The Internet Economy and Telecommunications analysis
An updated report by the New America Foundation (NAF) examines whether we are getting a good deal on our broadband in the United States. It does so using fairly straightforward methods: cataloguing advertised prices and speeds for major cities around the world. Unfortunately, to paraphrase H. L. Mencken, for every complex problem there is an answer that is clear, simple, and wrong.
We covered the issue exhaustively in our report from earlier this year, The Whole Picture: Where America’s Broadband Networks Really Stand, and a number of blog posts responding to the original Cost of Connectivity report in 2012. However, their report update makes the same claims as the last one using the same logic: we therefore feel compelled to issue a very similar rebuttal. The NAF report fails to engage the issue in a way that helps us understand what is really going on in our broadband markets.
There are two important questions to consider when examining these broadband markets: are companies offering a fair price for high-quality broadband services given their costs, and are they competing in a way that will offer dynamic improvements in the future? … Read the rest
In its second annual report assessing broadband speeds and prices in various nations, the New America Foundation reports some disturbing findings. Broadband provided by U.S. municipal governments costs much more than broadband provided by private sector providers in other nations. The local government of Bristol, Virginia ranks 31st; Lafayette Louisiana’s service 44th, and Chattanooga Tennessee’s, a recipient of federal stimulus funds for broadband, ranks a dismal 57th in the price of broadband. All of them charge their unsuspecting citizens prices around four times higher than their private sector competitors in other nations.
As they write, “Many American consumers take high prices and slow speeds to be a given, but our data demonstrates that it is possible to have faster, more affordable connectivity in cities of comparable density and size.” New America writes that it will be releasing a report shortly calling for policy solutions to address this terrible situation. Based on their analysis, I am sure they will be calling for Congressional legislation prohibiting socialist local governments from getting into the broadband business.
Of course my reason for pointing this out is to show the absurdity of the New America … Read the rest
On October 16, Akami released its quarterly state of the Internet rankings comparing nations around the world on broadband speeds. The United States continued its upward trajectory, improving in both average connection speed and average peak connection speed. This new data further illustrates that the claims of some broadband Casandras, such as Susan Crawford, regarding the weakness of U.S. broadband networks are highly misleading.
As ITIF has noted, over the last five years America has made great strides in improving average connection speeds and enhancing broadband infrastructure. According to the latest Akami study, the U.S. now ranks eighth in the world in average connection speed, up from ninth last quarter, and 11th in average peak connection speed, which grew 34 percent year over year. It should also be mentioned that the nations ranking above us in both categories either have small, densely populated geographic areas where deployment costs are lower, or enjoy significant government subsidies for broadband deployment and adoption.
The data exemplifies the success of America’s competition-based broadband model in incentivizing innovation and promoting the continued deployment of high speed networks. This is particularly clear when we … Read the rest
Europe’s telecom woes are “coming home to roost.” An article in the September 14th issue of The Economist discusses European Union Digital Commissioner Neelie Kroes’ call for major reforms to the European telecom system to address the poor performance of broadband networks on the Continent. This is just the latest effort by EU regulators to address a broadband system that lags well behind the U.S. and Asia, hampering economic growth and technical innovation.
As the article notes, “Only a quarter of the European Union’s people have access to new 4G networks, according to the European Commission. In America a single company, Verizon…reaches nine out of ten.”
Unfortunately, The Economist article does continue a misleading argument that has been used by some activists to denigrate U.S. broadband successes and justify the European model despite its obvious flaws. “Americans may have faster networks, but they pay a lot more.”
In fact, America enjoys the second lowest prices in the OECD for introductory level broadband. The U.S. does have higher relative prices for faster broadband, but this is not, as some critics have claimed, because of relatively higher profits. Among OECD nations, profits … Read the rest
The latest survey of America’s home broadband subscriptions by the Pew Research Center’s Internet & American Life Project reveals some surprising trends that you probably haven’t heard before. The fact that 95% of America’s young adults use broadband at home really jumps out:
Adding smartphone ownership to home broadband use, we see that the proportion of young adults who have ”home broadband” under this definition increases from 80% to 95%, while including smartphones has no discernible impact on access rates for seniors—the 46% of seniors who have broadband or a smartphone is little different from the 43% who have broadband at all.
Buying into a personal broadband account is mainly an age thing, which is to say it’s mainly an interest thing. Pew defines “young adults” as those aged 18 – 30, the wide swathe of the population that encompasses everyone who has come of age since the Internet was opened up to the general public (by Al Gore) in the mid ’90s. As a group, younger people tend to have less wealth than older people, and they tend to be better educated. Wealth, education, and ethnicity correlate with broadband … Read the rest
This is the second installment of a two part series of posts on Susan Crawford’s 8300 word post, Responding to Distorted Op-Eds Published by the New York Times. In the first installment, we looked at primarily at the technical claims that Crawford got wrong and her general framing of the issues. In this one, we’ll examine factual claims Crawford makes on the basis of her foray into actual research. As noted previously, this blog post is Crawford’s first attempt to buttress her analysis of U. S. broadband policy on research data; her book, Captive Audience, relied on blog posts and news articles for its references, not exactly reliable sources.
