Why U.S. Consumers Pay "More" for Internet Access

U.S. consumers tend to pay more for broadband, high speed Internet access than some people in other countries, on a nominal basis. What does that actually mean? Not much, in one sense. 

Ignore just for the moment the growing number of entrepreneurs who think they can change that state of affairs in the U.S. market. It is true that in nominal terms, U.S. high speed access prices are "higher" than in many other countries. 

On the other hand, average incomes and average costs of living also differ significantly between countries. So "nominal" costs don't tell us as much as some think. 

But even on a nominal basis, across countries globally, U.S. Internet access rates are somewhere in the middle. Critics say lack of competition, spectrum scarcity or regulatory capture by the tier one telcos accounts for the pricing. It isn't hard to find evidence of the higher costs. 

But nominal retail prices are not the issue, anymore than the typical cost of just about anything, across countries, is a terribly useful way of understanding broadband costs. 

There are other fundamental reasons why retail prices vary from country to country. Communications spending is related to income. Communications spending is related to the average level of retail prices for all other goods and services, as well. 

Communications prices therefore reflect the backrop of overall income and prices in each country.

So one way of trying to filter for those facts is to look at what high speed access, or any other commodity, costs as a percentage of typical personal income (mobile services sold to people) or fixed broadband (sold to locations). 

As a percentage of income, U.S. broadband is no more expensive than it is in other developed countries. What matters is what consumers pay as a percentage of income.