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
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
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
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
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
Akamai published the Q4 2012 edition of their State of the Internet report yesterday, and it’s pretty much as expected: the trends that have been evident since 2010 are continuing. Globally, Internet connections are growing incrementally faster, and we see this trend in the U. S., where connection speeds are increasing somewhat faster than they are in other high-speed nations.
- The U. S. has picked up one place in the “Average Peak Connection Speed” that’s the best measurement of network capacity, rising from 14th to 13th as the measured peak connection speed increased from 29.6 Mbps to 31.5 Mbps.
- In terms of the “Average Connection Speed,” widely cited by analysts who don’t know what it means, the U. S. remains in 8th place world-wide. but we’re no longer tied for it as we were in the previous quarter; Sweden is right behind us on this one.
- In terms of “High Speed Broadband Adoption”, the proportion of IP addresses with an Average Connection Speed greater than 10 Mbps, we remain in 7th place, but now we’re tied with Sweden.
Another notable trend is the continued increase in mobile traffic, about which
Subtitle: A Tale of Two Pictures.
There’s an ongoing debate about the number of Americans with meaningful choice among broadband providers. The answer depends on how you define the terms; it can range from less than half all the way up to 98 percent, although the low numbers demand some creative exclusions. If we limit broadband to wired systems provided by major providers, the answer the National Broadband Map provides is 85 percent, but this depends on a fairly loose definition of “broadband” in some cases. If you’re willing to include fixed wireless, you would have to count WISP connections and Clearwire, but there aren’t any good data on them. If you include mobile broadband, the number goes up to 98 percent, but you’re including service plans that currently have usage caps of 2 – 4 GB/month, which makes them challenging for video streaming but acceptable for web browsing and email. Throw increasingly capable satellite in the mix (Wild Blue now offers 12 Mbps over satellite for a low intro price of $50, but there’s a data cap) and we’re at 99 percent.
The FCC’s Internet Access Services: Status
Here we go again. Some members of Congress are irate over the so-called “Obamaphone” program, initiated under President Bush, that provides poor people with subsidized mobile phones. They’re making it out to be a Welfare Cadillac plan that provides the undeserving with fancy phones at taxpayer expense. Karen Tumulty explains the high points of the issue in today’s Washington Post:
In the 31/2 years after false rumors started that the Obama administration was giving free cellphones to poor people — and six months after a racially charged video about it went viral — a once-obscure phone service subsidy is getting renewed scrutiny on Capitol Hill.
There are growing calls in Congress to end or drastically cut back Lifeline; later this month, the House Energy and Commerce Committee will hold a hearing that could help determine its fate.
“The program has nearly tripled in size from $800 million in 2009 to $2.2 billion per year in 2012,” the senior Republicans on the Energy and Commerce Committee wrote in a March 26 letter to the Democratic minority. “American taxpayers — and we as their elected representatives — need
At the Free Press annual conference in Denver today, the shameless Susan Crawford delivered one the most amazing speeches in the history of American tech policy, comparing herself to Martin Luther King, Jr. and demanding that President Obama appoint her to head the FCC. Either one of these claims would be remarkable in its own right, but the combination of the two was simply breathtaking in its arrogance and narcissism. It hardly needs explaining that it’s an insult to the memory of Doctor King to compare him to a self-interested job seeker whose grasp of the subject matter required of the job she seeks ranges somewhere from slim to none, and whose respect for the facts of history is virtually non-existent.
Broadband, the Internet, telecom, media censorship and the other issues within the jurisdiction of the FCC are certainly important issues, and if they weren’t, organizations like ITIF and a host of others would not devote the time and trouble it takes to conduct painstaking research into the facts that define them. But to compare these issues to the civil rights movement is to trivialize the suffering brought on people
Ofcom, the UK’s FCC, has published a broadband scorecard comparing Britain’s broadband networks to those of the other large European economies: France, Germany, Spain, and Italy. The report compares broadband deployment, subscription, use, and price in the five European nations that are most comparable and offers limited but interesting insight on performance.
The Brits are taking some stick from European critics who wanted Ofcom to produce a more comprehensive ranking against the entire EU-27 and especially speed merchants Latvia, Netherlands, Bulgaria, Romania, and Sweden. In Ofcom’s defense, the report does include an appendix that provides data on the rest of the EU.
The report is especially interesting as it comes on the heels of our report, The Whole Picture: Where America’s Broadband Networks Really Stand, on the ranking of U. S. broadband versus other nations, especially those in the EU and the OECD.
The UK is the only nation other than the U. S. to publish SamKnows data on broadband speed, so the limited data it has on performance is directly relevant for us. As readers of our report will know, there are many methods of measuring broadband speed,