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Cable Technology Feature Article

May 24, 2011

FCC Report Finds U.S. in Middle of Broadband Pack: That Isn't the Point

By Gary Kim, Contributing Editor

The latest Federal Communications Commission report on global broadband suggests the United States ranks about ninth for mobile broadband adoption among Organization for Economic Co-operation and Development member countries and 12th for fixed (DSL or cable) broadband on a per-household basis. 

That will annoy some people, but is entirely consistent with past U.S. ranking for such things as telephone service, something rarely considered to be a “problem.” As an aside, the report is easily among the most nuanced and careful some of us have seen in years, a much more careful analytical work than the press release announcing it indicates.

A six-spot gain to 9th place in international broadband rankings would be a successful outcome for the Federal Communications Commission’s National Broadband Plan, researchers at  the Phoenix Center for Advanced Legal and Policy Studies have said. 

In March 2010, economists at the Phoenix Center said “historical trends suggest the United States will likely move to 13th in broadband adoption by 2012 even without significant policy changes.” The latest FCC (News - Alert) report shows that was an accurate forecast. 

But nobody should expect the United States to rank much  better than where it is, for historical reasons. The United States ranks no better than 15th in global measures of telephone density. But nobody really suggests the United States has a fixed-line voice availability problem. In fact, most observers say demand for that product is declining.

So where does the United States currently rank on per-capita measures of broadband penetration in early 2010? 15th, as it turns out; precisely where it has long ranked in terms of fixed-line voice line penetration. 

But assessing broadband availability is more complicated than it used to be, in large measure because of mobile broadband, an area where the United States is forecast to lead, at least in terms of fourth generation Long Term Evolution deployments. 

Also, using only the OECD data, which FCC report authors say is the best overall, the United States ranks first out of 28 in cable modem coverage, sixth out of 16 for fiber-to-the-home coverage and eighth out of 29 in 3G mobile wireless coverage.

None of that is to suggest there are not real or potential issues in rural areas, issues with the price of the faster services or issues with adoption. But based on historical comparisons, the data is entirely consistent with the realities of service in a continent-sized nation with lower population density than many other nations, and regulatory policies in some areas that support government-lead or supported network investment more aggressively than is possible in the U.S. market. 

The latest FCC report contains few surprises about the state of U.S. broadband, and should not be expected to do so, since year over year, not that much actually can change in terms of broadband penetration or access speeds, both in terms of availability and adoption. 

The report is voluminous in its discussion of the data sources, with special attention to the difficulties of comparing data across markets, as well as the well-studied fact that there is a “positive correlation between broadband adoption and income, population size, and population density.”

What seems to be new also is a clear recognition by report authors that such factors help explain the United States’ rates of broadband adoption compared to other OECD member countries. U.S. fixed network broadband adoption lags behind such countries as South Korea, the United Kingdom, Canada, and Germany, but exceeds adoption rates in Japan and the EU average.

The OECD’s deployment data ranks countries based on particular technologies, rather than overall coverage. The U.S. ranking in these surveys ranges from 27th out of 30 in DSL coverage, for example. But the U.S. market is unusual in the extent of cable modem coverage, where it ranks first, making telco access “supplemental” to cable coverage, one might argue. 

U.S. stand-alone residential broadband prices are generally “in the middle of prices in OECD countries,” after accounting for speed, terms of service, data caps, and service delivery technology. None of that is out of character with earlier findings. 

Similarly, prices in the United States for business stand-alone broadband services were fourteenth out of 30 among the OECD countries.

“We recognize that the complexity in the pricing of residential broadband services complicates any empirical analysis,” the report says. “The features and quality of broadband service vary across countries and providers, service is often offered under a multi-part pricing scheme and broadband is frequently purchased as part of a bundle of services.” That poses all the typical issues one has when trying to compare plans across companies or regions, since the actual prices are hidden within a bundle. 

“Price comparisons are also difficult because of important packaging details. “For example, it is not simple to compare an offering of unlimited broadband service with a maximum download speed of 5 Mbps for an up-front fee, a flat monthly recurring fee, and a two-year contract with an early termination fee, to a 5 Mbps offering from another provider that charges a different up-front fee, monthly recurring fees that vary with usage, and the ability to cancel service at any point with no penalty or termination fee,” the report says.  

Alsom, at least one study has suggested that if the measure of broadband value is ability to harness broadband to boost productivity, the United States ranks first in the world, even though its rated speeds never show at the very top. 

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Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Jennifer Russell