Bits Blog: Developing Countries Surge in Mobile Broadband, U.N. Finds

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Op-Ed Contributor: How the U.S. Got Broadband Right

Such criticisms are misplaced. If he is confirmed, Mr. Wheeler will have the good fortune to be arriving at the F.C.C. at a time when the United States has gained a global leadership position in the marketplace for broadband.

More than 80 percent of American households live in areas that offer access to broadband networks capable of delivering data with speeds in excess of 100 megabits per second. Almost everyone in the country has several competitive choices for high-speed broadband service (with wireline, satellite and wireless options). Verizon offers 14.7 million consumers, in parts of 12 states and the District of Columbia, speeds up to 300 megabits per second via our FiOS network, which is poised to provide even greater speeds in the future. Companies like AT&T, Comcast and Time Warner Cable are also investing in their infrastructure.

Fifty-six percent of American adults have smartphones that give them access to mobile broadband data and video. Our country is the center of a booming mobile ecosystem in which new devices and applications are being used to do everything from personal health monitoring and e-commerce to tracking deliveries and saving energy.

Contrast this with the European Union, where innovation and investment in advanced networks have stagnated under an onerous regulatory regime that limits investment and innovation, and where today only about 2 percent of households have access to broadband networks with 100-megabit-plus speeds. “Once, Europe led the world in wireless communication: now we have fallen behind,” Neelie Kroes, the European Union official responsible for broadband policy, said in a speech in January. “Europe needs to regain that lead.”

The United States built its lead because companies invested nearly $1.2 trillion, over 17 years, to deploy next-generation broadband networks. These investments, which began with the passage of the Telecommunications Act of 1996, were neither accidental nor inevitable; they were a result of deliberate policy decisions by Congress and by Democratic and Republican administrations alike to protect consumers while encouraging companies to invest in nascent technologies that are now flourishing.

President Bill Clinton’s administration decided not to impose, on the Internet and wireless technologies, century-old regulations designed for copper networks. Michael K. Powell, the F.C.C. chairman during President George W. Bush’s first term, presided over the decision to exempt new fiber-optic networks from the old regime of price controls and rate-of-return regulation. The fast deployment of 4G LTE mobile broadband networks across the country might not have happened had Julius Genachowski, the most recent F.C.C. chairman, imposed a heavy-handed regulatory approach toward the technology.

Regulatory restraint has resulted in a robust broadband market, but today some self-styled policy advocates insist that America’s broadband marketplace is badly broken and that the only solution is to revert to Depression-era regulations, like government rate setting and price controls or rules dictating what types of competitive offerings broadband providers can offer consumers. These ideas, however, are part of the rigid bureaucratic approach that European regulators like Ms. Kroes have correctly identified as stifling.

Since 1996, as America encouraged the growth of its broadband industry, European regulators have adopted policies that generally limited network infrastructure deployment to a single facility in a given country or region. Other companies were allowed to “resell” broadband services to consumers, but only if they used the same infrastructure. This “retail” competition resulted in prices that may have covered the costs of operations but left little capital or other incentive for companies to invest in improving these networks. In other words, a decade ago the European broadband market may have looked healthy from the standpoint of consumer pricing, but after 10 years of underinvestment, European households (only half of which have access to networks capable of speeds of even 30 megabits) have far fewer broadband options and innovations than their American counterparts.

Regulatory prudence is the only way to keep up the momentum in broadband innovation. We are just beginning to see the potential of innovative cloud-based services, smartphones and tablets to transform education and job training. A recent study found that cloud computing could save enough energy to power Los Angeles for a year, the equivalent of 23 billion kilowatt-hours of electricity. The broadband ecosystem is more than service providers and carriers. Our regulatory system needs to protect consumers while allowing market participants — developers of mobile applications and operating systems, handset manufacturers or operators of mobile virtual networks — to innovate.

