from Skyreport E-news: OUTSIDE THE BOX: USA Left Behind in Broadband By Paul Budde, Budde Communication
In May, the OECD (Organization for Economic Co-Operation and Development) published its December 2004 statistics comparing broadband penetration between its 30 member countries. In aggregate, broadband subscribers in the OECD had grown rapidly, up 41 percent to 118 million.
The figures showed that the United States dropped from fourth place in 2001 to 12th place in 2004. Compare this with Japan, which rose from 11th to 9th place over the same period.
A comparison of broadband subscribers, however, is deceptive. In the U.S., average broadband access speed is around 1.5Mbits/s at an average cost of U.S. $30 per month. Compare this to the average Japanese connection of around 26Mbits/s at an average cost of around U.S. $22 per month.
In 2000, the Japanese government forced the incumbent fixed line operators to unbundle their infrastructure. This was four years after the United States passed the 1996 Telecommunications Act, which was designed to do the same thing.
In Japan, unbundling successfully mobilized the private sector, and by mid-2003, broadband penetration overtook that of the United States and average DSL broadband access speeds had increased to around 12Mbits/s.
In contrast, in the United States, the incumbent Regional Bell Operating Companies (RBOCs) fought the unbundling with tooth and nail. They stopped investing in telecommunications infrastructure and employed lawyers and lobby groups to fight the legislation. The 1996 Telecommunications Act gradually unraveled and by mid-2003, had effectively been overturned.
The RBOC resistance to unbundling was a scorched earth policy. It put U.S. broadband infrastructure development into stasis while Asian and European countries were developing their infrastructures. Originally at the forefront of the Internet revolution, the United States now trails Korea, Japan, Canada and eight European countries. The RBOC's themselves lost over half of the US broadband market to their competitors, the cable companies.
Despite the harm wrought to themselves and to the country, the RBOC's did have a victory of sorts. They persuaded the Bush administration that the unbundling model, despite its extraordinary success in Japan and other countries, was not the best one for the U.S.
During its first term in office, from 2001 to 2004, the government virtually ignored the plight of broadband development. As part of its platform for election to a second term in November 2004, the administration advocated competition between technologies, between DSL, cable and satellite, and it promised to support new broadband technologies, especially those that could reach rural areas, including Broadband over Power Line (BPL), WiFi and WiMAX.
Will this work? Will this policy return the United States to its dominant competitive position in broadband infrastructure? BPL and WiMAX could become disruptive technologies, and could make an impact on broadband penetration into rural areas. Will these new technologies compete with the 40Mbits/s now being delivered to Japanese and Korean residents? Very unlikely! At the end of 2004, satellite and Fixed-Wireless Access (FWA) held less than 2 percent of the U.S. broadband market.
With the removal of unbundling, and exclusive use of their networks guaranteed, the RBOC's are rolling out Fiber-to-the-Home (FttH) and Fiber-to-the-Curb (FttC) infrastructure. But is it going to be fast enough? The likelihood is that it will be slow, as faster broadband speeds will increase the use of Voice over IP (VoIP) telephony and cannibalize RBOC voice revenue.
The cable companies deliver over 60 percent of U.S. broadband access lines. Will the U.S. multi-platform policy encourage them to build out digital infrastructure and deliver faster access lines? Again, the answer is unlikely, because faster broadband lines will allow their customers to receive competitive TV channels, which will eat into their TV content revenue.
If the FCC continues to measure broadband access at 200KBits/s, it is possible that the Bush administration's promise in 2004, to deliver universal affordable broadband access to US citizens by 2007, may be realized. However, by 2007 the developed countries in Asia and Europe will be delivering universal 60-100Mbits/s access, and will be reaping the consequent benefits of economic growth, increased productivity, technological innovation and quality of life. The United States will be left behind.
Paul Budde operates Paul Budde Communication, a global telecommunications and information highways consultancy and research company based in Australia. The company's Web site can be found at: http://www.Budde.com.au. The e-mail address is: [EMAIL PROTECTED] (Please note, opinions expressed in "Outside the Box" are that of the author and not of the editorial staff.)
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