Regulatory Reform

State of U.S. Broadband

The recent release of the 2014 Akamai study, The State of the Internet, has again brought the question of US broadband to the public forefront. In terms of global average connection speeds, the US has been slotted in 8th place, spurring critics to cite this as yet another indication of the failure of the private sector to adequately ensure innovation and expansion in speeds, accessibility, and usage rates. Europe and Asia are often touted as key, alternative models in pioneering aggressive government involvement in the private broadband sector to ensure access and expansion.

Despite these criticisms, broadband in the US is surging forward, surpassing all expectations in its quality, usage, and affordability. And unlike traditional public utilities, there are credible alternatives within the high-speed internet market, such as wireless, DSL, cable, and satellite. In the span of three years from 2009 to 2012, the United States moved from 22nd fastest to 8th fastest internet service in the world. The Akamai study also points out that in the third quarter of 2013 alone, average connection speeds in the US increased by 10% from the second quarter. Average adoption rates saw double-digit increases in forty-three states in the past year. The broadband adoption rate in Arkansas, for example, jumped by 106 percent year-over-year.

US investment in internet technology is also double per capita than that of European firms. Private companies continue to push the limits of fiber optic networks, with expansion set to occur in thirty-four cities across the United States, allowing homes access to one gigabit per second connection speeds. Fiber is already being laid down at a rate of 19 million miles per year in the US. This rate moves far beyond all of Europe and all of Asia, with the exception of China. Demand is clearly sufficient enough to justify the higher costs of building networks through areas of low population density—an element often not taken into account by advocates for European broadband models.

Moreover, availability rates in the US far surpass Europe. Cable is available at 93 percent, compared to a European rate of only 42 percent, and a similar ratio exists between broadband download speeds of 100 Mbps or higher: 85% and 30%, respectively.

Existing research highlighting the cost of broadband the United States compared to Europe fails to take note of media license fees and value added taxes added onto base subscription charges in Europe, and when properly taken into account, it turns out that Americans actually pay less for broadband. Aside from Israel, the US has the second lowest entry-level pricing for broadband in the OECD, so it’s fairly clear that broadband is not exclusionary.

Fifteen of the top internet companies are from the US. Only one is from Europe. A study in June 2011 conducted by the Federal Communications Commission found that broadband was accessible to 95 percent of Americans. The data show that usage is primarily about interest, and that US broadband networks perform well against Europe and Asia. The success of US internet companies demonstrates that there is much more to economic growth and rapid private sector innovation than average connection speeds alone.

According to Pew Research, when factoring in smartphones, broadband usage for young adults from 18-30 reaches approximately 95 percent. Of all the different variables surveyed, age matters most for usage rates. This means that regardless of availability, broadband use is primarily about interest—a matter of choice, and less of a matter of income. To the extent that income matters at all, each passing year shows that it matters less. Government intervention should not be employed to ensure that every household actively uses a 100 Mbps broadband connection, whether they want it or not.

 


In Depth: Regulatory Reform

In his first inaugural address, Thomas Jefferson said that “the sum of good government” was one “which shall restrain men from injuring one another” and “shall leave them otherwise free to regulate their own pursuits of industry.” Sadly, governments – both federal and state – have ignored this axiom and …

+ Regulatory Reform In Depth