IP Convergence: Beyond VoIP, Beyond Cost Savings

With the release of ”Networked Nation: Broadband in America 2007”, the National Telecommunications and Information Administration (“NTIA”) takes credit for largely achieving President Bush’s 2004 goal of “universal, affordable broadband access for all Americans.” Not to be too cynical, but NTIA’s claim is akin to Hank Morgan’s claim that he caused the solar eclipse in Mark Twain’s A Connecticut Yankee in King Arthur’s Court.

First, the methodology by which NTIA reaches its conclusion is spurious at best. But I shouldn’t be too harsh on NTIA since they are simply following the FCC’s methods. You see, NTIA makes it claim because “broadband service was available in 99 percent of the nation’s zip codes, encompassing 99 percent of the nation’s population.” If one person in a zip code has broadband service, the FCC counts the entire zip code as having broadband access. So by this methodology it isn’t too hard to claim success.

Second, increased broadband penetration was inevitable and would have occurred regardless of public policy. Broadband penetration occurred at a rate that surpassed all previous consumer electronics. In a September 2007 survey, Pew Internet found that broadband was adopted by a majority of consumers faster than other technologies. Broadband took 10 years to break 50% adoption, followed by the CD Player at 10.5 years, the VCR at 14 years, cell phones took 15 years, color TVs took 18 years, as did the personal computer.

So was this adoption due to Administration policy or because consumers know a good thing when they see one?

Third, this Administration considers bandwidth speeds of 200 kbs to constitute “broadband.” 200 kbs may be “Rubenesque” among narrowband speeds, but it hardly counts as broadband, especially when you consider the speeds available around the world. And when you look at actual speeds that U.S. consumers enjoy, the picture is even grimmer. The Communications Workers of America (an obviously self-interested source) produced a report last year showing the median download speed in the United States is 1.9 Mbps, compared with 61 Mbps in Japan, 45 Mbps in South Korea, 21 Mbps in Finland, 18 Mbps in Sweden, and 7.6 Mbps in Canada. And of course U.S. consumers pay far more per megabit than residents in these other countries. According to the OECD, the average price per advertised Mbit/s of connectivity in the OECD is USD $18. Japan, France, Sweden, Korea and Finland have the least expensive offers per Mbit/s
o Japan: USD $0.13
o France : USD $0.33
o Sweden: USD $0.35
o Korea: USD $0.38
o Finland: USD $0.42

So what exactly is there for this Administration to take credit for? Did their policies stimulate broadband penetration, increase broadband speeds, and reduce broadband prices or like Hank Morgan are they simply taking credit for a phenomenon that was already happening over which they had no influence?