The sorry state of broadband in the United States

May 11, 2009 by

By Wendy Davis

In 2000, the U.S. ranked 5th worldwide in broadband penetration, with 2.5 broadband lines per 100 residents. At the time, the No. 1 country was South Korea, with 8.4% penetration.

By 2007, however, the U.S. had slipped to 22nd place, with 21.5 broadband lines per 100 residents, lagging behind countries such as Bermuda (36.7), South Korea (30.6) and Japan (22.5).

Those stats were compiled by Free Press for its new 123-page report examining the current state of broadband in the U.S.

Not only do penetration rates lag, but service in America is also more expensive and slower than in many other countries. The average U.S. price is $53 per month — more expensive than in 21 other countries — while average advertised download speed is 8.9 Mbps, slower than 13 others. By comparison, Finland offers the cheapest service at $31 a month (with advertised download speeds of 13 Mbps), while the fastest country is Japan, with an average advertised downstream of 93.7 Mbps (for $34 a month).

What accounts for this situation? Free Press says “massive policy failures” of the last eight years are to blame.

Among others, the broadband advocacy group points to a decision by regulators (later upheld by the U.S. Supreme Court) to classify broadband as an “information service” rather than a communications service. That move meant that ISPs no longer had to offer wholesale broadband to competitors — which dealt “an immediate blow to third-party ISPs like Earthlink that relied on reasonable wholesale rates” and “ensured that U.S. consumers would be at the mercy of a duopoly marketplace,” the report states.

In fact, it’s all too plain that U.S. residents don’t have much choice in ISPs. Many people have only two realistic options — their telephone or cable company.

Given the lack of competition, it’s probably not surprising that ISPs have made some very consumer-unfriendly moves, triggering significant backlash. In what’s probably the most famous example, Comcast decided to slow down peer-to-peer traffic without first notifying consumers — a decision that resulted in sanctions by the Federal Communications Commission.

In another high-profile example, Time Warner recently announced a plan to test pay-per-gigabyte billing in four new cities. The company backed off, but only after politicians and residents protested.

While consumers, regulators and politicians have successfully fought some ISP initiatives that would have resulted in higher prices or diminished service, it’s clear that the best long-term solution will depend on figuring out how to increase competition among providers.

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