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American broadband is better than you think

Robinsegg

Is the United States falling behind the rest of the world on internet access? A lot of people think so. A recent New York Times article suggested, based on research from the New America Foundation, that the US has "fallen behind in internet speed and affordability." That research found that broadband customers in America's biggest cities often paid more for slower broadband service than consumers could get in other world capitals like Tokyo, Seoul, and Paris.

Yet a new report from the American Enterprise Institute offers a more optimistic take on America's broadband performance. It compares the performance of the American internet against other members of the G7, a group of the world's largest wealthy economies. One of those nations — Japan — clearly has faster internet service than the United States. But the study's author, the AEI researcher Richard Bennett, argues that US broadband speeds compare favorably to that available in the other five G7 nations: Canada, France, Germany, Italy, and the United Kingdom.

Bennett has compiled an impressive amount of data to make his case. Here are five reasons that internet access in the United States is better than many critics want to admit.

1) America has a lot of fast cable internet service

A coaxial cable, cut away. (JUAN LUIS MARTEL)

Broadly speaking, there are three ways the world's households get online. The slowest technology, known as digital subscriber lines (DSL), delivers internet service over twisted-pair copper phone lines that have been in the ground for decades. In the middle are coaxial cables, which have traditionally been used for cable television. The fastest is fiber optics, a relatively new technology that sends information as pulses of light over glass strands.

Which of these technologies a country uses today is strongly influenced by decisions policymakers there made decades ago. For example, Bennett says that when cable television emerged in the mid-20th century, some European countries turned the technology over to incumbent telephone monopolies to manage. These companies dragged their feet on rolling out new coaxial cables, and as a result the technology never reached many European homes.

The United States pursued a different approach, making cable television a separate industry initially dominated by small companies. As a result, cable TV service grew rapidly and today almost all American homes have cable service.

The result: when the internet emerged in the late 1990s, cable television was more widely available in the United States (and Canada, which took an approach similar to America's) than it was elsewhere in the developed world:

(AEI, based on OECD data)

Today, the United States still largely uses these decades-old cables to deliver internet access. The latest standard for delivering internet access over cable networks is called DOCSIS 3. And the technology is more widely available in the United States than any other G7 nation:

(AEI, based on data from various sources)

That's significant because cable-based networks tend to be faster than the DSL-based networks that predominate in major European economies. That explains why (as we'll discuss more below) the average US internet connection is faster than internet access in France or Italy.

2) The US has more fast fiber connections than most other G7 nations

Fiber optic networks are really fast. Right now, they can deliver speeds of one gigabit per second, which is 20 to 50 times the typical speed of a cable modem connection.

Yet only one G7 nation — Japan — has built fiber optic networks that reach most of its citizens. The United States occupies the number two position among G7 nations, though it's way behind the leader:

(AEI, based on data from various sources)

In 2012, almost a quarter of US households had fiber optic service available to them, though not all households had actually signed up for service. Data from the Organization for Economic Cooperation and Development the same year indicated that about 7 percent of US broadband connections were fiber-based. Again, that's much lower than Japan, where almost two-thirds of connections are fiber. But it's a lot more than the other five G7 countries, none of which have more than 3 percent of active internet connections using fiber optics.

To sum up, here's a chart of the different technologies each country uses to deliver internet access:

(AEI, based on data from OECD)

As you can see, only Japan has a majority of its population on fiber optics — the red bar. The United States and United Kingdom have much smaller, but still significant, shares of their populations using fiber optic networks. Meanwhile, the United States and Canada have large fractions of their populations using cable modems. By contrast, many European households are stuck with slower DSL connections, the slowest of these three technologies.

3) US internet service is fast and getting faster

With a large share of households enjoying either fiber optic or cable connections, the average American enjoys a faster internet connection than consumers in most other G7 countries — again, with the exception of Japan.

