from emerging a third time (I'm counting the current AT&T as the second) suggest that perhaps a different course should be pursued: government competition.
If you know the argument for single-payer health care, you know the argument here. Telecommunications is an increasingly vital part of everyday life and of an inclusive, participatory democratic (small-d) society. In this scenario, the federal government itself would set up a national telecommunications agency, in which all of the infrastructure was publicly owned and operated. Since it is not for profit, it could offer citizens service at a lower cost, and without fear of merger, bankruptcy, or abuse through absurd contract terms. This would not close the door to private industry; it would simply offer a universal standard, a "people's" choice to serve as an anchor point and keep private companies in line. This would of course dramatically interfere with the business plans of AT&T, Verizon, et al.
And of course, there is a third, middle-ground option: municipal utilities. Some communities own and operate their own public utilities, from trash and recycling centers to water and power agencies. My home town of Burbank, California is an example of public utilities done right. According to Wikipedia:
Burbank is a full-service, independent city, with offices of the City Manager and City Attorney, and departments of Community Development, Financial Services, Fire, Information Technology, Library Services, Management Services, Police, Parks-Recreation & Community Services, Public Works, and Burbank Water and Power (BWP). The first power was distributed within the city limits of Burbank in 1913, supplied then by Southern California Edison Company. Today, the city-owned BWP serves 45,000 households and 6,000 businesses in Burbank with water and electricity. Additionally, the $382-million annual revenue utility offers fiber optic services. Burbank's city garbage pickup service began in 1920; outhouses were banned in 1922.
At the height of California's 2001 energy crisis, BWP unveiled a mini-power plant at its landfill. It marked the world's first commercial landfill power plant using Capstone microturbine technology. Ten microturbines run on naturally occurring landfill gas, producing 300 kilowatts of renewable energy for Burbank. That's enough energy to serve the daily needs of about 250 homes. The landfill is located in the Verdugo Mountains in the northeastern portion of the city.
Most of Burbank's current power comes from the Magnolia Power Project, a 328-megawatt power plant located on Magnolia Boulevard near the Interstate 5 freeway. The municipal power plant, jointly owned by six Southern California cities (Burbank, Glendale, Anaheim. Pasadena, Colton and Cerritos), began generating electricity in 2005. It replaced a 1941 facility that had served the customers of Burbank for almost 60 years.
More specifically relevant, a number of cities have responded to poor choice in the telecom market by starting their own public telecom agencies, including municipal wifi.
However, the telecom industry has recently been pushing conservative lawmakers to undermine, gut, and even outright ban these public agencies.
So where do we go from here? How does one make responsible consumer choices in our current market, and what is the long-term solution to this problem? I'd love to hear your thoughts.