How to turn a world leader into a fourth-rate broadband economy
Filling in the wide open white spaces
There is an interesting report out this week from an organization in the US calling itself Speed Matters. It is backed by the Communications Workers of America, and it makes a seriously cogent point about US broadband capability.
It is in its third year and it points out that US broadband connection speeds have not improved significantly during the past few years. It is based on sampling the last-mile connections of 413,000 Internet users who took an online test, between May 2008 and May 2009.
We should first go through the recommendations of the report, but readers of Faultline, especially US readers, will be wondering just what it will take to improve this and turn broadband into a commercial tool for US prosperity? Now that’s going to be tough, so perhaps we should leave that until the end.
The report found that between 2007 and 2009, the average download speed in the United States has increased by only 1.6 Mbps, from 3.5 Mbps in 2007 to 5.1 Mbps in 2009. At this rate, it will take the United States 15 years to catch up with current Internet speeds in South Korea, the country with the fastest average Internet connections.
Speed Matters also released a full list of 2009 state rankings and a comparison to the average download and upload speed in 2008. It probably only matters to people living in the US so they can compare their local speeds to other parts of the US, so we won’t republish that here.
However, one of the most compelling pictures is the map it has of the US, and we can immediately see why the US Obama administration has had to reach into the public purse for its Broadband Stimulus package, not only to create jobs to stimulate the economy, but to fill some of the horribly large white spaces on the map.
Speed Matters map of available US broadband speeds
The report concluded that "Only 20% of those who took the test have Internet speeds in the range of the top-ranked countries - South Korea, Japan and Sweden. 18% do not even meet the FCC definition for current-generation broadband, an always-on Internet connection of at least 768 Kbps downstream.
The data also confirms that where a customer lives is a good indicator of Internet connection speed. With some exceptions, if you live in a Northeastern or Mid-Atlantic state, you are likely to have good high- speed Internet options.
The fastest Internet connections are in Delaware, Rhode Island, New Jersey, Massachusetts and New York, all of which average 8.4 to 9.9 Mbps. The slowest are likely to be in Mississippi, South Carolina, Arkansas, Idaho, Alaska, which average between 2.3 Mbps and 3.7 Mbps
Speed matters also made some international comparisons, ranking the US 28th in the world in average Internet connection speeds. South Korea is at the top end with 20.4 Mbps, four times faster than the US, which also loses out to Japan at 15.8 Mbps, Sweden at 12.8 Mbps, the Netherlands at 11.0 Mbps, and 24 other countries that have faster broadband.
It also ranks the US 15th behind other industrialized nations in the percentage of the population subscribing to broadband, with countries like Canada, Britain, France, Germany, and Sweden with higher broadband subscription percentages than the US.
The report also reminds the US authorities that millions of Americans don’t have and can’t have high speed internet connections, either because of where they live or because of what they earn.
Around 67% of urban and suburban homes have broadband, but only 46% of rural homes have it. Similarly, 88% of Americans who earn over $100,000 a year get broadband, but just 35% where the home earns less than $20,000 subscribe. Only about 54% of middle-income families earning between $30,000 and $40,000 a year subscribe to broadband.
So the Communications Workers of America has come up with a ten point plan, and has called on the US government to establish a national policy goal for broadband, something that European governments did around 4 years back.
It suggests that the goal is to construct an national infrastructure with enough capacity for 10 megabits per second (Mbps) downstream and 1 Mbps upstream by 2010. The policy should also call for a minimum and then rising number of homes that can get 100 Mbps. The next thing is to collect robust and detailed broadband data, rather than leaving it to organizations like Speed Matters, but it accepts that the FCC has improved its broadband data collection program, and federal funds are now available to states to map their broadband infrastructure.
It says that planning should then devolve to local state and regional task forces and that universal service revenues should be spent on broadband, not just on voice. Most advanced countries have a Universal Service Fund, which usually comes from a minor tax on existing lines, which is used to stimulate further advances. The $7.2bn stimulus funding is a good start, but there needs to be a permanent fund, it says.
The next suggestion is for tax incentives for operators that introduce faster internet speeds, which it says is how Japan and South Korea achieved world leadership in broadband, building nearly universal fiber-to the home networks capable of delivering 100 Mbps.
The report then listed key broadband applications which were out of reach. It said that broadband-enabled smart grids and smart meters can cut energy consumption, that online two-way video allows doctors to make virtual house calls and diagnose medical conditions at a distance and that high-speed connections enable students to take courses hundreds of miles away.
But the US is a long way from making these standard experiences, because of the poor condition of the broadband infrastructure. It also says that better and faster data transmission permits fire, police, and emergency personnel to exchange real-time video and data and called on Federal, state, and local policy makers to integrate broadband infrastructure and applications into delivery of education, health, job training, public safety, and other public services.
Which leads neatly to its next point, which is that no US child should be offline. A third of adults in the US do not use the Internet, and most of them do not own a personal computer. Surveys indicate that the biggest barriers to broadband adoption are lack of a computer, high cost of equipment and broadband access, lack of knowledge about how to use the technology, and lack of interest in existing broadband applications.
The federal broadband stimulus grants should provide important models to expand digital literacy, develop public-interest broadband applications and services, and provide affordable computers and broadband access equipment to low-income households.
The report’s next point is that the US must preserve free speech on the Internet and so keep it open, so that people can go where they want and download or upload what they want, when they want, on the Internet. There should be no unreasonable blocking of access to any websites, degradation of service, or censoring any lawful content on the Internet. And yet we still have US telco CEOs mumbling in public about net neutrality and what an evil it is.
The Communications Workers of America then calls on public policies to safeguard consumers and workers. Government should require public reporting of deployment, actual speed, price, and customer service benchmarks. It calls on policymakers to ensure that every American gains access to the benefits of the information age.
But the point it made about broadband in Japan being way faster at the same price is perhaps the most indicative point in forming a new strategy. There’s a lot of importance in that statement. Countries which have similar labor costs to the US, should be able to build out infrastructure at about the same price.
Yet it is actually the competition and the way this has been allowed to prosper in other countries which has made the low prices and the rapid deployment possible. During the Bush administration, the RBOCs were allowed to eliminate CLECs by removing externally set attachment prices.
They were also allowed to dither on long overdue fiber build outs, because they wanted to be sure that CLECs, or anything like them, could not re-emerge. Only in the US could the Courts castrate the decision making of the regulator, leading to a growing unhealthy monopoly of the fixed communications infrastructure.
And to add to all of this, the FCC and Justice Department under the Bush administration thought it was okay for SBC to buy both AT&T and Bellsouth, and recreate something close to the 1980s monopoly monstrosity of AT&T. The US has effectively gone backwards in its communications policies for a dozen years, and the Obama administration has to both catch up that lost 12 years, as well as generate growth going forwards.
What we find disturbing is that the major broadband corporations have spurned the Broadband Stimulus package, electing not to help the call to improved broadband, whilst being prepared to ignore $billions in government aid. They are all making obscene monopoly style profits in- stead of being under the cosh of regulator enforced price falls.
Overall, we look at the 10 point plan of the Communications Workers of America and its Speed Matters campaign and see that it has way too much carrot and not enough stick to get the job done. Without it, the US is destined to continue its slide into a fourth rate broadband economy.
Copyright © 2009, Faultline
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