Telecom analysis including broadband
Last month something evil happened in Las Vegas: Netflix was invited into the inner cloister of the Last Mile Cabal, where a blood sacrifice sealed a dark pact with Comcast. What was in that pact, what were the terms on which the sacrifice was made? I’ll tell you: a commercial transaction that will reduce congestion at points of interconnection, improving Netflix performance across Comcast’s network, bringing joy and good cheer to video streamers across the country. Wait, what – you may ask – what’s evil about that? I’m not quite sure either, although reading the coverage of this deal, you’d think it was.
To be clear, this is an interconnection issue, not a net neutrality issue. Let me repeat that: this is not a net neutrality issue. It is unfortunate timing for the parties – with the recent opinion from the D.C. Circuit vacating the Commission’s non-discrimination and no-blocking rules some industry watchers are on hair-trigger to find a would-be violation. Accusations that Comcast was “throttling” Netflix, or that Netflix is “paying off” Comcast for a “premium” connection are simply wrong. Netflix is not getting priority treatment of its traffic, … Read the rest
As an American academic in Europe, I find the claims by some American media about an EU broadband utopia curious. Europeans roundly complain about the quality of their broadband, and, there is no European who would say that the US is falling behind Europe. In fact some of the biggest critics of the EU are the EU leaders themselves. Consider EU Commissioner for Digital Life Neelie Kroes:
The world envied Europe as we pioneered the global mobile industry in the early 1990s (GSM), but [because] our industry often has no home market to sell to (for example, 4G) consumers miss out on latest improvements or their devices lack the networks needed to be enjoyed fully. These problems hurt all sectors and rob Europe of jobs it badly needs. EU companies are not global internet players. . . . 4G/LTE reaches only 26% of the European population. In the US one company alone (Verizon) reaches 90%!
Kroes praises the success of the American broadband mode, noting its ability to drive private investment and innovation. She is increasingly joined by other European leaders who recognize that the European approach is not working. … Read the rest
Big news yesterday – Comcast is planning to buy Time Warner Cable in a stock deal worth $45.2 billion. This is no doubt a big transaction: Comcast and Time Warner are the two largest U.S. cable operators, and the deal will give the combined company roughly a third of the pay TV market. Such a largemerger deserves a careful look from the FCC and the DoJ, but knee-jerk reactions against any consolidation, all too common in the media, cloud the discussion. We should consider the benefits to consumers and the overall economy, as well as the potential drawbacks instead of assuming big cable companies are necessarily bad. With a little analysis, the deal appears a win for consumers and the economy overall.
The most important point, frequently overlooked or downplayed by opponents, is that Comcast and Time Warner have no overlapping service areas. The two simply do not compete. There will be no change at all to consumer facing competition in the pay TV or broadband market after the deal goes through. Furthermore, what we should really be concerned with is intermodal competition, not how a merged entity would stack … Read the rest
Today marks the 18th Anniversary of the signing of the 1996 Telecom Act. In these 18 years the communications market has changed dramatically – change that warrants an update to our laws. We are all familiar with the recent explosion of services riding over our networks, but a simple thought experiment illustrates just how dramatic the changes of the last twenty years have been. Imagine if Congress had enacted the Telecommunications Act of 1999 instead of the Telecommunications Act of 1996. Would encouraging facilities-based competition in an attempt to build a duplicative phone network have seemed wise when by then it was clear broadband networks were key? Would the rise of the Web and early IP voice communications have given us pause? The changes we have witnessed since the ’96 Act represent a break in our ability to easily understand and predict this complex sector. It is time to update the Act, but not in a way that assumes to know what direction or velocity our communications and media markets are heading or what would be best for them.
In 1996 voice, video, and data were totally separate services … Read the rest
Yesterday two Los Angeles broadcast TV stations announced a plan to enter a pilot program to demonstrate the feasibility of channel sharing. They plan to experiment with broadcasting the streams of both stations over the infrastructure and, more importantly, the spectrum of only one. This is exciting news – channel sharing potentially allows for significant amounts of spectrum to be unleashed for mobile broadband. Broadcasters also win though the deal. When two stations are able to squeeze into a single 6 megahertz channel, they maintain virtually all of their previous revenue streams (including retransmission fees) plus gain a cash infusion by putting their extra spectrum up for sale in the incentive auctions. In the end, channel sharing means more efficient use of valuable low-band frequencies, more spectrum available for mobile broadband, a higher chance of a successful incentive auction, all while those few who watch TV over the air remain able to do so. This is one of those rare win-win-win situations.
An unfortunate idea continues to circulate in the mainstream press, fueled by broadband populists: in this case, a piece recently published by The New York Times proclaims that the “U.S. Struggles to Keep Pace in Delivering Broadband Service.” Such headlines perpetuate an argument that, although appealing in its simplicity, is ill-founded and dangerous in its policy implications. The argument goes something like this: broadband is a utility, a utility that the U.S. is “falling dangerously behind” in providing; therefore governments should step in, either through regulation or public provision of infrastructure to ensure we have top-notch utility service. Forget the politics of such a position – the premise of the argument is simply not borne out by the facts. For starters, our past research has shown that by many measures the U.S. ranks competitively in international broadband speeds, prices, and deployment. But let’s look at the specifics laid out in the Times piece.
The author, Edward Wyatt, attempts to draw policy conclusions by comparing the broadband speeds of San Antonio and Riga, the capital of Latvia. As a threshold matter, it is not clear that we can conclusively … Read the rest
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