Another View of the U.S. Position on Broadband

While there is much wringing of hands with regard to broadband in the U.S. versus the rest of the world, I wondered if we were analyzing the numbers properly. Currently, broadband usage is measured using three factors: price, speed and penetration. However, most of the time, I see price used as a measurement; it is not normalized to average income, disposable income or any other relevant measure of income across countries. Given that, I looked at several reports including a global study of broadband usage and penetration and average world salaries. This was important to do because then I could take the average monthly cost of broadband in the U.S. ($53) and compare that against the average monthly cost of both industrialized nations and emerging nations. The results indicate that the U.S. has better pricing than usually attributed to it and not surprising, the developing nations are more expensive than advertised.

Using Japan, U.K., China, India and Sweden, let’s look at some key factors.

Average monthly price for a broadband subscription is:

• Japan $34.21
• U.K. $33.34
• China $13.25
• India $22.00
• Sweden $34.00
• U.S. $ 53.06

Most studies would then list the U.S. as the highest costing broadband service. However, if we normalize these numbers based upon average salaries and disposable income using the U.S. as the baseline you discover that Japan ($37) and the U.K. ($44) are below what would be expected. Citizens in these countries are getting good value for their broadband services. However, China ($10.03), Sweden ($28.63) and India ($1.21) are overcharging, with India at over 18 times the appropriate value price.

Understanding this relationship also helps to understand penetration percentages and per megabit pricing better. This would have to much be more than a blog to completely work through all of the data I studied, but my conclusion for the U.S. in terms of broadband positioning is we are OK with our average cost of broadband services. However, when we look at the members of the G7, we are sixth highest in per megabit pricing, with only Canada higher. Finally, with regard to penetration, although we lead the world in terms of total number of subscribers, when compared to the G7, we are dead last.

The net of this is that the U.S. needs to increase its bandwidth speeds and, yes, we quickly need to address our level of penetration. However, our focus on penetration may be misplaced by expansion in rural areas rather than addressing why Americans who have access are not participating. More on that next week.

See you on Monday with a new recipe. Have a great weekend!

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.