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Bad comparisons distort the state of broadband in the United States

Bad comparisons distort the state of broadband in the United States

Admin | Post Wednesday, 13 July 2022 - 08:59 AM | 77

For years, American broadband got a bad rap when compared to the European market. That rap ? and the comparison it?s based on ? is questionable, according to a report released Monday by a DC tech think tank.

Comparisons between broadband prices in the United States and Europe abound, but their respective markets are based on such different cost structures that any comparison between the two is meaningless without taking into account the differences in the necessary expenses, notes the report of the Information Technology & Innovation Foundation (IFI).

Costs for U.S. broadband providers are 53% higher than their European counterparts, ITIF reported, due to higher labor costs, taxes, advertising and payments for spectrum licenses.

He added that US suppliers also spend more on capital investments, spending more both on an aggregate and per household basis than European suppliers, who benefit from lower taxes and government subsidies.

Another criticism of US suppliers ? that they artificially inflate prices to boost their profits ? also does not hold water, according to the report, since the average profits of European suppliers are higher than those of their American counterparts.

?The US telecommunications market is very different from Europe,? observed technology analyst Jeff Kagan. ?So comparing them doesn?t make sense. It?s like trying to compare a pizza to a fried chicken.

?The European model involves the government more,? he told TechNewsWorld. ?When government is part of the mix, the quality is lower.?

Put an end to unproductive comparisons

The report explains that broadband populists in the United States have argued that the American broadband system, through which most people receive broadband from large private telecommunications or cable companies, is flawed.

For the most part, however, he continued, their animosity goes beyond the practical to the ideological. They see broadband as something that inherently requires a strong role from government, not the private sector.

To further their cause, the report notes, they argue that the US system underperforms other countries and regions, particularly in Europe, where the EU has imposed strict network unbundling requirements on incumbents. .

But as this report shows, he added, comparing EU and US broadband is fraught with pitfalls, and most importantly, any such analysis inherently involves comparing ? apples with oranges?.

It?s time to put an end to the unproductive comparisons of broadband between the EU and the US and the false belief that the two structures are comparable to the rest, says the report.

?Consumers don?t compare to Europe,? said Bruce Leichtman, president of the Leichtman Research Group in Durham, NH, which specializes in research and analysis of the adoption of products and services in high-end industries. flow, media and entertainment.

?They?re comparing themselves to what they?re getting, and they?re generally happy with it,? he told TechNewsWorld.

More literacy needed

Should the US revise its broadband policy to more closely align with the EU model?

Jessica Dine, research assistant for broadband policy at ITIF and co-author of the report, thinks not. ?Right now, our main focus should be on ensuring that every state participates thoughtfully and wholeheartedly in existing programs designed to encourage deployment and adoption,? she told TechNewsWorld.

?The money is already there,? she continued. ?The real question is whether it will be used effectively.?

Dine explained that while some rural areas are unlikely to be served without subsidies, the $65 billion allocated for broadband through the Infrastructure Investment and Jobs Act enacted by Congress should really be enough to finally bridging the digital divide.

?For some time now, some of the biggest gaps in American broadband access have been on the adoption side, not the deployment side,? she said. ?So there?s good reason to forego funding for high-cost locations and instead focus on programs like Lifeline to help those in need, no matter where they live.?

?We should also redesign the program to go beyond reducing internet access costs at the individual level to also encourage digital literacy,? she noted.

Leichtman added that in surveys conducted by his company, only 1% of respondents said they wanted broadband but couldn?t get it.

?The number one reason for not having broadband is not availability, not cost, it?s lack of need,? he claimed. ?And the reason for the lack of need is computer literacy. It?s the elderly and the poor who don?t have computers.

?If we focus on availability, we?re really missing the root of the problem, which is IT culture,? he said.

unwarranted fear of falling

The report also notes that critics of US broadband say failure to emulate the European approach to technology will cause the country to fall behind developed countries in high-speed Internet access, capacity and of price. Dine disputes this.

According to a report by the European Telecommunications Network Operators Association, she noted, US broadband had an average fixed downlink speed of 199 Mbps, significantly higher than the global average of 108 Mbps. s.

In the mobile realm, she continued, the US average downlink speed of 96 Mbps exceeds both European and global averages. Moreover, the United States? 5G coverage at 93.1% of its population is higher than that of Europe and Japan, and only slightly lower than South Korea.

She added that fixed broadband coverage in the United States in 2020 was 98% of households, compared to 87% in Europe.

?As prices are harder to compare directly, US prices are falling,? she said, citing USTelecom?s ?2022 Broadband Pricing Index.? It shows that the most popular speed service tier from US providers fell 14.7% from 2021 to 2022, after adjusting for inflation, and the price of the fastest speed fell 11.6 %.

The mismatch persists

As imperfect as comparisons between the European and US broadband markets may be, they persist. ?There seems to be a lingering belief that to rate something accurately, you have to compare it to the competition,? Dine said. ?In this case, it is interesting to compare US and European broadband offers to say that one is doing better than the other.?

?It?s not necessarily a bad approach when it comes to areas that are actually comparable across countries, and it can be a useful way to identify flaws or approaches to take,? she said. observed.

?As this report highlights, there are many underlying differences in the regulatory, economic and geographic underpinnings of each country?s broadband market,? she continued. ?Taken together, these are such significant differences in the inherent cost of deploying broadband that it is not necessarily useful to compare prices without considering costs.