(Akamai)

This chart comes from Akamai, which operates a network of servers that help companies deliver content to users more quickly. This role gives the company wealth of real-world data on network performance around the world, and their data suggests that the US is doing pretty well on broadband speeds.

However, there's a big reason to take these figures with a grain of salt. Akamai counts each file download as a separate connection. This means that the measured connection speed can reflect factors unrelated to the speed of the underlying network, such as the number of tabs a user has open on her browser or the number of computers using a shared wifi connection.

An alternative measurement is the average peak connection speed — that is, the average of the fastest speeds seen on each network connection. This provides a better estimate of the average capacity of broadband connections in a country.

(Akamai)

Once again, this measure shows Japan well ahead of the rest of the G7. The United States is in the next tier, slightly behind the United Kingdom and slightly ahead of Canada and Germany. France and Italy bring up the rear.

4) Low population density makes America's good internet performance more impressive

The more densely populated a country is, the cheaper it is to provide universal internet access. And that puts the US and Canada at a distinct disadvantage compared to other G7 nations.

(AEI, based on data from  ITIF and Demographia)

This chart shows the average population density of urban and suburban areas — defined as areas with population density greater than 1000 people per square mile. Japan has some of the most densely-populated cities on the planet, with a lot of high-rise apartment buildings. That gave Japan an advantage: it's much cheaper to string a bundle of fiber optic cables to a big apartment building, where it can serve hundreds of families, than to run individual cables to hundreds of individual homes in a suburban neighborhood.

The US, Canada, and France have the least densely populated metropolitan areas by this measure. And the US and Canada also have the least densely populated rural areas:

(AEI, based on data from World Bank, The Little Green Data Book 2011)

As in cities, lower rural population densities mean higher costs: the more sparsely-populated the countryside is, the longer the cables required to reach each house.

This makes the respectable performance of American broadband networks more impressive. You might expect densely-populated countries like Italy and Germany to be well ahead of the United States in average network speeds. But only Japan seems to have taken full advantage of the cost savings made possible by high population density.

5) US wireless network coverage is pretty good too

Bennett also finds that American wireless providers are leaders in deploying the latest and fastest mobile networking standard, called LTE:

(AEI, based on various sources)

Surprisingly, America's more extensive LTE coverage does not translate to higher average mobile speeds. To the contrary, most speed measurements show the United States with slower-than average mobile speeds.

It's not clear why this happens, but Bennett has a theory. He points out that new networks are often fastest when they are first built and few people are using them. But wireless spectrum is a shared resource, so as more people sign up for service, the network gets congested and average speeds decline.

In other words, Bennett argues that the poor performance of American wireless networks is actually a sign of their success: because American providers upgraded to LTE before those in other countries, they have more LTE customers and therefore more congested networks.

Where the United States falls short

Last week I asked Danielle Kehl, one of the researchers behind New America's more pessimistic report on American broadband, about Bennett's conclusions. While she quibbled with a few of his specific findings, she didn't disagree with his general observation that American broadband speeds were competitive with those available in the European G7 nations.

However, she noted two big drawbacks to the American internet. One was price. American broadband networks might be fast, but consumers often pay a hefty premium for that extra speed.

This is most noticeable at the high end of the market. For example, New America's data shows that some consumers in New York City can get a blazing fast 500 Mbps fiber optic connection from Verizon — much faster than the 200 Mbps service available in Berlin or the 150 Mbps service in London. But the New York connection costs $300 per month. In contrast, the Berlin and London connections cost less than $60.

And as this chart shows, the same pattern holds at lower speeds: costs tend to be lower in Europe than in the United States for a range of different speeds.

(New America Foundation)

Kehl pointed to recent interconnection disputes — such as the fight Netflix had with several large ISPs earlier this year — as another sign of problems in the American broadband market. Fast connections aren't worth much if consumers can't use them to download the content they want. Network neutrality advocates worry that without legal protection for network neutrality, large ISPs will start interfering with consumers' use of their internet service, speeding up some content and slowing down others.

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