Over the years, US broadband has received a bad rap by comparing it to the European market. According to a report released Monday by the DC tech think tank, that rap — and the comparison on which it is founded, is questionable.
Comparisons between US and European broadband prices abound, but their respective markets are built on such completely different cost structures, so that any comparison between the two is meaningless without accounting for the difference in expenditure required, The Information Technology and Innovation Foundation has mentioned in the report. ITIF).
Costs for US broadband providers are 53% higher than their European counterparts, ITIF reported, driven by higher labor costs, taxes, advertising and payments for spectrum licenses.
It added that US providers also spend more on capital investment, on an overall and per household basis, than European providers, which benefit from lower taxes and government subsidies.
Another criticism of US providers — that they artificially inflate prices to pad profits — doesn’t hold water, either, the report said, because the average profit among European providers is higher than among their state counterparts. Is.
“The US telecommunications market is very different from Europe,” said technology analyst Jeff Kagan. “So, comparing them makes little sense. It’s like trying to compare a pizza to fried chicken.”
“Government is more closely involved in the European model,” he told TechNewsWorld. “When government is part of the mix, quality is low.”
eliminate unproductive comparisons
The report noted that broadband populists in the United States have argued that the US broadband system, through which most people obtain broadband from large, private telecommunications or cable companies, is lacking.
For most, however, it continued, their animosity ranges from practical to ideological. They see broadband as something that naturally requires a strong government role, not the private sector.
To further his case, the report noted, he argues that the US system undermines other countries and regions, especially in Europe, where the EU has imposed strict network unbundling requirements on functionaries.
But as this report shows, it says, comparing EU and US broadband is fraught with difficulties, and most importantly, any such analysis is inherently “apples to oranges”. Includes comparison.
advertisement
The report declares that it is time to end unproductive EU-US broadband comparisons and put to rest the misleading notion that the two structures are comparable to rest.
“Consumers are not comparing themselves to Europe,” said Bruce Leichtman, president of Leichtman Research Group in Durham, NH, which specializes in research and analysis on the adoption of products and services in the broadband, media and entertainment industries.
“They’re comparing themselves to what they get, and they’re generally satisfied with that,” he told TechNewsWorld.
need for more literacy
Should the US reform its broadband policy to more closely align with the EU model?
Jessica Dine, a research assistant for broadband policy at ITIF and a co-author of the report, doesn’t think so. “Right now, much of our focus should be on ensuring that every state participates thoughtfully and wholeheartedly in existing programs designed to encourage deployment and adoption,” she told TechNewsWorld.
“The money is already there,” she continued. “The real question is whether it will be used effectively.”
Dine explained that while some rural areas would not be served without subsidies, the $65 billion allocated to broadband through the Infrastructure Investment and Jobs Act, enacted by Congress, should be enough to actually close the digital divide.
“For some time now, some of the biggest gaps in US broadband access have been in favor of adoption, not deployment,” she said. “There is therefore good reason to pull back on financing high-cost locations and instead focus on programs like Lifeline to help individuals in need wherever they live.”
“We must re-imagine the program to encourage digital literacy while simultaneously reducing the cost of Internet access at the individual level,” he said.
Leichtman said that in surveys conducted by his firm, only 1% of respondents said they wanted broadband but could not get it.
advertisement
“The number one reason for not having broadband is not availability, not cost, it is lack of need,” he said. “And the reason for the lack of need is computer literacy. It’s old people and poor people without computers.”
“If we make this all about availability, we’re really missing the crux of the issue, which is computer literacy,” he said.
unreasonable fear of falling
The report also noted that critics of US broadband argue that a failure to emulate Europe’s approach to technology would result in the country falling behind the pack of developed nations in terms of high-speed Internet access, capacity and prices. . The food controversy.
According to a report by the European Telecommunications Network Operators Association, they said, the average fixed downlink speed of US broadband was 199 MB/s, which is significantly higher than the world average of 108 MB/s.
In the mobile sector, it continued, the average US downlink speed of 96 MB/s beat both the European and world averages. Furthermore, US 5G coverage at 93.1% of the population is higher than both Europe and Japan, and barely below South Korea.
He said that in 2020 US high-speed, fixed broadband coverage was 98% of homes compared to 87% in Europe.
“While it is more difficult to directly compare prices, US prices are falling,” she said, citing the “2022 Broadband Pricing Index” by USTelcom. It shows that when adjusted for inflation, the price of the most popular speed service from US providers declined by 14.7% from 2021 to 2022, and the price of the fastest speed dropped by 11.6%.
Incorrect comparison persists
As flawed as comparisons between the European and US broadband markets may be, they continue to swell. “There seems to be an enduring belief that to properly assess something you need to compare it to the competition,” Dine said. “In this case, it is appealing to look between US and European broadband offerings to argue that one is doing better than the other.”
“This is not necessarily a bad approach when it comes to areas that are actually comparable between countries, and it can be a helpful way of pointing out flaws or approaches that should be followed,” she observed. .
“As this report points out, there are many inherent differences in the regulatory, economic and geographic foundations of each country’s broadband market,” she continued. “Taken together, these constitute such a large difference in the cost inherent in deploying broadband that it is not necessary to compare prices without taking into account the costs.”
