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Bernie Sanders Meets Romanian Internet

  • Internet

Tags Free MarketsInterventionism

Nine cities in Romania rank in the top 15 in the world with the highest speed of Internet connection. The average monthly costs of a Mbps is a meager $0.71, with some providers offering 1 Gbps for a subscription of $18 per month. Two Romanian cities rank higher than Kansas City, the first US city on the list. According to Bernie Sanders’s latest tweets, which have taken the online world by storm over the last day, this is “unacceptable and must change.”

Responses to Sanders’s musings have ranged from indignation to amusement over his befuddlement on how a relatively poor country can fare so well in the digital sector. But the answer to the confusion is simple; furthermore, it is not a technical explanation — relating to innovative engineering or the organization principles of the networks — but an economic one. The Internet service providers market in Romania has been one of the least regulated markets in the world.

Roughly since 2000 onward, when broadband Internet became available through coaxial cable, a flurry of small neighborhood ISPs, alongside some larger firms, took over the large and small cities alike, often serving just small areas of two or three streets. By 2011, the total number of providers had reached approximately 1,000, and this at a broadband penetration rate of only 16 percent.

Fierce competition led to aggressive innovation and a race to slash prices and improve quality. The government took a long time to realize the pace of these developments, and was slow in hampering the growth of what we can assume is still the freest sector of the Romanian economy. That the number of ISPs has dipped in recent years may indicate that the regulators are catching up, but the market seems to be going strong for now.

It is unclear whether Sanders’s claim about change refers to the US or Romania. Whatever the case, there is no mystery surrounding the discrepancy between the Internet speeds in the two countries. It’s just basic economics. 

Author:

Contact Carmen Elena Dorobăț

Dr. Carmen Elena Dorobăț is a Fellow of the Mises Institute and Senior Lecturer (Associate Professor) at Manchester Metropolitan Business School in the United Kingdom. 

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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http://www.vectorhq.com/search/map-of-romania
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