Jul 08, 2014 - 8:45am

Report: With Private Investment, U.S. Has Edge in Broadband Deployment

“U.S. Ranks Behind Latvia in Offering Top-Speed Broadband Connections,” the headline in a June 27 Wall Street Journal brief announced. The headline’s implication was clear: U.S. consumers are poorly served by inferior broadband service, while users in even tiny European nations meet with a comparatively superior experience.

Spend a little time reading about broadband services, and you’ll encounter variations of that argument, typically followed by an exhortation to U.S. policymakers to emulate the highly regulated, highly subsidized path Europe has taken in the broadband deployment race.

However, that conventional wisdom leaves a lot to be desired, ignoring the progress that’s been made in improving U.S. broadband service. Moreover, it overlooks critical factors that affect broadband deployment in different nations, like geography and population density.

Indeed, one thing that stands out in the comparison in the WSJ brief cited above is that the United States is the only “large” country in the top 10 for high-speed Internet penetration. The remaining nine are countries that are much more geographically compact, with several, like Hong Kong and South Korea, boasting significantly higher rates of urban population density. 

A new study comparing broadband deployment in the United States and the European Union poses a new challenge to the conventional wisdom about the comparative state of broadband.

The study, “U.S. vs. European Broadband Deployment: What Do the Data Say,” published by the University of Pennsylvania Law School and the Center for Technology, bases analyzed mapping studies of U.S. and European deployment of Next Generation Access (NGA) networks to determine the breadth and depth of coverage in both markets. (A subsequent study of Asian broadband is planned for later this year).

What they discovered was “that concerns that the U.S. is losing the broadband race are misplaced.”

“The empirical evidence produced by the mapping studies thus indicates that the United States is faring better than Europe in terms of broadband coverage and provides a strong endorsement of the regulatory approach taken by the U.S.,” Yoo writes. “These data stand as a major landmark with which anyone asserting otherwise must come to grips.”

A key finding was that the U.S. regulatory approach, which focuses on facilities-based competition, in which competitors build their own networks, outperforms the European policy of service-based competition, in which new market entrants lease access to existing networks at wholesale cost.

The U.S. approach, the study finds, ultimately promotes greater investment in broadband networks, to the ultimate benefit of consumers. The study finds that U.S. “per household investment” in the electronic communication sector is more than double that of Europe—$562 vs. $244. That disparity should stand as a warning to Europe, the authors note, which “runs the risk of falling farther behind in high-speed broadband coverage.”

The CTIC’s findings square with those of a similar study published last year by the Information Technology & Innovation Foundation (ITIF), which found that broadband infrastructure development in the United States had improved markedly over the last several years.

ITIF examined broadband deployment, adoption, performance and price and found that the picture for U.S. consumers has improved measurably since 2008, when the U.S. was ranked 22nd in the world for broadband performance. Five years later, the United States was ranked 8th. Likewise, the ITIF study also credited the progress to market-driven innovation and private competition.

Of course, that’s not to say that the U.S. broadband experience doesn’t require ongoing improvement, as anyone who’s ever waited for a YouTube video to finish buffering can attest.

But a strong case can be made that when slowdowns in Internet service occur (often at peak usage times), the problem stems from the explosion of demand. With the rapid rise of mobile access and streaming services for video and music, there’s greater demand on networks than ever before. That’s led to substantial new investment from broadband providers to keep pace with escalating demands.

Former Sen. John Sununu (R-NH) and former Rep. Harold Ford (D-TN), who now serve as the honorary co-chairmen of the industry advocacy group Broadband for America, say that “American broadband has been a great success” as a direct result of industry investment in upgraded networks.

“Since 1996, [U.S. Internet service providers] have invested over $1.2 trillion,” Sununu and Ford wrote in a letter to The New York Times. “That’s how 99 percent of Americans today have access to wired and wireless broadband, and Internet speeds have gone up 1,500 percent in the last decade. Per capita network investment in Europe in 2012 was less than half of what it was in the United States. That’s how the United States is a leader in broadband speeds.”

Given the importance of broadband availability and speed as a key factor in innovation and productivity, other nations may soon be looking toward the United States for guidance on how to build and maintain top-flight broadband infrastructure by relying on competition and private investment. 

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About the Author

Freelance writer