There is no telling what will come out of this next wave of change. For its potential to be fully realized, however, it will be critically important for the industry to work with regulators — led, we hope, by Mr. Wheeler — to continue the bipartisan policies that have made our fast-changing industry a global leader.

Op-Ed Contributor: How the U.S. Got Broadband Right

Such criticisms are misplaced. If he is confirmed, Mr. Wheeler will have the good fortune to be arriving at the F.C.C. at a time when the United States has gained a global leadership position in the marketplace for broadband.

More than 80 percent of American households live in areas that offer access to broadband networks capable of delivering data with speeds in excess of 100 megabits per second. Almost everyone in the country has several competitive choices for high-speed broadband service (with wireline, satellite and wireless options). Verizon offers 14.7 million consumers, in parts of 12 states and the District of Columbia, speeds up to 300 megabits per second via our FiOS network, which is poised to provide even greater speeds in the future. Companies like AT&T, Comcast and Time Warner Cable are also investing in their infrastructure.

Fifty-six percent of American adults have smartphones that give them access to mobile broadband data and video. Our country is the center of a booming mobile ecosystem in which new devices and applications are being used to do everything from personal health monitoring and e-commerce to tracking deliveries and saving energy.

Contrast this with the European Union, where innovation and investment in advanced networks have stagnated under an onerous regulatory regime that limits investment and innovation, and where today only about 2 percent of households have access to broadband networks with 100-megabit-plus speeds. “Once, Europe led the world in wireless communication: now we have fallen behind,” Neelie Kroes, the European Union official responsible for broadband policy, said in a speech in January. “Europe needs to regain that lead.”

The United States built its lead because companies invested nearly $1.2 trillion, over 17 years, to deploy next-generation broadband networks. These investments, which began with the passage of the Telecommunications Act of 1996, were neither accidental nor inevitable; they were a result of deliberate policy decisions by Congress and by Democratic and Republican administrations alike to protect consumers while encouraging companies to invest in nascent technologies that are now flourishing.

President Bill Clinton’s administration decided not to impose, on the Internet and wireless technologies, century-old regulations designed for copper networks. Michael K. Powell, the F.C.C. chairman during President George W. Bush’s first term, presided over the decision to exempt new fiber-optic networks from the old regime of price controls and rate-of-return regulation. The fast deployment of 4G LTE mobile broadband networks across the country might not have happened had Julius Genachowski, the most recent F.C.C. chairman, imposed a heavy-handed regulatory approach toward the technology.

Regulatory restraint has resulted in a robust broadband market, but today some self-styled policy advocates insist that America’s broadband marketplace is badly broken and that the only solution is to revert to Depression-era regulations, like government rate setting and price controls or rules dictating what types of competitive offerings broadband providers can offer consumers. These ideas, however, are part of the rigid bureaucratic approach that European regulators like Ms. Kroes have correctly identified as stifling.

Since 1996, as America encouraged the growth of its broadband industry, European regulators have adopted policies that generally limited network infrastructure deployment to a single facility in a given country or region. Other companies were allowed to “resell” broadband services to consumers, but only if they used the same infrastructure. This “retail” competition resulted in prices that may have covered the costs of operations but left little capital or other incentive for companies to invest in improving these networks. In other words, a decade ago the European broadband market may have looked healthy from the standpoint of consumer pricing, but after 10 years of underinvestment, European households (only half of which have access to networks capable of speeds of even 30 megabits) have far fewer broadband options and innovations than their American counterparts.

Regulatory prudence is the only way to keep up the momentum in broadband innovation. We are just beginning to see the potential of innovative cloud-based services, smartphones and tablets to transform education and job training. A recent study found that cloud computing could save enough energy to power Los Angeles for a year, the equivalent of 23 billion kilowatt-hours of electricity. The broadband ecosystem is more than service providers and carriers. Our regulatory system needs to protect consumers while allowing market participants — developers of mobile applications and operating systems, handset manufacturers or operators of mobile virtual networks — to innovate.

