U.S. Should Continue Leading in Promoting Global Broadband Access

Cisco recently released its Visual Networking Index: Forecast and Methodology, 2016-2021, not to be confused with Cisco’s mobile forecast, which I discussed in a February 2017 blog. This valuable index presents global and regional trends regarding Internet access, usage, and network speeds. The most interesting finding might be that 58% of the world’s population will be using the Internet by 2021.

As a global leader in broadband investment, innovation, access, and adoption, the United States should adopt policies that will promote growth in broadband deployment, access, and devices. Not only will this create jobs and economic activity within the United States, but it could encourage similar policies in other countries.

Another interesting finding in the new report is the proliferation of smartphone use. Consumers are beginning to use smartphones as their primary device. The report finds that global smartphone traffic will exceed personal computer (PC) traffic by 2021. In 2016, PCs accounted for 46% of total Internet traffic, but by 2021 PCs will account for only 25% of the total traffic. Smartphones will account for 33% of total Internet traffic in 2021, up from 13% in 2016.

Here are some more of the key findings regarding global Internet access, usage, and network speeds:

• By 2021, 58% of the population will be using the Internet, up from 44% in 2016.

• By 2021, 80% of all Internet traffic will be video, up from 67% in 2016.

• By 2021, there will be 3.5 networked devices and connections per person, up from 2.3 in 2016.

• By 2021, there will be 61 GB of Internet traffic per month, per user, up from 24 GB in 2016.

• By 2021, the average broadband speed will be 53 Mbps, up from 27.5 Mbps in 2016.

• By 2021, the average mobile speed will be 20 Mbps, up from 6.8 Mbps in 2016.

Here are some of the same key findings with respect to North America:

• By 2021, 89% of the population will be using the Internet, up from 88% in 2016.

• By 2021, 78% of all Internet traffic will be video, up from 74% in 2016.

• By 2021, there will be 12.9 networked devices and connections per person, up from 7.7 in 2016.

• By 2021, there will be 181 GB of Internet traffic per month, per user, up from 68 GB in 2016.

• By 2021, the average broadband speed will be 74.2 Mbps, up from 32.9 Mbps in 2016.

• By 2021, the average mobile speed will be 25 Mbps, up from 13.7 Mbps in 2016.

As you can see, North America is well ahead of the rest of the world in terms of Internet usage and network speeds, with the United States the leader of North America. Until February 2015, U.S. consumers benefited from a relatively light-touch regulatory regime that did not discourage investment and innovation. The regulatory uncertainty and burdensome costs imposed by the FCC’s 2015 Open Internet Order have slowed investment by about $5.6 billion. In order to continue a rapid increase in output of investment in broadband networks and devices, the FCC should reclassify broadband as a Title I “information service” and implement a light-touch regulatory framework that promotes competition and protects consumers from potential harms.

Moreover, as Free State Foundation Senior Fellow Ted Bolema and I suggested in a new Perspectives from FSF Scholars, there are steps that Congress, the FCC, and state and local governments should take to promote private broadband investment and increase access in underserved areas. So, although the United States, for now, is a world leader in broadband investment, innovation, access, and adoption, encouraging additional network investment and innovation within the U.S. could incentivize foreign governments to embrace similar policies.

By 2021, more than half of the world’s population will be using the Internet. If the U.S. adopts policies that promote broadband investment and access within the United States, the positive impact on job creation and economic activity may encourage foreign governments to adopt similar polices. In other words, the U.S. leadership through example could help increase global Internet access, pushing adoption well beyond 58% of the world’s population.

Again, Cisco’s index is valuable in providing policymakers with a forecast of the exponential Internet growth just over the horizon. 

Zero-Rating Could Kick-Start Internet Connections for Low-Income Persons

The Progressive Policy Institute released a March 2015 policy memo by Diana Carew entitled “Zero-Rating: Kick–Starting Internet Ecosystems in Developing Countries.” “Zero-rating” is when a consumer can access specific websites or applications for “free” (or without the data accessed counting towards the consumer’s data cap) because of an agreement between a content provider and mobile broadband provider. In her policy memo, Ms. Carew argues that zero-rating plans could play a huge role towards increasing connectivity in developing countries.

Ninety percent of the world’s unconnected individuals live in developing countries. Thus, there is little incentive for these individuals to spend the small amount of money that they have on an Internet connection if very few people around them are connected. Mobile data plans in the Philippines, for example, cost almost 10 percent of the per capita monthly national income, according to the ITU.

Less than 30 percent of Africa’s 1.1 billion people were connected to the Internet in 2014. Ms. Carew says that zero-rating plans could be the key towards transitioning a community from low-connectivity to high-connectivity:

The power of zero-rating to nourish an Internet ecosystem in poor and developing countries comes from its potential to increase connectivity by both people and businesses quickly and at low-cost. First, free access to popular sites like Google, Twitter, Wikipedia, and Facebook encourages more people to sign up for data plans, and enables greater data freedom to explore local content. Second, the increase in demand for local content spurs local businesses and entrepreneurs to create new online products and services—for example, information on Ebola outbreaks, typhoon warnings, or even wait times at local stores and government offices. Moreover, the higher share of population online justifies efforts of government agencies to go digital, which in turn encourages more business and individuals to join the internet ecosystem. Taken together, zero-rating can effectively jump start a virtuous feedback loop that moves the local economy into a high-connectivity equilibrium.

The economics is simple. If ISPs subsidize data for consumers in developing countries in order to increase the number of subscribers, this will increase the demand for more content. In other words, if an ISP provides “free” access to Google, Facebook, or Wikipedia, it may incentivize individuals to connect. Then, as individuals increasingly want to access more applications, they may be willing to switch to broader data plans which offer access to the entire Internet. This is not a new idea either. ISPs have often subsidized broadband plans in order to attract low-income consumers.

Granted, connecting the developing world will not be an overnight process. However, 45 percent of the world’s mobile providers already offer some form of zero-rating. If these providers (and additional providers) can find a way to market these plans to individuals in developing countries and/or develop more attractive plans, we may be on our way.

Although zero-rating plans have been criticized by Title II advocates, Ms. Carew argues that it is bad policy to simply prohibit them. In the United States, some consumers may not find zero-rating plans attractive, but many low-income consumers who only use mobile data to access a handful of applications could benefit from existing and/or emerging zero-rating plans.

Read more about zero-rating plans with relation to Net Neutrality in Randolph May’s Perspectives from FSF Scholars entitled “Net Neutrality v. Consumers.” Also, check out our blogs. (See here, here and here.)