Note to the FCC: America Is Falling Behind

"The average U.S. household has to pay an exorbitant amount of money for an Internet connection that the rest of the industrial world would find mediocre," starts a scathing critique of American broadband services in Scientific American.

Not only are we falling behind densely populated and easily connected nations like South Korea and Japan, but we're also getting passed in the fast lane by less optimal geographies such as Portugal and Italy. According to the Berkman Center (Harvard) report to the FCC that Scientific American based its article on, the United States started the 21st century at the head of the class but has lost that competitive advantage over the years.

What happened?
Our low-grade broadband access is all right, but our plans get comparatively more expensive here than elsewhere the faster you go. Out of 19 nations with access to broadband plans of 35 megabits per second or more, ours are dead last in affordability.

Scientific American posits -- and I agree -- that government policies have stifled broadband access. When the FCC reclassified these services as "information" rather than "communications" solutions, it created a latticework of local monopolies or duopolies across the nation with little incentive for more competition. Instead, service providers are dead set on improving their short-term profits by keeping capital investments low and service fees high.

If your phone service provider is Verizon (NYSE: VZ  ) and your cable network is Comcast (Nasdaq: CMCSA  ) , those are pretty much your only options for DSL and cable modem broadband service, respectively. In the next town over, you might have AT&T (NYSE: T  ) facing off against Time Warner Cable (NYSE: TWC  ) instead, but the competitive picture is the same: Verizon and AT&T have to allow other companies to sell long-distance phone plans over their connections, but the DSL line is theirs alone.

You'll take the high road and I'll take the low
Leading broadband nations like South Korea and Sweden have invested heavily in high-speed communications over the past decade by means of tax breaks, direct installations, and low-cost loans for infrastructure projects. France went the other way and shot to the top with a hands-off approach and explicitly open competition between multiple service providers in every local market. Either model appears to work, but we're stuck in between.

Current laws and regulations are structured to protect existing business models rather than encouraging consumer-friendly competition -- a result of heavy industry lobbying getting priority over concern for the well-being of consumers and the nation as a whole. This wouldn't be so bad if high-speed networking wasn't the modern-day equivalent of railroad lines, fueling innovation and economic strength wherever it goes -- but that's exactly what it is.

Google (Nasdaq: GOOG  ) is on the right track with its cheeky fiber installation plans and independent providers of wireless broadband, which include WiMAX provider ClearWire (Nasdaq: CLWR  ) , and could make a positive difference over time by selling a third networking option to choice-deprived Americans. But they won't get far without government support, whether it's in the form of deregulation with truly open competition or tighter rules with capital investments attached.

What are my choices?
The infamous Google-Verizon network neutrality proposal isn't exactly meant to address universal broadband access, but it's still a good step in the direction of where Sweden and Japan are going. If I owned shares of AT&T, Verizon, or Cablevision Systems (NYSE: CVC  ) , I'd cheer all day long for more regulation and the government-backed investments that would have to follow like a cart behind the horse. But I don't own them, so a marketplace with fewer protections for the incumbent service providers would be all right with me, too.

The Scientific American writers prefer more third-party competition with a vengeance. "It is frustrating," they say, "to see Genachowski acknowledge that the U.S. has fallen behind so many other countries in its communications infrastructure and then rule out the most effective way to reverse the decline. We call on the FCC to take this important step and free the Internet."

I'm open to the opposite method, but we clearly can't afford to keep doing nothing to strengthen the information infrastructure in what's supposed to be the greatest high-tech culture on the planet. Or should we all just move to Sweden? Discuss your options in the comments below, then go give your favorite government representative a piece of your mind.

Google is a Motley Fool Inside Value selection and a Motley Fool Rule Breakers pick, and The Fool owns shares of Google. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. He was born in Sweden and wouldn't mind moving back, but it'd be better to have a decent communications infrastructure where he lives now. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


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