An Improved Strategy for U.S. Broadband

We are down to the final leg of the three-legged stool, speed. Most studies examining broadband use a speed of 200kbps as the minimum measure. However, in 2008 the FCC finally realized that 200kbps was insufficient to support the bulk of existing Internet based services and applications. The new definition requires a speed of 768kbps for access to be called broadband. Using that definition, a majority of Americans do not have broadband services. In fact, the percentage of American households with broadband services at 768kbps or greater is less than 25 percent. Despite having access to higher speeds, most Americans are forgoing the option of increasing the speed of their broadband.

In Japan the average advertised broadband speed is 93.6 megabits and the cost per megabit is one-fourth that of the U.S. The average advertised broadband speed in the U.S. is 8.8 megabits with only Canada having a higher per megabit price among the G7 (Canada, France, Germany, Italy, Japan, U.K., and U.S.). Interestingly, while Japan can boast 100-megabit speeds for residential users and SMBs across the country, less than 10 percent of high-speed lines in the U.S. exceed 10 megabits. This is the true digital divide that remains for the most part unspoken by the bureaucrats at the FCC and politicians in Congress.

The U.S. needs to promote and nurture a competitive environment that delivers faster broadband. Our measurement for success should be the G7 and not the entire world where our rankings overstate our achievements and obfuscate our failures. Broadband access, penetration/adoption rates and speed should be the three elements of any strategy built to improve our global broadband position. And while previously I have unabashedly supported the government assisting in the build-out of our broadband infrastructure, I can no longer do so. I understand that as part of stimulating our economy we are going to spend $7.2 billion expanding broadband into rural, unserved and underserved markets. However, it will do little to nothing to address our fundamental needs.

In summary:

• The price for broadband access in the U.S. is good when it is normalized against global salaries and disposable income.
• The price for broadband access in the U.S. is bad when normalized only against the members of the G7.
• Broadband access is now in 99 percent of U.S. ZIP codes and at least 80 percent of the U.S. population has an option to purchase broadband services.
• Fifty-seven percent of Americans either do not want broadband access (32 percent) or have made no investment in a computer or Internet access device (25 percent).
• Broadband speeds in the U.S. are rapidly becoming inadequate for the next generation of proposed Internet services and applications for residential users and SMBs (VoIP/SIP Trunking, Unified Communications, HD Voice, video streaming and cloud computing).

Our strategy as a nation should be to encourage service providers to increase the speed of their broadband while holding down the cost. We need to have much better per-megabit pricing. However, the government’s role in this effort needs to be one of education where it explains the value proposition for having Internet access in the home. Until that happens, only a minority of Americans (22-25 percent) will take advantage of any improvements in our broadband infrastructure. Our current center of attention is examining rural versus urban infrastructure development. Our proper digital divide concern should be one that has a global or G7 focus.

Have great weekend and I’ll see you on Monday with one of my favorite seafood dishes.

David Byrd is vice president of marketing and sales for Broadvox, and is responsible for marketing and channel sales programs to SMBs, enterprises and carriers as well as defining the product offering. Prior to joining Broadvox, David was the Vice President of Channels and Alliances for Eftia and Telcordia. As Director of eBusiness Development with i2 Technologies, he developed major partnerships with many of the leaders in Internet eCommerce and supply chain management. As CEO of Planet Hollywood Online he was a pioneer in using early internet technologies to build a branded entertainment and eCommerce website company partnered with Planet Hollywood. Having over twenty years of Telecom sales and marketing experience, he has held executive positions with Hewlett-Packard, Sprint and Ericsson.