Internet 25 Gbit: Switzerland yes, USA no
Have you ever stopped to wonder why Switzerland has symmetrical and dedicated 25 Gbit/s internet at reasonable prices, while countries like the United States — which boasts about its "free market" — or Germany — famous for its regulation — lag behind, with slower speeds, shared connections, and very little choice? This is a question that reveals a fundamental, and often misunderstood, truth about capitalism and regulation.
The Paradox of the Market and Regulation
In Switzerland, getting a symmetrical and dedicated 25 Gbit/s fiber optic connection to your home is not a rarity. If you don't need such high speeds, you can opt for 1 or 10 Gbit/s from multiple competing providers, paying little. The key difference is that the connection is not shared with your neighbors; there is plenty of bandwidth, and the limit today would be more the cost of cutting-edge equipment than the infrastructure itself.
In the United States, if you're lucky enough to have fiber, you might get 1 Gbit/s. But this connection is often shared with your neighbors. And, generally, you only have one provider option, maybe two if we count the cable company offering lower speeds for the same price. In practice, what is sold as competition is often a territorial cartel.
Germany, in turn, faces a similar situation to the US. Fiber service is limited to a single provider and is often shared. The country, known for its extensive regulation, faces the same problems of stagnation, monopoly, and inferior internet as the US, which celebrates deregulation. Switzerland, with a highly regulated telecommunications sector and strong oversight, is the counterpoint that makes us question: what is happening?
The Natural Monopoly and Shared Infrastructure
To understand this market failure, we need to comprehend what economists call a "natural monopoly." An industry falls into this category when the cost of building the infrastructure is extremely high, but the cost of serving an additional customer is very low. In this scenario, infrastructure competition, in fact, destroys value.
Think about water pipes. It would be insane to have three different water companies digging up your street to install their own pipe networks. That would be three times the construction, three times the disruption, three times the cost. And, in the end, you would still only use one of them.
The rational solution is to build the infrastructure once, as a neutral and shared asset, and allow different companies to compete to provide service over that infrastructure. This is how water and, in most places, electricity work. And in Switzerland, this is how fiber optic internet operates.
Failed Models: Germany and the US
In the United States and Germany, the path taken was the opposite, with equally poor results, despite distinct approaches.
In Germany, the "free market" approach meant allowing any company to dig up the street to install its own fiber. The result is what is called "overbuild": multiple networks running in parallel trenches, often just a few meters apart. Billions of euros spent on redundant concrete and asphalt, money that could have been invested in faster equipment, lower prices, or connecting rural areas, but was wasted digging the same hole twice, literally. Although Germany is regulated, the regulation focuses on infrastructure competition instead of mandating conduit sharing. Furthermore, Deutsche Telekom, the incumbent, uses existing regulations to create obstacles for smaller ISPs.
The United States followed a different path. Instead of "overbuild," they obtained territorial monopolies, in some places even paid for by the federal government. In most American cities, there is no choice of fiber providers. You have the incumbent serving your neighborhood. This is marketed as competition, but it is not; it is a cartel. Each company has its protected territory, and consumers have no choice. If you don't like your provider, your only alternative is often a 90s-era DSL or a cellular hotspot. This is what happens when natural monopolies operate without oversight: they don't compete on price or quality; they just extract value. And, because these networks are built cheaply using P2MP (Point-to-Multipoint), or shared architecture, your "gigabit" connection is split with the entire neighborhood. At 8 PM, when everyone is watching Netflix, that gigabit becomes 200 megabits, or 100, or less. The provider still charges for the "gigabit" but doesn't inform you that you are sharing it.
The core of the issue is not "free market versus regulation," but rather how regulation is applied and whether it recognizes and addresses the nature of a natural monopoly. Switzerland understood that infrastructure should be a public good or a neutral and shared asset, upon which service competition can flourish. For us, developers, this means that the quality of network infrastructure has a direct impact on innovation, the ability to work remotely, and the reliability of the services we build and use. It is a reminder that the technological foundation upon which we build is as important as the code we write.
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