While US ISP’s improved on advertised speeds for delivered broadband, the cost of access continues to be a concern.
A new report issued by the FCC, Measuring Broadband America – 2012, based on broadband advertised speeds vs. delivered speeds improved substantially from 2011 to 2012. The survey of 6,500 household’s revealed speeds increased to 96% delivered from 87% in 2011. That is a marked increase year-over-year with fiber leading the way at 117%, cable coming in at 99% and DSL reaching an average of 84%. The last survey taken in August 2011 indicated broadband speeds were divergent in actual vs. delivered speeds across different companies. The most recent report indicted those divergent speeds were much closer to each other by company.
Great News, but with a Catch
Although overall average speeds increased during the period, prices for broadband service were substantially higher than other countries. Competition, which is a governing factor on US economic pricing, continues to be an issue on how much consumers must pay for those speeds. In foreign countries pricing is substantially lower than US levels going back to a lack of competitive pressures which tends to reduce overall prices for goods and services.
US Lags in Competition Compared to Global Counterparts
According to the FCC this is troubling, and should to be addressed going forward. The regulator has long lobbied for more competition within the ISP industry believing in the resulting positive effects on consumer pricing, and job creation. The New America Foundation released a recent report, The Cost of Connectivity, which undertook a comparison of high-speed Internet prices in 22 cities around the globe, found interesting statistics regarding competitive pricing. Their research centered on pricing, download-upload speeds, and bundled services.
“When looking at the cost and speed of Internet access in major U.S. cities in comparison to other global cities, it is difficult to ignore the fact that the U.S. is so much more expensive than many of its international counterparts.” – (New America Foundation)
Interestingly, the foundation indicated that the key metric in its findings, which conveys US consumers often pay more for slower broadband access than its foreign counterparts, was a lack of serious competition across markets. The report found that where competition of at least 3 service providers existed within a market, prices were lower and speeds were higher. These results are undeniable, that increased competition is good for market forces, including price demand and job creation.
U.S. ISP’s: Too Large, Too Complacent
Clearly the US has work to do in becoming a global competitor in broadband metrics. This includes affordable access to consumers and businesses, reasonable speeds of broadband service offered, including download-upload capability. Until legislators are willing to tackle the competition issue head-on, the US will languish in lackluster broadband access and performance in a global setting. Have we created a large non-competitive ISP industry which has become complacent and slow to meet market demands? I think so, if you look at hard data on a global scale.