TECH
10/31/2014 09:16 am ET Updated Oct 31, 2014

America Pays More For Internet, Gets Slower Speeds, Than Other Countries

Bloomberg via Getty Images

Americans pay far more and get far less when it comes to the Internet than many other people around the world. But a few small towns might be changing that.

Internet users in Seoul continue to get the speediest connections at the lowest prices anywhere in the world, with speeds of one gigabit per second costing just $30 a month, according to annual report released Thursday the New America Foundation’s Open Technology Institute. By contrast, the best speeds that consumers in Los Angeles, Washington, D.C., or New York can get are half as fast and cost $300 a month.

The report looked at the cost and speed of Internet service in 24 cities in the United States and abroad. Many of the report’s findings -- like the fact that broadband is faster and cheaper in several Asian cities like Seoul, Hong Kong and Tokyo than in American cities -- are similar to findings from previous years.

But new entrants to the U.S. broadband market are starting to close the gap between America and the rest of the world.

For example, Chattanooga, Tennessee, which built the country’s first citywide gigabit-per-second Internet network in 2010, has slashed the price of its ultra-fast service from $300 a month to $70 a month. Google’s new gigabit service, Google Fiber, which is available in Kansas City, also costs $70 a month, the report found.

Gigabit Internet connections are up to 100 times faster than what many Americans receive today. Consumers who can get such service don't have to worry about videos buffering or websites loading. They can share large files in seconds and take advantage of new offerings in online education and health care that require fast access.

Google is looking to expand its gigabit broadband service to several mid-size cities like San Antonio and Portland, but it is not expected to arrive in New York or Washington, D.C., in the near future, according to the Washington Post.

The New America Foundation's report highlights how city-owned networks are becoming more competitive with the offerings from Internet providers around the world. The small number of towns that have built such networks -- like Chattanooga and Lafayette, Louisiana --- ranked higher in the report on speed and price than almost every other city except for those in Asia.

"In general, our research shows that these locally-owned networks tend to deliver better value to their customers when compared on a price-per-megabit basis to competing cable and telecom providers in their own cities," the report said.

Lafayette has cut the cost of its city-owned service from around $1,000 per month to $110 per month in a single year, the report found.

Advocates for municipal broadband say there is not enough competition in the market for major companies to offer faster service at cheaper rates. They argue that local governments should be able to provide their own networks, especially in rural areas where most cable companies won't deliver Internet service because it is not profitable.

But many cities are banned from creating their own Internet service. At least 19 states have passed laws restricting publicly owned broadband networks, according to the Institute for Local Self-Reliance. Supporters of city-owned Internet networks say the laws, and the lawmakers who support them, have been backed by major Internet providers trying to limit competition.

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