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OECD: broadband is unequal

Report shows big cost and speed differences

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There's a great variance around the US in broadband speeds and prices. The differences are even greater when countries are compared. A report from the Organisation for Economic Co-operation and Development (OECD) points out that broadband users in Japan have 100 Mbps connections, which is 10 times faster than the average of the 30 OECD countries.

The complete 319 page report, available in English or French, is here (pdf).

The OECD says 60 per cent of the internet-connected households in its member countries have broadband instead of dial-up.

In general, the OECD said countries that have switched to fiber have the fastest speeds at the lowest prices. It said Japanese prices for broadband per megabyte per second are the lowest in the OECD at 22 cents. Turkey is the most expensive at $81.13.

The least expensive megabyte per second of broadband in the US is $3.18, and it is $3.62 in the UK.

Another benefit to fiber is that it can be configured to upload files at the same speed as it downloads, an important point in a world of user-generated content. The ADSL that the telcos use and the technology that most cable TV services use do not allow for speedier uploads.

Consumers in Japan, Sweden, Korea, and Finland can get 100 Mbps broadband in locations that have switched to fiber optic networks. The country with the most expensive entry point for broadband access was Mexico, where it cost $52.36 for 1 Mbps.

Least expensive entry-level broadband:

  • Sweden $10.79
  • Denmark $11.11
  • Switzerland $12.53
  • US $15.93
  • France $16.36
  • Netherlands $16.85
  • New Zealand $16.86
  • Italy $17.63
  • Ireland $18.18
  • Finland $19.49

Source: OECD. Figures for October 2006

The entry-level price points do not include bundled deals in which broadband is included for free or at a discount together with a contract for pay-TV and/or phone service.

"Broadband is very quickly becoming the basic medium for service delivery on both fixed and wireless networks," said the report.

The OECD report also says broadband prices for DSL connections have declined 19 per cent in its 30 member countries and increased in speed by 29 per cent in the year ending October 2006. It said broadband prices and speeds at the cable TV services reported about the same improvements.

The telcos' broadband speeds have increased as they upgraded their copper wire networks from DSL to ADSL2+. ADSL2+ doubles the amount of data that can be downloaded. That gets them up to a maximum of 24 Mbps, far short of the 100 Mbps that fiber can deliver.

The telcos' next step is to pull fiber optic cables to near the home (FTTN) as AT&T and BT are doing or all the way to the home (FTTH) as Verizon, the Japanese and the South Koreans are doing. Verizon in some locations is offering 50 Mbps over its FiOS fiber optic network.

The US cablecos, together with several technology companies, are developing the capability to offer speeds up to 150 Mbps over their existing networks, which are typically fiber to the neighborhood and coax cable from there to the home. Many telcos are using the fiber networks they're building to get into the pay-TV business where they compete with cable and satellite TV services. One main differentiator in pay-TV services these days is how many HD channels are provided.

The OECD said the future of HD television depends on getting the new fiber networks deployed such as is being done in Japan. However, the organisation said building fiber optic networks is costly.

"Questions remain about who should pay for installing new fiber networks and who should own them. For example, there is a growing trend for local municipalities themselves to build the network and then require their local network operator to offer competitors access to the network under equal terms."

This article first ran in the current issue of The Online Reporter from Rider Research

Copyright © 2007, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

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