Common Research Errors
Just as Crawford makes technical errors about the differences between fiber, cable, and DSL, she makes research errors with respect to broadband deployment (AKA “buildout”) and adoption (AKA “uptake”.) For example:
Crawford says: “The FCC recently reported that only 0.3% of DSL connections in America provide speeds of 25 Mbps or higher.” There is no source for this claim, but the most recent data from NTIA & FCC is cited in the White House’s June, 2013 report … Read the rest
Susan Crawford has written an 8,300 word blog post defending her claims that American broadband is a second rate monopoly against criticisms of her facts, methods, and findings recently published as op-eds in the New York Times; it’s titled Responding to Distorted Op-Eds Published by the New York Times and is published in the Roosevelt Institute’s web site.
This is the first installment of a two part response; it deals with the technical claims Crawford makes for Fiber to the Home (FTTH,) her belief that the fastest network always wins (except when cable does) and a few miscellaneous observations. The second part will deal with Europe. So here we go.
While it’s remarkable to see such a lengthy response to a couple of 700 word op-eds, the more unusual feature of Crawford’s blog post is its use of actual research reports to bolster her claims; her book Captive Audience leaned on blog posts and articles from the popular press for authority, second- and third-hand sources at best, but the blog links to an FCC report, a European Commission report, and an OECD Communications Outlook report. If nothing … Read the rest
Ev Ehrlich, a former Clinton Administration Under Secretary of Commerce for Economic Affairs, has outlined an Internet policy agenda for progressives in a paper sponsored by the Progressive Policy Institute. The paper, titled “Shaping the Digital Age: A Progressive Broadband Agenda,” argues that progressives have a choice to make regarding broadband and Internet regulation. While the Clinton Administration’s Internet policy was focused on competition and innovation, in recent years there’s been a concerted effort by some who would lay claim to the progressive mantle to discard this essentially deregulatory approach in favor of a framework that pours Internet policy into the bottle made to contain the monopoly telephone network in the 1930s.
Arguments for “net neutrality” and “common carriage,” limits on spectrum transactions and mandated spectrum sharing are actually attempts to treat the broadband network infrastructure as if it were the same sort of seamless monopoly that telephone service was in the 30s. They can only succeed to the extent that their advocates can convince regulators that the old “stovepipe” systems that applied a unique set of rules on each communications technology from application to network still make sense. This … Read the rest
The Senate Commerce Committee’s Thursday hearing is titled “State of Wireline Communications” but it’s going to have a heavy rural bias. This is par for the course in the Senate, where rural Americans have more power than the urban majority. When your district is defined by geography rather than population, that’s going to happen. The witness list includes the subsidized rural carriers, CLECs, Public Knowledge CEO Gigi Sohn, and Larry Downes.
The actual focus of the hearing is going to be the phase out of Plain Old Telephone Service (POTS.) Senators are worried about this, as rural folks aren’t at all comfortable with the broadband Internet and the rumors they’ve heard about POTS going away. To be fair, if you want the fastest and cheapest broadband service, you don’t move to cattle country, you find yourself a high-rise in a major Internet city such as San Francisco where you can get fiber service for a rock bottom price.
Rural telecom carriers live on subsidies from the Universal Service Fund’s “High Cost Fund” and termination (interconnection) fees from urban carriers. As POTS is allowed to go extinct in the cities, rural … Read the rest
How about a little cheap melodrama?
An AP story (Homeowners in Sandy’s path angered by phone companies’ refusal to restore copper landlines) is making the rounds today about an 85 year old heart patient – the victim – who can no longer connect his pacemaker to his doctor from his home in Mantoloking, N. J. because Verizon – the villain – has replaced his wired telephone service with a wireless equivalent:
Robert Post misses his phone line.
Post, 85, has a pacemaker that needs to be checked once a month by phone. But the copper wiring that once connected his home to the rest of the world is gone, and the phone company refuses to restore it.
In October 2012, Superstorm Sandy pushed the sea over Post’s neighborhood in Mantoloking, N.J., leaving hundreds of homes wrecked, and one floating in the bay. The homes on this sandy spit of land along the Jersey Shore are being rebuilt, but Verizon doesn’t want to replace washed-away lines and waterlogged underground cables. Phone lines are outdated, the company says.
Mantoloking is one of the first places in the country where the