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Broadband Policy Contest: US vs. EU

We had an interesting discussion about broadband policy today, International Broadband Quality: How’s that Policy Working?

For several years, policy wonks have debated the merits and demerits of two competing broadband policies, the “facilities-based competition” policy we have the U. S. and the “wholesale unbundling” or “open access” policy the Europeans favor. For a long time, it was thought that unbundling would yield lower prices at the expense of ongoing investment while robust facilities-based competition would yield better quality at higher prices.

Things are roughly going that way, but there’s an additional issue in terms of value for money. The average cell phone/broadband bill is lower in theĀ  EU, but the quality is so much lower that the value per dollar tilts in favor of the U. S. even though the bill is a little higher. Americans consume four times as many cellular minutes and twice as much data usage over mobile networks than Europeans. We also have faster speeds.

On the wireline side, our speeds are higher than those all all but three EU nations: Latvia, Sweden, and the Czech Republic. Prices for middle tier broadband packages are lower in Europe, but the high-speed plans we have in the US on cable and FTTH networks aren’t available to most Europeans at any price.

So the Euros went for low prices and a semblance of competition over ADSL lines, while we went for ongoing network improvement.

It wasn’t obvious until recently, but the U. S. has won. Half of Europe still has no cable, and the only prospect for fiber in most EU nations is a massive subsidy program that most nations can’t afford. Europe can’t even upgrade their ADSL networks the way AT&T and Century Link are upgrading theirs to VDSL in the U. S., since shortening the copper loop when a dozen small ISPs are connected means a coordinated move.

That’s quite some dead end Europe has painted itself into.

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