Has the U.S. Been Sidelined in Broadband Revolution?

Should a fall of 11 places in international rankings for broadband penetration be of concern for U.S. policymakers? Expanding broadband access for business and residents has become a key element of many regional development strategies. The Internet has become a key resource for entrepreneurs and small businesses, as well as a necessary ingredient in preparing students for the modern workforce. Widespread broadband use offers many advantages for regional economies, especially in regions that have traditionally lagged in high-tech development, but may now be able to access information and markets that were once beyond their reach.



A recent report from the Organization for Economic Co-operation and Development (OECD) highlighted why state and regional efforts to expand broadband access are becoming vital to sustaining U.S. economic prosperity. SSTI reported on recent examples from two states, West Virginia and Vermont, that were implementing new strategies to expand broadband and wireless Internet access for businesses and individuals (see the May 14, 2007 issue of the Digest).



OECD found, since 2001, the U.S. has fallen from fourth to 15th in national broadband penetration. In the second half of 2006, the U.S. had the second-slowest rate of increase among OECD countries. The rankings, which are based on the number of broadband subscriptions per capita, suggest that the U.S. may fall even farther in the next few years, as countries like Australia and Germany continue to make strong gains.



Earlier this month, Robert McDowell, a commissioner with the Federal Communications Commissions, strongly objected to the OECD rankings system responding to the report at a national broadband policy summit. Challenging their methodology, McDowell holds the OECD research does not account for the variation in the number of individuals per household. Since the OECD data only accounts for the number of broadband subscriptions per capita, countries with more individuals per household are at a disadvantage. [Editor’s note: The U.S. average household size of 2.57 individuals is tied for 11th among the reported countries. The figure is above several nations ranked higher for broadband penetration without taking household size into consideration.]



McDowell notes the OECD report also does not account for the speed of broadband service. National average download speeds vary between 61 mbps in Japan to just 1 mbps in Greece. At 16th, the U.S. currently ranks even lower on average speed of broadband connections than on penetration, but McDowell reports recent successes with fiber-to-the-door network pilot programs suggest that the U.S. may soon be able to improve its high-speed services in many cities.



As an additional observation, McDowell cites alternate recent surveys reporting 43 percent of U.S. households receive broadband service, well above the E.U. average of 23 percent.



The Information Technology and Innovation Foundation (ITIF) recently addressed the commissioner's concerns in a white paper that proposes an alternate set of metrics for estimating the state of national broadband deployment. The ITIF ranking system assigns each OECD country a score based on OECD measurements of broadband subscriptions, the average number of individuals per subscribed household, the average speed of broadband connections, and the average cost of high-speed connections. The U.S. does modestly better in the ITIF rankings than the OECD report, coming in 12th among all OECD countries; however, slow speeds and low adoption rates still appear to place the U.S. at a disadvantage in the information economy.



The ITIF paper makes several recommendations to help pull the U.S. out of its broadband slump. At the national level, they suggest that Congress should exempt broadband services from paying into the Universal Services fund, create federal tax incentive to deploy new networks, and adopt a higher-speed standard for high-speed Internet services. At the state level, ITIF recommends the adoption of statewide video franchise agreements, which would allow broadband services that offer Internet-based video services to bypass the time-consuming process of negotiating local agreements. Since television-over-the-Internet (or IPTV) services are one of the major drivers of expanded fiber-to-the-door services, these statewide franchises could encourage the spread of much faster networks. The paper also advises states to fill in the gaps left by federal broadband studies by collecting and reporting local data about broadband penetration.



Download Accessing Broadband in America: OECD and ITIF Broadband Rankings at: http://www.itif.org/files/BroadbandRankings.pdf



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