Why US is not a broadband laggard

29 Comments

Like many urban myths, we have come to believe that US is a broadband laggard. Often pundits hold up the shining examples of South Korea and Japan as countries that are miles ahead of the US. Media is quick to point out that even puny Singapore and Belgium are ahead of US in terms of broadband penetration. I know, I have often said so, and have been wrong.

Broadband penetration is a wrong metric to look at when it comes to evaluation US and broadband. I think the right yardstick to evaluate US is the actual number of broadband users – folks who pay for their broadband every month. US, at the end of 2004 had nearly 34 million broadband connections – that’s more than any other country on the planet.

Surely, in broadband penetration – broadband lines per 100 users -US is falling behind in the race, but then it’s a much large country than say South Korea or Japan, or Singapore – with nearly 250 million residents. It’s easy to wire a country the size of say Florida, but it’s darn hard to wire-up a continent. (US ranks at #11 in broadband penetration.)

Bruce Leichtman, principal at Leichtman Research Group spends most of his time pouring over the broadband data, and he called to remind me that broadband adoption in US is second only to DVD when it comes to new technology adoption. “Comparing us to rest of the world is just crazy,” he says, and reminds us “that there are 25% American households who don’t have computers.” If you took at the people who have computers, in his estimates the US penetration is shade over 40%.

The thing about urban myths is that they are just that a myth – sure we may not have as much bandwidth as South Korea, online gaming parlors are not part of our lives, but never say US is a broadband laggard.

29 Comments

John Liebermann

The US is indeed a laggard. As in many other aspects, the US is a backward and mediocre country where ignorance is rampant. Regardless of its GDP, a society such as the US where illiteracy, infant immunization and the rate and quality of college graduates is dismally low is indeed a mediocre society. Korea, Denmark, Iceland, Sweden, Holland and so many other countries are decades ahead not only in the application of technology in every day life for a majority of the population, but also in the level of sophistication and education of its citizens. To say that the geographical and demographic size of the US makes it a more difficult country to wire is preposterous – a country able to needlessly send proves to Mars, surely might be able to mach the level of broadband penetration of little ole Denmark – and it does not. The problem is the provincial and mediocre nature of those in strategic planning. As always the Colonies do best in keeping their populace ignorant, provincial, gullible, and as obese as possible.

Scott Kozicki

I know this response is late, but I wanted to include it for posterity! =)

Oddly enough, I’m a capitalist more than a liberal, but I hear your point. I guess my perspective on it is that there’s simply no incentive for any market leaders to close the gap between those with access and those without. I love watching the new efforts to bring WiFi and other access to whole communities with one of the majol beneficiaries being underserved markets (poor, rural, elderly, etc), but providing access without a mechanism to use it is stupid. Obviously, you don’t think that we should’ve built the interstate highway system without a considerable number of people owning cars, right? The auto was around for 60+ years before the interstate system was created. Same goes for electricity – the Feds stepped in and regulated it to make sure that rural populations got taken care of just as well as urban ones. Those moves made a huge difference in the nation’s prospects, in so many ways as to be futile to try and name them all.

My point wasn’t that the g’ment should be giving every poor person a free computer. Well… maybe it was, indirectly. It’s been 30 years since the personal computer was available. I’m thinking it’s one of those things that everyone should have by now. Like a phone (99% penetration) or a television (95%) or a pen (um…). I do think that more incentives should be created to drive innovation that makes personal computing ubiquitous. I know the captains of silicon valley would differ with me, but they’ve only just recently in the last 7 years or so decided to go down market to capture growth. And frankly, they’ve already made their billions. Let’s move on to what we can accomplish next with everyone having a PC and access to knowledge and each other the world over.

Sascha Meinrath

Funny, I _just_ wrote up a piece about this on March 28th that pretty much encapsulates the very discussion happening here. I disagree with Om Malik’s analysis — which is strange cause usually he’s right on. But, I back it up with some recent news tidbits that might help explain why the US is lagging (and continuing to lag further). Check out: http://www.saschameinrath.com/node/130

Chicken

I fear you are asking a question that has no answer, or rather a question that has so many correct answers that none of them can be held up as the truth.

