Experts Debate U.S. Global Broadband Rankings

WASHINGTON, June 24, 2010 – Experts this week debated whether the United States is seriously lagging behind other countries on broadband access and if its place on the global stage is related to a failure of telecommunications regulation.

At a forum hosted by the Information Technology & Innovation Foundation, Sascha Meinrath, director of the Open Technology Initiative at the New America Foundation, said the United States was a leader in broadband penetration, but has fallen behind in adoption.

He showed current statistics from the Organization for Economic Cooperation and Development and an ITIF report that rank the United States as 15^th in the world.

“This isn’t actually about the sky is falling or imminent destruction,” Meinrath said, adding that it’s more about the slow and steady erosion of U.S. competitiveness within an increasingly connected global economy.

The drop, according to Meinrath, is due in part to “overly laissez-faire” attitudes by Congress and Federal Communications Commission regulators. Meinrath compared the nation’s broadband standing to the regulatory failures in the Gulf of Mexico and the sub-prime mortgage crisis. Meinrath said the United States was the last to develop a national broadband plan, and the sum of all of these facts makes us “woefully unequipped” for a 21^st century economy.

Meinrath showed how other countries have better penetration, cheaper prices and proactive broadband plans.

“It is remarkable that anyone would still be debating this fact,” he said.

Matthew Wood, associate director of the Media Access Project, focused on the U.S. failure in telecom regulation, pointing to three areas that he said are seriously lacking: universal service fund reforms, transparency regulations and competition policies.

Universal service is a problem because Wood said low broadband adoption is keeping the United States behind, even though this fund is being repurposed for broadband use.

Transparency issues begin with the U.S. reliance on third parties to gather information, he said. This needs to stop so that USF funds can be distributed properly, Wood said, because companies claim 95 percent of Americans have the capability for broadband access. The companies that stand to benefit from funds are the ones collecting the data, he said.

Wood also said customers should be made more aware of the service they receive and what they actually pay for.

Who can honestly say they can look at their cable bill and understand it, Wood asked.

There are several failures in competition policy, he said, because of mergers and wholesaling. Wood said the FCC has made predictions and had assurances from companies that there will be competition, but it hasn’t happened.

Wood said that Verizon capping its Fios fiber service at 25 million households evidences the lack of competition, and the fact that Verizon and SBC have acquired a number of smaller companies shows lack of merger policy.

Wood said it is a government failure that customers don’t have a baseline of information that companies should have to disclose to them about their service.

George Ford, chief economist for the Phoenix Center, disagreed with some of what Meinrath said in regards to statistical rankings: “I’m not going to make any claims about where we are, but I certainly am going to make some claims about how much of what is said is utter nonsense.”

“Ranks are for dummies,” Ford continued, showing ranking data for the rest of the world, and its inconsistencies. Ford showed that examining per capita adoption was futile because even if everyone were connected, there would not be 100 percent adoption. Ford said that, even though Australia, New Zealand and Spain all had 97 percent phones per capita, there were huge differences in rank because of population and broadband capabilities.

Japan has more people using broadband than France, said Ford, but ranks seven spots lower.

“Broadband per capita is a meaningless measure,” Ford said, because it isn’t properly scaled.

Ford added that the nation shouldn’t focus so much on the rankings. Rather, it should care about the value. According to Ford, the U.S. broadband connection has a value of 75 times that of Finland. This makes workers more effective and produces a higher GDP output, he said.

ITIF President Robert Atkinson said the United States is a leader in quality broadband, adding that the real problem is that only 62 percent of Americans have a computer at home. Combined with 96 percent of cable modem coverage, the problem simply is adoption, he said, and sometimes people just don’t want it.

Ford said that some people don’t adopt internet because of the risks of pornography and personal data security while others cannot afford it.

Atkinson said that competition is something that’s difficult to compare on a global stage because of geographic and other differences, but noted that the United States has the longest loop lengths in the world. Despite this, Atkinson said, the United States has more fiber deployment on a per-home basis than Europe.

Meinrath and Wood said no matter how you hash up the numbers, it is clear that America is not on a positive trajectory. “Numbers don’t lie, but statistics is a whole other story,” Meinrath said. Both stuck by their numbers, showing the quoted primary sources.

Wood concluded that merger reform has to happen. Meinrath concurred, quoting statistics that show broadband is cheaper and faster in Europe because of regulation.

Atkinson’s rebuttal asked, “What were we supposed to rank? … It is simply much harder to do this in the U.S.”

Ford asked, “Where is this nirvana government that can solve any problem? They are the worst bunch of problem solvers on the planet.”

The votes taken at the beginning of the debate showed 40 percent of the audience members agreeing with the opening statement, and 60 percent in disagreement. The final vote found 55 percent of audience members in agreement, 35 percent in disagreement, and 10 percent unclear on the issue.