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Study: U.S. needs stronger broadband policy

Mix of factors cited for why U.S. lags behind other countries in high-speed Internet service

By Grant Gross
May 1, 2008 12:00 PM ET

IDG News Service - WASHINGTON -- A complicated mix of factors, including population density and the cost of broadband, contribute to U.S. residents lagging behind several other nations in buying high-speed Internet service, but the government can take some steps to improve the numbers, according to a report released today.

Government policy plays a less important role in broadband adoption than environmental factors such as population density and price, but the U.S. government should take some new steps to help the country catch up to many other industrialized nations, said the report by the Information Technology and Innovation Foundation (ITIF), a Washington think tank.

The federal government could adopt more favorable tax policies, allowing broadband network operators to depreciate their investments in next-generation networks faster, the report said. The report also recommended that the government make more wireless spectrum available, expand and reform programs aimed at delivering telecom services to rural areas, and fund state programs already working to expand broadband deployment.

The U.S. government also needs to focus on demand for broadband, said Robert Atkinson, study co-author and ITIF president. Congress should fund a grant program focused on digital literacy and access to computers, he said.

"The overall message is, leadership matters," Atkinson said. "At the end of the day, top-level leadership from the highest ranks of government does seem to make a difference."

The Organisation for Economic Co-operation and Development in June 2007 ranked the U.S. 15th among its 30 member nations in broadband adoption per capita. Although there's some debate over whether those numbers tell the whole story, U.S. lawmakers and many technology groups have raised concerns about those rankings, saying the U.S. is losing out on many economic benefits of broadband.

The ITIF report compared the U.S. broadband environment to eight other countries, most with higher speeds and lower prices. In several cases, the countries launched extensive broadband programs in the last decade, with government working closely with broadband providers to expand coverage and roll out next-generation broadband.

The results: In Japan, the average download speed is 63.6Mbit/sec., and the lowest advertised price is 13 cents per megabit, according to the report. Sweden, a largely rural country, has average download speeds of 16.8Mbit/sec. and the lowest price is 35 cents per megabit.

In the U.S., the average download speed, based on actual broadband services used, is 4.9Mbit/sec., the report found. The lowest advertised price is $2.83 per megabit.

In some cases, those programs won't work in the U.S., Atkinson said. South Korea mandated that telecom providers invest in broadband, and the Japanese government continues to own a piece of telecom provider NTT, he noted.

"It's clear that one size doesn't fit all," Atkinson said. "The reality is there's a much tighter linkage between government and business there."

But Magnus Harviden, counselor for science and technology in Sweden's U.S. Embassy, and Thomas Bleha, an author who's written about broadband deployment in Japan, noted that both countries mandated that incumbent broadband providers share their networks with competitors, a practice that the U.S. Federal Communications Commission has moved away from in the past three years. Both countries also invested significant money into programs that subsidized broadband providers expanding into rural areas, they said.

Japan spurred broadband competition by setting very low fees for competitors to piggyback onto incumbent DSL networks, Bleha said. That competition forced incumbent NTT to drop prices, he said.

Some lawmakers, FCC members and incumbent U.S. providers Verizon Communications Inc. and AT&T Inc. have repeatedly argued that the network-sharing agreements in place for several years discouraged incumbents from expanding and improving their networks. The incumbent carriers had little incentive to roll out fiber-based broadband if they had to split the network with several competitors, Verizon and AT&T have said.

But the line-sharing requirement on DSL encouraged the rollout of fiber in Japan, Bleha said. Although the Japanese government set rates of about $2 a month to rent a DSL line, it set a $50-a-month rate for renting a fiber line, making it tough for competitors to offer fiber at a competitive price, he said. That encouraged NTT to roll out fiber.

Top Japanese officials have also set aggressive goals to roll out fiber across the country as well as launch high-speed wireless networks, he said. As a result, "Japan has the cheapest and fastest broadband in the world," he said.

Still, Japan's broadband adoption rate is similar to the one in the U.S., Atkinson said. Other countries have focused more on creating consumer demand for broadband, he added.

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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