There is no telling what will come out of this next wave of change. For its potential to be fully realized, however, it will be critically important for the industry to work with regulators — led, we hope, by Mr. Wheeler — to continue the bipartisan policies that have made our fast-changing industry a global leader.

Opinion: No Country for Slow Broadband

WASHINGTON — THERE is a popular story going around about the state of America’s broadband networks: service is pitifully slow, hugely overpriced and limited to the richest neighborhoods — whereas in Europe, service is cheap, fast and widespread because regulators force big companies to make room for smaller service providers.

Almost none of this is true: America’s broadband networks lead the world by many measures, and they are improving at a more rapid rate than networks in most developed countries.

Much of the disparity between perception and reality has to do with timing. Before the recession, American Internet service was on a very different path, not keeping pace with large sections of Western Europe and East Asia.

But that began to change as the economy turned around. Private investment and advances in technology, brought about by a competition policy that encouraged cable and phone companies to improve their networks, have propelled America’s networks forward.

Over the last three years America’s broadband systems have doubled in speed, while Europe’s have remained stagnant. And that will continue, because broadband companies here are installing advanced fiber-optic technology faster than Europe, and most of the world’s users of the fastest mobile broadband technology, 4G/LTE, live in America.

This is particularly impressive for a nation where low urban population density imposes higher actual costs on network upgrades than in most of the world, and in which government subsidies are rare. In fact, America outranks all nations with similar population density.

Much of the recent growth has come thanks to our system of facilities-based competition — that is, each service provider is responsible not only for broadband service but for the underlying infrastructure, which encourages them to improve network quality to win customers.

Most European providers still depend on telephone wires controlled by the local phone company, leasing infrastructure they have no ability to improve. Only two European nations, Belgium and the Netherlands, have more network-based competition than America, and many European regulators are now seeking to mimic the American model.

As the reality has changed, many critics have simply stopped discussing international rankings. Others repeat outdated statistics: Susan Crawford, a law professor and author of the widely praised book “Captive Audience,” relies on 2009 data to claim that America is 22nd in average broadband speed among developed countries — and falling. This is despite the fact that the source of that data, the technology company Akamai, has updated its analysis showing America in eighth place — and rising.

Critics have also focused on price and profit, claiming that America’s broadband companies earn windfall profits at the expense of customers. But company financial reports show that American providers are four times less profitable than their European counterparts.

Others say the reason almost a third of Americans don’t subscribe to broadband is because networks are underbuilt or overpriced. Yet over 96 percent of households are in areas with access to wired broadband, while prices for entry-level plans are now the third-lowest in the world.

The major causes for low subscribership, as extensive survey research shows, are low interest in the Internet and minimal digital literacy. And too many American households lack the money or interest to buy a computer. As a result, more Americans subscribe to cable TV and cellphones than to Internet service. Our broadband subscription rate is 70 percent, but could easily surpass 90 percent if computer ownership and digital literacy were widespread.

Indeed, the most critical issue facing American broadband has nothing to do with the quality of our networks; it is our relatively low rates of subscribership.

This is one place where we could learn from the rest of the world. The leaders in broadband subscriptions, like South Korea and Singapore, use outreach, education and computer ownership programs to get people online.

We are starting to see something like this in outreach and education initiatives in the United States, including Connect2Compete and Comcast’s Internet Essentials. It is too early to evaluate them fully. But at least they address a genuine, present-day problem — rather than an overwrought historical phantom.

Richard Bennett is a senior fellow at the Information Technology and Innovation Foundation and a co-author of its recent report “The Whole Picture: Where America’s Broadband Networks Really Stand.”

Economic Scene: Google Project May Spur Broadband Competition

“At that time the United States was a leader in broadband,” Mr. Medin recalled. Today, he lamented, “I don’t see anybody arguing that the U.S. is anything but mediocre.”