Your first point is to look at absolute users. This is unfair to smaller countries. Are you saying that Belgium will never be as successful in broadband as the US unless everyone there gets 3.5 broadband connections each and the US stops growing tomorrow?

Secondly, your article doesn’t address the issue of differing household density. Everyone in a household can have a mobile phone so population penetration is appropriate there. On the other hand, each household is only likely to have one broadband connection (if we leave aside the issue of business connections) so household penetration is more relevant. The number/% of population that has broadband subscriptions does not show what percentage of the population has access to broadband. However, taking this to the other extreme, you could also say that any country that has high-speed internet cafes has 100% population coverage because everyone has access.

I also have to take issue with Mr Leichtman’s analysis that 25% of households don’t have computers so therefore should not be included. Just because you don’t have one yet doesn’t mean you won’t have one in the future. Even if you do accept his point, it’s not like other countries have a computer for every person. The segments of the population that should be excluded are those that can’t be reached at the point the survey is made – no telephone line or out of reach of a satellite (or no electricity).

I could go on and on, but I won’t – as I have to go home for dinner. I’m also aware that it’s easy to criticise but hard to create – and my work is torn to pieces on a daily basis. As a parting shot though, I will say that America is often touted as the biggest, the best, the most advanced, blah, blah, blah – please let someone else win for a change.

Wyatt Brown

Najeeb and Scott Kozicki make interesting points. Some university buddies and I were just recently talking about the kind of socio-political and financial motivations and priorities that Scott references.

Data-bandwidth, access, and availability should certainly be a main social, industrial AND political priority. Some countries, as mentioned in the previous posts, have made bandwidth and availability/access a governmental/policy priority as a means of driving, monitoring and focusing economic and social development.

Cultural values, social trends and financial/industry strategy related to these notions in the US is rooted in a different soil psychologically though. It would be interesting to study in-depth different aspects of these issues in an academic and intellectual manner.

Great discussion, y’all!

Alex Rowland

Scott, I’m an avid liberal and believe that capitalism can’t solve all the world’s evils. But are you really indicating that all inventions/discoveries that produce great benefit for our citizen’s should be free? This is patently absurb. WHere would you draw the boundaries, both socio-economically or geographically? The key to driving innovation is less centralized govenment control, not more. The most government should do to push broadband is to work to break up monopoly positions along the supply chain, not give away free computers.

Scott Kozicki

Om, you are missing the point completely. The arguement is not about what way to slice the statistics. The point is that we are not in possession of the correct policy as a nation. Arguing about whether it’s purchased broadband or provided is moot.

Can you imagine what our nation would’ve looked like in the last 100 years if the federal government would not have mandated electricity deployment? Or standardized the rail system? Or driven the interstate road system?

It’s not a comparison of whether we have more territory than South Korea, or whether we have more rural users than Singapore. The point is that those nations have made a conscious and adept decision to provide broadband access to their entire citizenry in an effort to unleash the potential developments which will UNDOUBTEDLY be built upon that platform. The fact that the US hasn’t even provided a damn computer for its citizens under the same notion as running water and electricity is a stagering miscalculation of economic development.

I’m sure when the cure for cancer is developed, you’ll have to buy that too.

najeeb

Om, I don’t quite agree with your analysis – for a country of 280 mil people, 34mil is not really a big number and the typical data rate is laughable compared to Japan, for instance. Japan’s fastest growing service provides 100mbps and the average monthly dsl rate is $18 which is super cheap. U.S providers should atleast have provided higher bandwidth solutions in populated areas. New York and L.A are not populated enough? I think, partly it is the strategy of these companies to not invest in furthering the technology while the going is good. Look at what they did with VOIP. They use voip in their networks, but refuse to pass the benefit down to the consumers, until companies like Vonage came up with competitive voip based solutions.

Om Malik

look if you are saying that the government should be doing more in pushing broadband, i agree. if you believe that we could do with more bandwidth, no questions about it. but what i am also saying is look guys we have a platform here which can used to develop interesting applications and let these applications force broadband carriers to push more bits down the pipe.

nojetlag

Must be pretty much frustrated when people start to talk up the numbers. Much talking won’t change a lot. How about comparing the broadband situation US vs. EU ? How about comparing Tokyo with New York, or Los Angeles with Seoul ? It is a fact that the US maybe used to be a technological leader in these areas. But these times are gone. Leaders are the countries like Korea & Japan. Both in wired and wireless communication.

