-By Scott Cleland
The latest data from the OECD and other sources indicate that the U.S. is no longer falling behind the rest of the world in broadband.
These latest data are relevant to assumptions underlying the FCC’s National Broadband Strategy due to Congress next February and also to broadband policymakers’ interest in more data-driven policymaking.
In particular, the OECD broadband rankings have been prominently cited by some as important evidence to justify a reversal of current facilities-based broadband competition policy, in favor of a more government-centered broadband policy.
The latest OECD broadband data were released yesterday and several statistics and rankings indicate that the dynamic/trend of the U.S. falling behind other countries in broadband has changed, that at a minimum the trend has stabilized, and most likely that the dynamic/trend has begun to reverse.
First, on a macro level, the most cited OECD statistic, broadband penetration, has stabilized — the U.S. in 2008 remained 15th in the OECD broadband penetration rankings, the same as in 2007.
Note that this is a clear inflection point in the statistical trendline.
Per the OECD, the U.S ranked 8th in 2002, 10th in 2003, 12th in 2004, 14th in 2006, 15th in 2007 and 15th again in 2008.
These data suggest something has changed, affecting the trend.
Second, the OECD highlighted in the second point of their press release that the U.S. had the seventh “strongest per-capita subscriber growth over the year behind the Slovak Republic, Greece, New Zealand, Norway, Germany and France.”
This greater than average growth penetration suggests a stabilization or reversal of the prior trend.
Third, the OECD highlighted in the fourth point of their press release that the U.S. was the #1 broadband market by size in the OECD with 80 million broadband subscribers, or ~30% of the OECD total.
Fourth, and maybe most importantly, the OECD’s broadband ranking of the U.S. — in the higher-bandwidth technologies that are more important to the future and innovation — is much higher than the overall 15th position ranking.
That is a perfectly understandable divergence because the U.S. facilities-based broadband competition policy has resulted in market forces naturally de-emphasizing one of the oldest and relatively slowest wireline broadband technologies, DSL, in favor of faster cable-coax and fiber technologies.
Where 60% of all OECD broadband subscriptions are copper-wire DSL, only 42% of U.S. broadband subscriptions are DSL.
When one breaks out the OECD data by lower-bandwidth potential technologies vs. higher-bandwidth potential technologies, the new story and new trend becomes more clear.
In 2008, the OECD ranking of the U.S. in broadband penetration was 21st for DSL, 8th for technologies other than DSL, cable or fiber, 8th for fiber, and 2nd for cable modems.
A reason for the high ranking of cable modem penetration is that the U.S. is the only nation in the OECD with cable broadband deployment to ~95% of potential households. This also means that the U.S. is the only country in the OECD with nationwide facilities-based competition for stationary broadband.
Fifth, the latest data from other sources confirm that the U.S. is reversing the broadband ranking trend decline.
On Fiber: Per IDATE, a European research firm in February 2009:
In fiber-to-the-home deployments, “Europe is still lagging the U.S. and Japan.”
Per IDATE’s data and its own data, Verizon may have deployed more fiber to the home than all of Europe by the end of 2008.
On Cable: The roll-out of DOCSIS 3.0 technology, which now enables 50-100+ Mbs of speed for a roughly $100 per home upgrade, is being rapidly deployed in the U.S.
Pike and Fischer estimates that “U.S. cable operators will have deployed DOCSIS 3.0 to 99% of homes passed by 2013.” … “Comcast, for example, plans to complete the deployment of DOCSIS 3.0 across its entire footprint by the end of 2010, estimated to be 50.3m homes.”
DSL Prime estimates that 60+% of U.S. homes will have DOCSIS deployed by 2010.
On Wireless Broadband:
The growth of broadband wireless smartphones almost doubled from 12% of handset sales at the end of 2007, to 23% of all U.S. handset sales at the end of 2008, led by AT&T’s iPhone, per NPD Group research.
According to ComScore, there were over 74m 3G wireless users in the U.S. in January 2009 — that total number is close to the 80m total number of stationary broadband subscribers per the OECD. Moreover, CTIA surveys indicate that ~80% of U.S. wireless consumers have web-capable phones.
This is important because the major U.S. wireless broadband carriers — Verizon, AT&T, Sprint and T-Mobile — are all in the process of upgrading their national networks with faster 4G/LTE speeds in the next few years.
And at the same time, Clearwire is building yet another nationwide wireless broadband network using WiMax technology in the next few years.
Recent data submitted to the FCC by the CTIA, showed that the U.S. wireless market is among the most competitive wireless market in the world, with some of the heaviest wireless use of anywhere in the world.
All these data suggest that the U.S. wireless broadband market is among the leaders in the OECD and is on path to rapidly increase wireless broadband speeds nationwide in the next few years.
In short, the latest data suggest that the previous trend — that the U.S. was falling behind the rest of the world in broadband — has changed.
The latest data also suggest that the U.S. is rapidly deploying a variety of super-fast wireline broadband technologies and faster wireless broadband technologies more quickly than most other OECD countries.
Addendum: Additional studies also indicate the U.S. is not falling behind the rest of the world in competitiveness:
No less than seven independent studies conclude that America is at, or near the top, in worldwide competitiveness in the converging sector of Internet, broadband, communications and information technology.
- World Economic Forum: Global Information Technology Report – 2008-2009: Ranks the U.S. third in “Networked Readiness” — up one place in the world rankings from last year.
- ITU – 2009: The U.S. has the most affordable broadband in world.
- University of Calgary – 2009: The U.S. ranks #1 in the world in their “Connectivity Scorecard.”
- IMD Swiss Business School – 2008: The U.S. ranked #1 in the world for the 14th year in a row in the 2008 World Competitiveness Yearbook.
- World Economic Forum – 2008: The U.S. ranked #1 in competitiveness in its 2008-2009 Competitiveness Report.
- Economist Intelligence Unit: The U.S. was tied for second in the world in “e-readiness” per their latest rankings.
- Nielsen – 2008: The U.S. ranked #1 of 16 countries surveyed in mobile Internet penetration.
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Scott Cleland is one of nation’s foremost techcom analysts and experts at the nexus of: capital markets, public policy and techcom industry change. He is widely-respected in industry, government, media and capital markets as a forward thinker, free market proponent, and leading authority on the future of communications. Precursor LLC is an industry research and consulting firm, specializing in the techcom sector, whose mission is to help companies anticipate change for competitive advantage. Cleland is also Chairman of NetCompetition.org, a wholly-owned subsidiary of Precursor LLC and an e-forum on Net Neutrality funded by a wide range of broadband telecom, cable and wireless companies. He previously founded The Precursor Group Inc., which Institutional Investor magazine ranked as the #1 “Best Independent” research firm in communications for two years in a row. His latest op eds can be seen at www.precursorblog.com.
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