Broadband penetration isn't the whole story

Broadband penetration isn't the whole story

Summary: In Dana Blankenhorn's article, Should we mandate open source Internet access?, it's a little misleading to compare broadband penetration in the U.

TOPICS: Broadband

In Dana Blankenhorn's article, Should we mandate open source Internet access?, it's a little misleading to compare broadband penetration in the U.S. with a list of countries which have dramatically less inhabited geographical area to service and which started with less infrastructure to upgrade or replace. Of those countries in the top 20, only France and Canada are of any significant geographical area -- and most Canadians live within 50 miles of the Canadian-U.S. border. Comparatively speaking, the number of households per linear mile of cable, twisted pair or fiber is probably dramatically lower in the U.S. than in those other 19 nations. Thus, the cost to upgrade infrastructure per household is dramatically higher in the U.S. than in any of the other 19 nations in the report.

Further, I would guess that few of the citizens in the 18 nations who are "ahead" of the U.S. in broadband penetration have available to them the number of very low cost dial-up options that are available in the U.S. (Remember, many nations charge per-minute rates for local telephone service.) If you include dial-up, I'd bet the U.S. is still near, or at the top of the list. That's not to say that dial-up is a good option -- but it is an inexpensive option. Changing habits and converting people from cheap dial-up to relatively expensive broadband service (roughly twice the cost in most markets) is no small task.

In support of Dana's point, in most places in the U.S., there is not even a choice between a Bell Operating Company and a cable company because the Bell concerns have not made the investment in infrastructure necessary for them to compete. They have abandoned those markets mainly because if they did build out, they would be forced to do as you propose -- lease their infrastructure to their competitors. Thus, forcing the issue will only make things worse.

As for the Bell companies being monopolies without competition...

When almost everyone I know (including the average Wal-Mart shopper) has a cell phone, I find it hard to believe that the Bell companies are not feeling competitive pressure -- especially in the once-lucrative (now commodity) long-distance markets.

With the rapid expansion of EDGE and EVDO in the U.S. market, and the ubiquity of GSM/GPRS and CDMA, not to mention the availability of wireless service in many public places these days, I am not too sure that focusing on one segment of the market, namely broadband/DSL service, tells the whole story.

Topic: Broadband

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.


Log in or register to join the discussion
  • Uhmmmm

    Dial-up is not broadband, it's a fact that internet dial-up access in the US is very cheap, but they tried the same in the NL, only when people get used to the speeds delivered by broadband, they will never switch back.

    But that's easy talk from a country that is very densely populated (Netherlands seems to be very dense at least).

    What has happened overhere is that those people that couldn't get access to broadband in the normal manner, got together and formed a group based upon village they where living in, creating enough mass and then pushing the providers to deliver it to them.

    Government also has played an important role by forcing the telco to share their network and capacity against a reasonable price, forcing enourmous competition on the DSL front (cable companies still have the monopoly, but not very long i guess). Most of these companies want to establish triple play by delivering internet access, ip phone services and digital TV. Most of them regard this as a necessity!!!

    It's even possible to get ADSL without having a phone number. As a lot people only use their mobile instead of a phone number at home for all.

    Mobile internet is interesting, but we currently have access to UMTS (which is faster than the old dial up lines), but it's not very popular yet.

    Next phase overhere is fiber up to the houses (as the fibre rings are already established in most parts of the country). As most telco's and cableco's are very reluctant to start with it, currently municipalities are starting to roll out this service and providing access to third parties to deliver the services.

    Governments can play an enourmous role in enabling broad band access, but i guess that's not very popular in the US.
  • Defending Dana

    Dana is at least right when he sticks to the basics. Many countries have tried duopoly 'wire-com' markets - and found them way too limited to deliver real cost, service level, or innovation benefits.

    Also wire-line broadband has a number of advantages over wireless. The EDGE, EVDO, GSM/GPRS and CDMA technology you are excited about has been around for a long time but is NOT ubiquitous. This is why there is still so much steam in the locos of the WiFi, WiMAX, and Mesh industry models. In addition, wireless 3G has two major problems over open DSL wire-line Broadband:
    - Content Control / Walled Gardens; and
    - Limits (Radio and Congestion).

    Dana has not done a great job of gathering in those who do not yet understand the Telco's agenda of imposing new controls on the Net - his piece assumes a certain level of knowledge. In essence, the Telco's have persuaded the FCC (and those in power, in general) that they deserve a bigger slice of pie and, in return, they are offering censorship. Set-top boxes, walled gardens, firewalls, tracking and tracing, backup, data mines, subscription services - or whatever else they're calling it this week.

