Lessons across the pond

Potentially a very big subject this, but I just wanted to mention a minor spat that erupted  recently over differences in broadband policy between the US and the EU… It probably kicked off when Susan Crawford, arch critic of the US broadband duopoly, promoted her latest book with statements like this:

“Investment by the incumbents is shrinking, competition is non-existent, America is falling far behind other developed nations, prices are high, and we have no path to the fiber upgrade the country desperately needs”. 

Unsurprisingly, the incumbents hit back.  David Cohen of Comcast posted this comment last month: 

“82% of U.S. homes have access to speeds in excess of 100 mbps, while in Europe, only 2 percent of the population has access to these speeds… No wonder Neelie Kroes, a senior European Internet policymaker, declared that Europe "needs to catch up," citing the United States as a model”. 

That 2% claim for European access to superfast broadband is of course completely wrong: reliable research confirms that the actual figure is twenty-times that figure.  Nonetheless, a similar statistic was trotted out out very recently by Lowell McAdam. CEO of Verizon: 

"More than 80% of American households live in areas that offer access to broadband networks capable of delivering data with speeds in excess of 100 mbps…Contrast this with the European Union, where innovation and investment in advanced networks have stagnated under an onerous regulatory regime… and where today only about 2% of households have access to broadband networks with 100mbps-plus speeds". 

Well, apart from reiterating the fallacious 2% for Europe, Mr McAdam now talks about US networks capable of delivering 100 mbps, not those necessarily doing so.  As others have pointed out, this US/EU comparison essentially boils down to the different coverage figures for cable technology – and has little or nothing to do with ‘an onerous regulatory regime’.

However, while the quoted statistical claims are simply untrue, I’m inclined to go along with some of McAdam’s other comments, e.g. 

“…European regulators have adopted policies that generally limited network infrastructure deployment to a single facility in a given country or region. Other companies were allowed to ‘resell’ broadband services to consumers, but only if they used the same infrastructure. This ‘retail’ competition resulted in prices that may have covered the costs of operations but left little capital or other incentive for companies to invest in improving these networks”. 

But on the bigger question of whether/how regulation suppresses investment, I leave the final word to a far more authoritative voice: 

“Both AT&T and Verizon proffer Europe as an example of a region that lags in broadband deployment because of overregulation.  Contrary to [the] Bells’ claims, sensible regulation targeted at bottlenecks does nothing to disincentivize network investment. That is the lesson from Europe and the USA”.  

Those words of wisdom come courtesy of Sheba Chacko, Head of North American Regulation for BT.