Om Malik

it has a far fewer people, it is densely populated in pockets and has been able to wire up pretty fast/.

Abba

What about a country like Canada? It has much higher broadband penetration per capita than the USA, even though it is a bigger country than USA.

om

i am not sure if that is the case. i just came back from the cable industry show, and no one is just sitting there. i think in US there is so much money involved that things appear to be slow. i am not that despondent about the US – as much as many others.

Jesse Kopelman

Michael has it exactly right. US is not a laggard in terms of making money off of broadband — we may well be the leader and stay the leader for a long time. That doesn’t stop us from being a laggard in terms of purely social factors. It would be like saying that it is ok to have 50% literacy as long as the country buys the most books (which I’m sure the book publishing industry would say is ok). This is the kind of short-sighted thinking that leads a nation to lose its super-power status.

Samir

I agree with Scott, I think you are getting soft.. :-)

There are many levels at which this argument can be argued, Yes some poeple argue that US is HUGE, campared to South Korea, but then why arent atleast the major metros having a Hi-Hi-speed connections?
Yes I am getting 6Mb downloads (thats what comcast says), but my uploads are pathetic 768k.
Why do i have to fiddle with the “quality” of mt voip calls? Why, Me and wifey, cant connect to VPN and start massive file operations?
Why do i have to pay $52.95 for 6mb download, that cannot gaurantee 6mb all the times? The point is atleastm all major metros should have been wired for higher speeds, AND at reasonable costs. South Koreans are probably not paying out of their “u know what” to get those kinds of speeds.

I think the problem is that the Bells and the Cables are still trying to milk profits from “infrastructures of yesterday”, and they are getting away with it.. :-)

Michael Glenn

This depends on what you’re trying to measure. If you are attempting to determine if the broadband market is large enough for your business model then a total number is fine. If however you are attempting to compare the U.S’ adoption rate to other countries then you must look at a per capita install base.

Looking at pure numbers, if a country such as Canada reach 100% broadband adoption they still wouldn’t lead the U.S. as Canada’s total population is only around 30 million.

Kyle Reed

Hey Scott Rafer: my fiber connection is asymetrical (2mb up; 5mb down). Does that mean it’s not broadband?

Teresa Mastrangelo

Om-

You are right. The fact that the United States is the single biggest broadband market, should speak for itself. I too believe the population metric is a poor method of determining penetration. Household penetration is a better indicator of true penetration (and paid subscriptions), as most households only have one broadband connection, but possibly many users.
At the end of 2004, the United States ranked 16th in terms of household penetration. Canada ranked 5th.

Ron

canada may be an interesting comparison, if you’re looking for BB penetration between two countries of comparable geographic size. the fact is, the slow growth of BB in the US is preventing us from enjoying (and profiting from ) new on-line business, entertainment and even healthcare applications that are available elsewhere.

john

It was my understanding that the FCC data tend to overrepresent the actual availability of “broadband” in an area, since they consider even a single broadband connection for an area code to mean that whole area code has broadband access.

Also, Scott makes a critical point: the FCC definition of broadband is 200Kbps symmetrical. That’s about as laughable a definition of broadband as you can get.

Om Malik

faisal can you explain your question a little more. i am sure i have the data, but just want to make sure i don’t reply incorrectly

Om Malik

actually those are the total number of users who use cable, dsl or in case of about 400,000 users fiber to the home or fiber to the building. not getting soft but this is the data that comes from FCC, SEC filings – two places, mind you no one wants to lie.

Scott Rafer

You’re getting soft in your old age. How can you give the US credit on an apples-to-apples basis? How many of those 34 million “broadband” connections are less than half a megabit, have the latency of satellite, are asymetrical, and carry other restrictions that shouldn’t really allow them to be called broadband? Finally, given my interaction with SF city government efforts to get disclosure from local broadband providers (Comcast and SBC primarily), the likelihood of the published numbers being close to accurate is very, very low.

garam

Yep, I agree the metric is skewed…just like the metric used, total box office collections, for a movie when comparing the movie with another movie of another time. The number that gives a better picture would be the number of tickets sold. To make comparison even more relevant, percentage of total population that watched the movie could be used.

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