Thursday, August 14, 2014

The Real Headline: Europe Lags US in Broadband

All too often in the past, those advocating for public utility-type regulation in the United States have suggested that the U.S. lags Europe in various measures of broadband progress. The suggestion is that the U.S. ought to adopt the common carrier-like model, with its mandatory access, non-discrimination, and rate regulation requirements, that has been favored in many European countries.

Indeed, now-former FCC commissioner Michael Copps has always been one of the most vocal leaders of what, back in 2007, I called the "Talking Broadband Down Crowd".  I explained then, and many times since, why the claims of Mr. Copps and his allies were not factually grounded -- but, in the service of advocating broadband regulation, the "talking broadband down crowd" persisted in downplaying U.S. broadband progress. Here is an March 2013 FSF blog entitled, "Europe Lags Behind U.S. in Broadband Speeds and Connectivity," with facts and figures refuting the "U.S. Lags Europe" storyline.

In the face of accumulating new data, I have the sense that former Commissioner Copps already may have begun to abandon the "talking broadband down" argument in favor of other (equally unpersuasive) arguments.

In any event, he should. Because now comes a newly-published study by Roslyn Layton, PhD Fellow for the Center for Communication, Media and Information Studies at Aalborg University, and Michael Horney, a Research Associate at the Free State Foundation. Their study, entitled, "Innovation, Investment, and Competition in Broadband and Impact on America's Digital Economy," is a must-read for anyone interested in broadband policy. This most certainly includes, of course, those interested in the FCC's net neutrality proceeding.

I commend the entire Mercatus study for your close attention. But in the meantime, here is a brief summary of their conclusions:

"How true are fears that the United States is falling behind the rest of the world when it comes to broadband? Are Americans paying more for lower-quality broadband than Europeans and South Koreans, and are US companies falling behind their global counterparts?
In a new study for the Mercatus Center at George Mason University, Roslyn Layton and Michael Horney survey broadband in America and compare broadband costs around the world. They find that the United States is a global leader in broadband, as measured by the level of broadband-enabled economic activity, the number of Internet-based companies, the level of digital exports, and the level of Internet-enabled employment.
.  . .
America’s broadband networks have allowed the United States to become a leading digital econ­omy. Building on a sound broadband foundation and leveraging the advantages of America’s inno­vation ecosystem have allowed American firms to export their digital goods and services to other countries, making the digital sector America’s third-largest category of exports after industrial supplies and capital goods. Policymakers should take the following steps to ensure that the United States continues to be the leader in global competitiveness:
  • In order to maximize investment, avoid utility-style regulation. Instead, focus on market-based, technology-neutral approaches that encourage dynamic competition with different networks and technologies.
  • Avoid subsidies for any particular technology: a variety of broadband technologies keep the market competitive. Government involvement in the broadband market may cause private firms to exit, stifling growth in the industry.
  • Permit competition-enhancing consolidation of broadband companies because mergers lower overhead costs and make operations more efficient.
  • Remove barriers to mobile infrastructure at the local level. Municipalities often hinder the deployment of infrastructure, which limits broadband competitors, particularly in rural areas.
  • Focus on increasing Internet adoption rather than the deployment of network. More than 80 percent of Americans use the Internet, and those who do not cite lack of usability and relevance as their primary reasons rather than cost or lack of access."
Presently, there is far too much loose talk about imposing public utility regulation on U.S. broadband providers under Title II of the Communications Act -- the same form of regulation imposed on the railroads in the late nineteenth century and Ma Bell throughout much of the twentieth century. I understand that Mr. Copps and his acolytes are serious about wanting the FCC to adopt this draconian approach. But my sense, perhaps wrongly, is that many of those suggesting that the FCC should adopt public utility regulation of broadband really don't believe the FCC would take such a fateful step or they don't really appreciate the consequences.

In either event, those urging such a course should read and carefully consider the new study by Aalborg University's Roslyn Layton and the Free State Foundation's Michael Horney.