In 2001, after the explosive growth of the Internet and online businesses in the 1990s, the United States had taken the lead online. In terms of percentage of the population with high-speed access, countries like Japan and Germany had half the penetration we did. France had less than a quarter.

Now, all three of those countries have passed us. We’re falling behind in providing high-speed access to the Internet, and just as importantly, our high-speed connections are much slower and more expensive than other countries.

How’d this happen? How did the U.S. go from setting the pace to falling far behind? Paul Krugman explains.

[T]he world may look flat once you’re in cyberspace — but to get there you need to go through a narrow passageway, down your phone line or down your TV cable. And if the companies controlling these passageways can behave like the robber barons of yore, levying whatever tolls they like on those who pass by, commerce suffers.

America’s Internet flourished in the dial-up era because federal regulators didn’t let that happen — they forced local phone companies to act as common carriers, allowing competing service providers to use their lines. Clinton administration officials, including Al Gore and Reed Hundt, the chairman of the Federal Communications Commission, tried to ensure that this open competition would continue — but the telecommunications giants sabotaged their efforts, while The Wall Street Journal’s editorial page ridiculed them as people with the minds of French bureaucrats.

And when the Bush administration put Michael Powell in charge of the F.C.C., the digital robber barons were basically set free to do whatever they liked. As a result, there’s little competition in U.S. broadband — if you’re lucky, you have a choice between the services offered by the local cable monopoly and the local phone monopoly. The price is high and the service is poor, but there’s nowhere else to go.

Effective market competition and effective regulation produced quality results. Then Bush took office.

(Nicole: Look how Sweden is raising awareness of faster internet speeds)