    In addition, they know from experience that 3G mobile has two major flaws:
    - Although they already offer walled gardens (have you tried signing up to a service, such as a directory service, that competes with your cellco's service?) the user experience is limited and as soon as a bigger screen hoves into view the cellphone goes off, and into a pocket.
    - 3G with EDGE/EDVO has a theoretical limit of about 3Mb/s (if memory serves). In theory. In practice 3G is far more easily congested by multiple users on the same cell [imagine a (500,000?) live audience at the Superbowl trying to record the Stones best songs and send the videos home...] - this is an extreme example, in most cases it only takes about half a dozen to load up a cell (it depends a lot on the cell). And it's still radio at the end of the day. Noise comes and goes, minute by minute, and so does your data rate (not to sell 3G too short - it can still be cracking on a good aday).

    In short, 3G does not offer competition to OPEN wire-line Broadband. Take it from me, as a former Telco EVP - though they feel plenty of pain in terms of lost old fashioned telephony - the Telcos feel no pressure from 3G 'Broadband'.

    It may be, as you discussed Marc, that the other wireless technologies will eventually provide some form of competition - but don't hold your breath. There are a lot of commercial wrinkles still in these models. If there were not, a whole series of wireles ISPs would be in your face with their advertising right now. <pause while Stephen looks round the Net> - No, I can't see any either.

    Dana is also, clearly, correct in his analysis that Moore's Law means that the cost of open broadband should be falling.

    He also scores on his analysis that the Telcos should be forced to offer wholesale services again.

    He is a little off target with his shot at Telco's attempting to charge content providers (can you say: "Buy Me!"). If the Telcos win the current argument over set-tops for IPTV - then Telcos and content providers will quickly 'discover' they cannot live without each other - just as publishers cannot live without printers...

    IMHO: Your own analysis, and Dana's, of broadband penetration rates is a side show of no value. As you rightly point out Marc, it is distance and subscriber concentration that are the key to understanding broadband penetration rates and these vary widely - or should that be wildly?.

    Finally, to address your point: " most places in the U.S., there is not even a choice between a Bell Operating Company and a cable company because the Bell concerns have not made the investment in infrastructure necessary for them to compete. They have abandoned those markets mainly because if they did build out, they would be forced to do as you propose ? lease their infrastructure to their competitors. Thus, forcing the issue will only make things worse."

    Marc, I think there is a place for you in a large Telco somewhere. That is, of course, what they would like you to think. It is also true that a wholesale service open to other service operators would have to be regulated to ensure that the incumbent (mostly Bellcos) do not tilt the market. I am as much against regulation as anyone - if only we could just trust one another... Here's a thought; While that same regulator has nothing much to do, watching the Bellcos pricing models, they could also be looking at technologies and asking:
    - Where does investment need to be made?
    - Who would invest (i.e. can see how to make a return)?
    - What is a minimum rate of return to attract investors?
    - How do we set service standards?
    - How do we set technical standards?
    - At what point does it become attractive for the incumbent telco to invest - where can we draw the line to attract Bellco investment?

    Hopefully, it is clear from this that it is possible to set up an open broadband market where the Bellco is still in a position to make good money. For example the regulator could draw the line for compulsory wholesale not at the wires but at the door of each local office (aka exchange building). With more equipment and personnel involved the price would be higher - but the corollary is that competing ISPs do not have to invest as much and should enjoy some of the benefits of the Bellco's buying power and economies of scale and scope - a win-win.

    Dana is right about one thing; Open broadband access is a choice - and right now it is only the polticians, in isolation, who are choosing...
    Stephen Wheeler
  • Canada has the pentration for few reasons

    First most Canadians may live with in 50 Miles of the US border only in the east. So that's a very small area where a lot of people live. Yet broadband started out west in place like Alberta where the majority live some 300+ mils north of the border.

    The reasons for this were that this area is a great test base for US companies. Another reason is the oil industry which has hoards of cash to spend want conncetivity between major centers and thier fields. The 3rd reason is socialist reason, government funded networks through private companies like Telus and Bell Canada.

    Also in Canada we have BAD phone lines. The most you can get with Dial-Up was 28.8 and that's SLOW even by dial standards. So adoption of broadband was much quicker due the fact that dial up even for free is useless here. At least that's how it is out here in the west, down east might be different.
  • Canadian Penetration

    I'm not sure I agree with your Canadian perspective. I'm not sure what the proximity to the US border has to do with broadband penetration unless you are trying to say that most citizens live in a smaller geographical area than the country's land mass.

    While this is true, let's put it in perspective. In a longer east-west span than the US the population is still smaller than Southern California. In my mind that infrastructure is a large undertaking and expensive. So I don't think the US is alone in this.