The Whole Picture: Where America’s Broadband Networks Really Stand


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Taking the whole picture into account, this report finds that the United States has made rapid progress in broadband deployment, performance, and price, as well as adoption when measured as computer-owning households who subscribe to broadband. Considering the high cost of operating and upgrading broadband networks in a largely suburban nation, the prices Americans pay for broadband services are reasonable and the performance of our networks is better than in all but a handful of nations that have densely populated urban areas and have used government subsidies to leap-frog several generations of technology ahead of where the market would go on its own in response to changing consumer demands. All in all, the state of American broadband is good and getting better, but there is still room for improvement in selected areas.

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The Whole Picture: Where America’s Broadband Networks Really Stand

  1. 1. February 12, 2013 The Whole Picture: Where America’s Broadband Networks Really StandRichard BennettSenior Research
  2. 2. Motivation for the Report European Commission VP Neelie Kroes says U.S. is pulling ahead:  High speed networks now pass more than 80 percent of U.S. homes, a figure that quadrupled in three years  Though the public sector can help, the real heavy lifting must be done by private investment American critics say we’re falling behind:  U.S. is 22nd and falling in broadband – Susan Crawford  U.S. in 29th place and falling fast – David Cay Johnson Who’s right? 2
  3. 3. Four Dimensions of Broadband PolicyDeployment: What share of postal addresses does the network cover?Adoption: What share of households subscribe?Performance: How fast are downloads and uploads?Price: What does it cost to use the service? 3
  4. 4. America’s CircumstancesLong copper loop PSTNCable TV system alongside the PSTNLow population density, especially in urban areasPlethora of entertainment choices, but low computer ownershipClose to most key Internet resourcesTechnology-flexible mobile policy 4
  5. 5. Broad Deployment of DSL and Cable96.3 percent have access to some form of wired broadband ~96 percent have access to cable modem ~85 percent have access to DSL ~18 percent have access to fiber 5
  6. 6. DSL and Cable in OECD120%100%80%60%40%20% 0% Cable deployment DSL deployment 6
  7. 7. Broad Deployment of DSL and CableThird highest rate of wired intermodal competition in OECD (behind Belgium and Netherlands) Fiber-based broadband (FiOS and U-verse) is growing faster than cable modem Long-loop DSL is losing subscribers Market share is 57% cable, 43% telco 7
  8. 8. Intense Fiber InstallationAmerica is installing more fiber optic cable than all of Europe 8
  9. 9. OECD Fiber Deployment100%90%80%70%60%50%40%30%20%10% 0% 9
  10. 10. America Leads in 4G/LTEAmerica leads the world in the adoption of 4G/LTE mobile broadbandOnly Korea is closeVery helpful for rural broadband 10
  11. 11. Adoption Remains an IssueBroadband adoption is not as high as we would like it to be, but:  U. S.: 68.2%  EU-15: 66.9%Adoption is best measured by computer-owning homes  U. S.: 88.6%  EU-15: 85.9%Spread between top nation Iceland and U.S. for computer homes is less than 5% 11
  12. 12. High Adoption by Computer Homes 88.6% adoption by U.S. computer-owning homes 12
  13. 13. Reasons for Non-Adoption 6% 6% 10% Other 12% Availability Price 18% No Computer Usability Relevance 48%Source: Pew survey: Americans’ main reasons for not using the Internet, 2010 13
  14. 14. Speed: Overall Traditional Speed leaders:  Korea, Japan, Hong Kong, Netherlands, and Denmark U. S. average network (peak) rate is 29.6 Mbps Top 10 Nations are less than 10 Mbps ahead  Average peak for the other Top 10 nations is 37.9 Mbps  American speeds are improving faster than world- leading speeds. 14
  15. 15. Speed: High Speed Adoption 7th in the world and 6th in OECD in percentage of users with connections faster than 10 Mbps 15
  16. 16. Speed: 100 Mbps Proliferation82% of American homes are passed by DOCSIS 3  Capable of 100 – 160 Mbps  DOCSIS 3.1 will be even fasterVectored DSL may soon bring a second 100 Mbps service to the marketLTE Advanced is another possible 100 Mbps pipe 16
  17. 17. Price: OverallEntry-level pricing for American broadband is the second lowest in the OECD and fourth lowest in ITU surveyU.S. rank in prices for higher speeds is lower 18
  18. 18. 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.8% 0.9% 0.7% Macao 1.0% Monaco Israel United States Liechtenstein San Marino Luxembourg Switzerland Hong Kong Canada Norway UK Belgium Japan Price: Low Entry-Level Prices Romania Sweden Netherlands France Denmark Singapore19
  19. 19. Price: Benkler’s Pricing Insight 20
  20. 20. Factors for Price: Low U.S. SubsidiesLow-price, high-speed nations have committed heavy subsidies to private firmsDespite subsidized fiber, Japan’s adoption level is no higher than ours 22
  21. 21. Factors for Price: High CostsAmerica is an expensive nation to serve because of low overall urbanization and low-rise cities  U.S. has 27th lowest rate of urbanicity (urban density) in the OECD  Costs of broadband are Mbps/mile  U.S. has to spend many more dollars per capita on cable and electronics to produce speedup effects than Japan, Korea, or Hong Kong 23
  22. 22. The Policy Battle The railroad corporations will either own the people or the people must own the railroads. – Omaha Platform, 1893 24
  23. 23. ConclusionsU.S. is a facilities-based deployment leader in cable, fiber, and LTEKorea and Singapore are adoption leadersU.S. is isn’t far behind for computer-owning homes 25
  24. 24. Conclusions – cont’dKorea, Japan, Hong Kong, Netherlands, and Denmark are consistent speed leaders  U. S. is in Top 10 and risingU.S. is a low-price leader at entry-level, but U.S. prices are higher at the high end than most OECD nations  Subsidies and urbanicity play a role, profits not so much 26
  25. 25. Issues to TackleInternet engagement, digital literacy, computer ownershipSubsidy programs for poor and rural residents, following Connect America modelUse of smart auctions to allocate subsidiesSpectrum remains scare due to government over-allocation 27
  26. 26. VerdictNeelie Kroes Wins 28
  27. 27. Thank You Follow