Broadband: How do we rate?

Posted on March 8, 2012

7


In my telecom policy class this morning, I discussed the FCC’s National Broadband Plan with my students. When I explained the impetus behind the plan was a general feeling that the U.S. was falling behind the rest of the world in broadband deployment, most of the students reacted with skepticism. I agree that the “America is falling behind” meme has been blown out of proportion. Yes, a handful of countries like South Korea, Japan and part of Scandinavia are ahead in deployment of high-speed broadband. But those countries have dense, highly-educated populations that live primarily in apartment buildings, and it isn’t realistic to compare them with the entire United States. A more reasonable comparison is between the United States and Europe as a whole, and the U.S. comes out quite favorably in that evaluation.

The two most recent reports I have seen on the subject are by Lemay-Yates Associates and Akamai. The Lemay-Yates report was commissioned by Rogers Cable, but it appears to be independent, straight-forward, and factual. The Akamai report is the quarterly account of the broadband performance that country sees around the globe.

So what do those reports say about the United States broadband ranking? In almost every category, the U.S. is in the top half or third of European countries, and the same thing is true for the OECD countries as a whole.

In terms of cost, the U.S. ranks 13th out of 32 OECD countries. The U.S. also ranks 13th in price per megabit. But the interesting point is the uniformity of rates. The American monthly subscription rate of $32.45 is consistent with my experience at Qwest, where we found that consumers were willing to spend around $30 per month. Apparently, the same is true in the rest of the developed world. The G7 countries all have averages between $29.80 and $35.19.

What do consumers get for their $30 across the developed world? Based on speed tests, Lemay-Yates ranked the U.S. in the middle of the pack (4th) in G7 countries and 16th among the 32 OECD countries. The U.S. performance in the percentage of households who subscribe to broadband is similar—it ranks 17th in that category. The U.S. ranks better when compared with Europe. In the Akamai report, the U.S. would be 9th out of 21 European countries in average broadband speed, performing better than Sweden, Germany, France, the United Kingdom, Austria, Spain, Portugal, Italy, Poland, Hungary, Finland and Slovakia. In average peak connection speeds, the United States ranks 7th of 21 European countries, again beating all of the largest European countries.

I am not saying that regulators should rest easy because we are above average. The goal should always be to be #1. But we shouldn’t assume that there is an easy plan to get there. Unbundling and resale obligations have been imposed on broadband facilities across Europe, and they have not vaulted above America. Broadband investment costs money—a lot of money. Countries like South Korea have invested substantial public funds to get where they are, and others like Australia are following their lead. I’m not sure that is a viable answer with the federal and state budget problems we are facing. The FCC has taken a big step in converting USF funding to support broadband deployment. If we find a huge new source of money, it is probably more prudent to spend it in an area where the United States really is trailing the rest of the world: like education.

Advertisements
Posted in: Broadband