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New York Times: No Country for Slow Broadband

Wednesday, July 10, 2013

There is a popular story going around about the state of America’s broadband networks: service is pitifully slow, hugely overpriced and limited to the richest neighborhoods — whereas in Europe, service is cheap, fast and widespread because regulators force big companies to make room for smaller service providers.

Almost none of this is true: America’s broadband networks lead the world by many measures, and they are improving at a more rapid rate than networks in most developed countries.

Much of the disparity between perception and reality has to do with timing. Before the recession, American Internet service was on a very different path, not keeping pace with large sections of Western Europe and East Asia.

But that began to change as the economy turned around. Private investment and advances in technology, brought about by a competition policy that encouraged cable and phone companies to improve their networks, have propelled America’s networks forward.

Over the last three years America’s broadband systems have doubled in speed, while Europe’s have remained stagnant. And that will continue, because broadband companies here are installing advanced fiber-optic technology faster than Europe, and most of the world’s users of the fastest mobile broadband technology, 4G/LTE, live in America.

This is particularly impressive for a nation where low urban population density imposes higher actual costs on network upgrades than in most of the world, and in which government subsidies are rare. In fact, America outranks all nations with similar population density.

Much of the recent growth has come thanks to our system of facilities-based competition — that is, each service provider is responsible not only for broadband service but for the underlying infrastructure, which encourages them to improve network quality to win customers.

Most European providers still depend on telephone wires controlled by the local phone company, leasing infrastructure they have no ability to improve. Only two European nations, Belgium and the Netherlands, have more network-based competition than America, and many European regulators are now seeking to mimic the American model.

As the reality has changed, many critics have simply stopped discussing international rankings. Others repeat outdated statistics: Susan Crawford, a law professor and author of the widely praised book “Captive Audience,” relies on 2009 data to claim that America is 22nd in average broadband speed among developed countries — and falling. This is despite the fact that the source of that data, the technology company Akamai, has updated its analysis showing America in eighth place — and rising.

Critics have also focused on price and profit, claiming that America’s broadband companies earn windfall profits at the expense of customers. But company financial reports show that American providers are four times less profitable than their European counterparts.

Others say the reason almost a third of Americans don’t subscribe to broadband is because networks are underbuilt or overpriced. Yet over 96 percent of households are in areas with access to wired broadband, while prices for entry-level plans are now the third-lowest in the world.

The major causes for low subscribership, as extensive survey research shows, are low interest in the Internet and minimal digital literacy. And too many American households lack the money or interest to buy a computer. As a result, more Americans subscribe to cable TV and cellphones than to Internet service. Our broadband subscription rate is 70 percent, but could easily surpass 90 percent if computer ownership and digital literacy were widespread.

Indeed, the most critical issue facing American broadband has nothing to do with the quality of our networks; it is our relatively low rates of subscribership.

This is one place where we could learn from the rest of the world. The leaders in broadband subscriptions, like South Korea and Singapore, use outreach, education and computer ownership programs to get people online.

We are starting to see something like this in outreach and education initiatives in the United States, including Connect2Compete and Comcast’s Internet Essentials. It is too early to evaluate them fully. But at least they address a genuine, present-day problem — rather than an overwrought historical phantom.

Richard Bennett is a senior fellow at the Information Technology and Innovation Foundation and a co-author of its recent report “The Whole Picture: Where America’s Broadband Networks Really Stand.”

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