Berkman Center Report on Next Generation Connectivity Criticizes U.S. Policy Choices

Editor’s Note: The following is a BroadbandCensus.com summary and analysis of the recent report, “Next Generation Connectivity,” released by the Berkman Center, and commissioned by Federal Communications Commission.

WASHINGTON, November 17, 2009 – The main purpose of the report by the Berkman Center at Harvard University, commissioned by the Federal Communications Commission, was to examine global broadband policies and determine how the United States may adopt principles employed by the rest of the world as a means of expanding the current state of domestic broadband. Among nations, there seem to be two different overarching goals, ubiquity and capacity.

Many European nations seem to be reaching for a goal of ubiquity rather than capacity. While they do seek to obtain high-speed connections, their first goal has been to achieve mass adoption and availability of broadband. This ubiquity was a key portion of Japan’s early broadband planning, but now it has shifted toward higher-capacity connectivity.

The U.S., said the Berkman report, has never had a properly-organized and centralized plan to promote either ubiquity or capacity. However, with the Broadband Technology Opportunities Program and the Universal Service Fund, it seems like the choice is being made toward ubiquity.

Open access seems to be another trend which the U.S. has not significantly participated. The Berkman report suggests that this has lead to mediocre broadband performance.

“Our  most  surprising  and  significant  finding  is  that  “open  access”  policies—unbundling,  bitstream access,  collocation  requirements,  wholesaling,  and/or  functional  separation—are  almost  universally understood as having   played a core  role  in  the  first generation  transition  to broadband  in most of  the high performing countries; that they now play a core role in planning for the next generation transition; and that the positive impact of such policies is strongly supported by the evidence of the first generation broadband transition.” read the report.

The U.S. largely abandoned policies of open access in 2001 when cable became the dominant form of high-speed access, and in 2003, when the FCC’s “triennial review” deregulated the application of common carrier rules to high-speed connectivity offered by Bell companies.

However, it appears that open access not only for wireline, but also wireless access, is one of the main factors in gaining ubiquity of access, said the Berkman report. Even nations that initially have eschewed the practice – such as Switzerland and New Zealand – are beginning to accept it now. The main benefit of open access is that it lowered the barrier to entry for new market entrants, which in turn created competition and caused speeds to increase as a method of competition.

The investment of $7.2 billion by the U.S. is comparable on a per-capita basis with most of the rest of the world. But the investment does not mirror the style of most of the rest of the world.

In Asia the investments were of higher quantity and with an eye toward long-term investments. Additionally, these investments were not just direct investments. Rather, they were tax breaks and low-interest loans.  France has not invested any money directly but has just created a highly competitive environment.

Broadband applications are another major factor of adoption which the U.S. seems to be lagging, said the Berkman report. The rest of the world seems to be actively developing applications which require high speed connections which include: smart meters, home based telehealth, transportation controls.

The Organization for Economic Cooperation and Development ranks the U.S. as 15th in broadband penetration, which is around middle of rankings. Many people have claimed that the OECD methodology is biased against the U.S. since it counts penetration per 100 inhabitants.  While the U.S. does have larger household sizes than the rest of the world and many households have a single high speed connection, according to the research done by Berkman, a change from per 100 inhabitants to per household would not significantly change where the U.S. ranks.

In addition, by using households the use of broadband by business would not be included.  However, it is important to collect both per resident and per household, to determine if policies are reaching both the business and household populations.

While high speed access and ubiquitoU.S. access are both high on the agenda for most nations, the next generation of access lies in mobile broadband. The rise in the sale of smart-phones over the past few years shows the public’s unrelenting demand for access outside of the home and office.

While Wi-Fi hotspots have been popular for years access everywhere is really what the public wants. Yet again though the U.S. does not rank high: “On mobile broadband the United States is a weak performer.  On nomadic connectivity we do better, but are  not  a  particularly  high  performer.”  (“Nomadic connectivity” refers to connectivity through Wi-Fi hotspots.) Using OECD data, the U.S. ranks 19th in third-generation wireless subscriptions.

One of the major problems faces by consumers is the disparity between advertised and actual speeds. The Berkman center was able to access data from the speed test company Ookla. This data set included 41 million people from OECD nations. They found “that Japan,  South Korea,  and  the Netherlands  are  particularly  high-performing  countries. Actual  test  data particularly calls attention to Sweden’s very high performance in fact, much more so than its advertised speeds alone would suggest, and confirms Portugal’s surprisingly high performance on advertised speeds (by comparison to penetration) as consonant with high actually measured speeds. Moreover, from a U.S. specific  perspective,  actual  measurement  benchmarks  look  better  for  average  download  speeds,  but worse  for  highest  speeds.  In  average  download  speeds,  the  U.S.  moves  from  the  top  of  the  fourth quintile to the middle of the third quintile.”