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Tuesday, November 14, 2006

What disconnect?
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In a recent Washington Post op-ed , FCC commissioner Michael Copps argued that broadband service in the United States is abysmal when compared to some other countries. Therefore, he concludes, we need some sort of national broadband policy to rectify this problem.

Recently I argued that it is not obvious that there is a U.S. broadband problem or market failure.

Simple comparisons to other countries are problematic. First, many factors contribute to broadband penetration and available speeds, including, for example, population density. It is less costly to provide high-speed Internet connections when people live closer together and lines or wireless signals do not need to travel so far.

Second, many Americans are content with dialup connections. That sounds like a preposterous claim to those of us who increasingly rely on broadband, but a recent survey by the Pew Internet and American Life Project revealed that nearly 60 percent of Americans with only dialup access to the Internet had no desire for broadband access.

Finally, the cross-country data themselves are problematic. As Commissioner Copps notes, broadband data in the US have flaws, making it difficult to know the true state of broadband here. But even with its problems, the FCC is far more transparent about how it collects and analyzes data than are other organizations, such as the International Telecommunications Union (ITU). The ITU and OECD provide almost no information on their data sources or methodologies. In other words, it is almost impossible to determine if cross-country data compare apples to apples.

(Note that I do not want to excuse our data collection failings. Good data, collected and analyzed in a transparent fashion and made publicly available is crucial to informing the debate. Fortunately, the FCC recognizes the data problems and at least two other organizations -- the Pew Internet and America Life Project and the Center for Public Integrity are committed to making good data publicly available.)

Meanwhile, the available evidence suggests that broadband investment by providers and adoption by consumers is increasing dramatically as available speeds are going up and prices are coming down.

Commissioner Copps is correct, however, both that competition is the key to further investment and innovation and that ubiquitous broadband could bring large economic benefits. So how do we get there? Policies targeted specifically at increasing broadband penetration have generally not been especially successful. Instead, we should focus on eliminating barriers to entry and not discouraging investment.

One of the most promising ways to increase competition is to continue to move spectrum into the market, allow it to be traded easily, and make its use flexible. If there is truly demand for better broadband access, providers will use their spectrum to provide it wirelessly. The recent AWS auction successfully moved a big chunk of additional spectrum into the market, although some were disappointed that so much of it went to incumbents rather than new entrants. The upcoming auction of spectrum in the upper 700 MHz band will provide yet more opportunities for firms to provide wireless broadband access.

Commissioner Copps is correct to focus on competition, but we should not get distracted by calls for a poorly-defined, generic broadband policy.

posted by Scott Wallsten @ 3:34 PM | Broadband

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