These days, Mr. Medin leads Google’s effort to deploy superspeedy 1 gigabit-per-second networks — 100 times faster than the 10 Mbps plans @Home introduced long ago — in several cities around the country, starting in Kansas City last fall.

Most of the nation’s innovation today relies on a broadband connection. Yet broadband seems to be the one area of the information economy that has not followed Moore’s law, named after the proposition by Intel’s co-founder Gordon Moore that the power of digital devices would roughly double every couple of years, radically expanding their capability and driving down their cost.

“Internet access is constraining what people can do,” Mr. Medin said. “This puts American companies at a disadvantage. It puts Google in a place where we can’t innovate as well as we could.”

President Obama has made much of this deficit. In 2010 his administration introduced a National Broadband Plan that promised a path of rapid deployment of high-speed networks, offering 100 million households affordable access to connections of 100 Mbps or more.

“We will not succeed by standing still, or even moving at our current pace,” Julius Genachowski, Mr. Obama’s first chairman of the Federal Communications Commission, told Congress at the time. Yet most Americans are still stuck in the Internet slow lane, far from the frontier of our possibilities. And the main roadblock remains much the same as it has been for years: a lack of competition.

Last week, President Obama nominated Tom Wheeler, a veteran lobbyist for the telecommunications industry, to succeed Mr. Genachowski. He has his job cut out for him: achieving fast universal broadband requires figuring out how to shake up the oligopolies that run the nation’s high-speed Internet.

There has been progress lately. The F.C.C. points out that more fiber-optic cable has been laid in the United States than in Europe in the last two years. According to Akamai, the nation’s average broadband download speed is about 7.4 Mbps per second, about twice as fast as it was two years ago. This puts the nation in eighth place in the world, up from 22nd in 2009.

Still, speeds in the United States remain behind those in the world’s most connected countries, like South Korea, Japan and Switzerland. Equally importantly, American broadband, at an average price of $6.14 per Mbps, is more expensive than in most other developed nations.

This has little to do with the actual cost of moving bits. The price of transporting data wholesale across the Internet has fallen to about $1.57 per Mbps, down from $1,200 when Mr. Medin was helping start @Home. And high prices discourage Americans from opting for higher speeds. Though 10 Mbps broadband is available in 90 percent of homes around the country, and four out of five homes have access to 100 Mbps service, last year only 28 percent of homes that had access to broadband at a speed above 6 Mbps actually bought it.

What’s most worrying is that the handful of companies offering high-speed broadband to American consumers may have little incentive to expand their networks, increase their speeds and lower their prices.

According to the F.C.C.’s latest calculation, under one-third of American homes are in areas where at least two wireline companies offer broadband speeds of 10 Mbps or higher. Even including the spottier service offered by wireless providers, which tends to come with strict data caps limiting use, the share is less than half.

That means that in most American neighborhoods, consumers are stuck with a broadband monopoly. And monopolies don’t strive to offer the best, cheapest service. Rather, they use speed as a tool to discriminate by price — coaxing consumers who are willing to pay for high-speed broadband into more costly and profitable tiers.

Blair Levin, who headed the F.C.C.’s broadband initiative until three years ago and is now at the Aspen Institute, traces the roots of broadband’s limits to telephone companies’ decision, back in the 1990s, not to match cable’s costly investments in fiber, trusting that their DSL service would be an adequate competitor.

But DSL couldn’t follow cable past 3 Mbps. Verizon did eventually get on the ball — investing in its FiOS fiber network, which is expected to reach 17 million homes when it is completed. But that’s the exception.

This article has been revised to reflect the following correction:

Correction: May 9, 2013

Because of an editing error, the Economic Scene column on Wednesday, about the United States’ lag in high-speed broadband, misstated the number of homes served by AT&T, which is expanding its U-verse high-speed network. It plans to make the network available to 33 million homes, an increase of 8.5 million; it does not currently serve 100 million homes.