Why internet service in America is so poor : Planet Money : The Indicator from Planet Money We answer two questions today: Why is American internet so bad? And why was the unemployment benefit extension set at $600?

Why Your Internet Sucks

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This is THE INDICATOR FROM PLANET MONEY. I'm Paddy Hirsch. And you're stuck with me today because Stacey Vanek Smith is hosting All Things Considered this week. And Cardiff Garcia - well, I'm not sure where Cardiff is. It's the summer, so while they're away, I'm going to answer some of our listener questions with the help of our producers. And one question that comes up regularly in one form or another is one that I find myself asking at least once a week. Why does our Internet suck so badly? And I can understand if you live in a rural area where, you know, it's inevitably patchy service, you know, it's hard to connect people. But 80% of people in the U.S. live in urban areas, where we're all clustered together, which means we should be easy to service, right? And yet, our Internet sucks, too. Why is that? Producer Camille Petersen looked into it.

CAMILLE PETERSEN, BYLINE: If you've got a broadband Internet connection, you're actually pretty lucky. A big portion of Americans don't have access to broadband at all. Your problem is competition. Your Internet sucks, and there's nowhere else for you to turn to - no other Internet providers you could just switch over to. That lack of competition is an enormous problem in the U.S. Internet market. To understand how we got here, we have to go back to the 1990s. That's when the two main sources of broadband today - phone and cable companies - got in the Internet game.

CHRISTOPHER ALI: We had a huge amount of competition for Internet service provision in the early and mid-'90s.

PETERSEN: Christopher Ali is a media studies professor at the University of Virginia. He says back then, phone companies started using their existing wires to provide Internet service. And they were required by law to lease those wires to smaller competitors. But in 2005, that leasing requirement went away.

ALI: Which basically was the end of Internet competition because suddenly, all these companies went under because they didn't own any of the infrastructure. They were just leasing it.

PETERSEN: So that's what happened with the phone companies. What about the other big provider of broadband - cable companies? There was actually a lot of competition in the cable market back in the '90s, too. But the Telecommunications Act of 1996 made it easier for cable companies to consolidate.

ALI: We actually had a ton of tiny cable companies in this country - thousands of them. What the '96 Act allowed was for companies to gobble up all of those tiny cable systems.

PETERSEN: Then in the 2000s, the big remaining cable companies made handshake deals with each other.

ALI: Companies were basically trading off areas so they wouldn't compete. Time Warner Cable might have Minneapolis. But Comcast has Philadelphia, and Optimum has New York. And they've all basically agreed to stay out of each other's neighborhoods.

PETERSEN: Those deals are honored to this day, which means there's also almost no competition among cable companies to provide Internet. And you may be thinking, OK, but what about antitrust law? Can't that step in and make these companies compete?

ALI: Cable companies can still say, well, there's competition because look at all the cable companies that exist. There's Cox. There's Charter. There's Comcast. We're not a monopoly. But if you drill down to the individual markets, you start to see these kind of local monopolies exist.

PETERSEN: Christopher says antitrust is done at the national level, so there's no government agency enforcing Internet competition. But you may wonder why these companies are not trying to break these handshake deals and compete anyway, or why smaller companies and startups don't get into the market. Christopher says it's because of the cost.

ALI: It is so incredibly expensive to lay down wires now. Like, the literal infrastructure costs - the capital investment is too much right now.

PETERSEN: Christopher actually took a road trip across the U.S. to get a sense of what the Internet looks like here. And he discovered a bunch of towns and cities experimenting with how to make the Internet better, like towns that fund their own high-speed networks and then allow lots of private companies to deliver service using those networks. But he says at the national level, there is a very entrenched system for how Internet works. It's been crafted through policy and corporate decisions over decades, and it's probably not going away anytime soon.


HIRSCH: Producer Camille Petersen - and if you're interested in learning more about how smaller cities are making their own Internet, our cousins at Planet Money have a great show on the topic. You can find links in the show notes on our webpage. We've got another great question answered after the break.

Democrat and Republican lawmakers are still tussling over the $600-a-week extension to unemployment benefits. In a nutshell, Democrats say the extra funds are critical for the unemployed and, indeed, for the economy. Republicans say the money could remove the incentive to return to work for some people. Now, our listeners have a lot of questions about all of this. But one that keeps on coming up is, why $600? That's such a random number, right? Producer Darius Rafieyan has the answer.

DARIUS RAFIEYAN, BYLINE: When Congress was debating the CARES Act back in March, people were trying to figure out how much additional unemployment the government should give to the millions of people who had lost their jobs. Michele Evermore, a senior researcher at the National Employment Law Project, says that one idea was to just give people exactly as much money as they'd been making before the pandemic.

MICHELE EVERMORE: A lot of people, including me, were calling for a 100% income replacement. However, trying to do that is technically infeasible.

RAFIEYAN: Infeasible because the computer systems that many state unemployment offices run on simply can't handle calculating in percentage terms. Michele has traveled the country visiting unemployment offices, and she's spoken with state officials about their computer systems. And what she's found is not exactly reassuring.

EVERMORE: State unemployment insurance IT is incredibly antiquated. It's based on largely 1970s COBOL mainframes. There's only 16 states that have completely upgraded from those mainframes. And even those new modernized systems aren't necessarily all that modern.

RAFIEYAN: That's right. Many of these crucial government agencies, which are the first line of defense against the economic devastation wrought by the pandemic, are using computer systems that may have been built more than 40 years ago. Part of the reason for this, says Michele, is that unemployment office administrative budgets are an easy thing to cut when the economy is good and there aren't a lot of claims to process. She says admin budgets at unemployment offices are lower now in absolute terms than they were in 2001. And that made it extra difficult for unemployment offices to tackle the flood of new claims that poured in during the early weeks of the pandemic.

EVERMORE: The spike in claims was historic. So the highest amount of new claims in history was 695,000 in 1982. But we saw 3.3 million new claims the first week, and then 6.6 million claims, 6.6 million claims, over 5 million claims. They're still processing over 2 million claims, so they're still processing more than twice as many claims as the highest point in history.

RAFIEYAN: Given the scale of the crisis and the lack of resources at state unemployment offices, lawmakers came up with an alternative solution. Rather than a percentage, which was impossible to calculate, they would go with an average. So they took the average weekly wage before the pandemic, which was about $900. And then they took the average unemployment benefit, which was about $300. And they subtracted 300 from 900, and they got 600. So they said give, everyone $600 a week, and that gets everyone who lost a job up to the average weekly wage. But, of course, some people were making more than the average wage before the pandemic. Some people were making a lot less, so the system is imperfect. But until we can bring our unemployment infrastructure into the 21st century, it may be the best we can do.


HIRSCH: Producer Darius Rafieyan, who recently departed THE INDICATOR to join the Knight-Bagehot Fellowship at Columbia University - we wish him the very best. If you'd like to ask us a question, you can reach us on Twitter or Instagram or via email at indicator@npr.org. We'd love to hear from you.

This episode of THE INDICATOR was produced by Brittany Cronin and edited by me, Paddy Hirsch. THE INDICATOR is a production of NPR.


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