Monday, February 05, 2007


FCC Fudges its Broadband Report -- but finally gets one thing right!

UPDATE: Harold Feld weighs in on the same FCC report here.

The FCC has just released its report, High-Speed Services for Internet Access: Status as of June 30, 2006 [.pdf]. All the usual problems with FCC data are built in (the wimpy definition of broadband as over 200 kbit/s, the use of zip codes as the unit of analysis, the inclusion of satellite-only zip codes as having broadband service, the counting of competitors as if a 250 line ISP is equal to a grownup Bell, et cetera).

The big shock is this:

U.S. terrestrial broadband Internet connectivity only grew 27% between June 05 and June 06! The FCC report claims it is 54%, but that's just wrong.

The FCC would have us believe that U.S. Broadband connectivity grew 54% between June 05 and June 06 (from 42 to 65 million lines) because, in a giant data-fudge, the FCC is lumping 11 million cellular data (mobile broadband) accounts with its other broadband Internet access methods.

Mobile broadband is entirely different than terrestrial forms of Internet access. It is

(a) extremely non-neutral; many Internet applications are forbidden or blocked,

(b) the largest providers impose covert throughput limits,

(c) it violates the FCC's own guidelines, because end-users are NOT free to access content, run applications, or attach devices of their own choosing(!!) -- see (a) above,

(d) it does not provide a rich environment for innovation or end-user generated content equivalent to landline broadband Internet access, and

(e) most U.S. citizens with mobile broadband probably already have terrestrial broadband Internet connectivity, so it is likely that including mobile Internet access is a form of double counting.

The OECD numbers show that the annual growth of U.S. broadband Internet penetration was 53% in 2001-2002. This slowed over successive years to 40%, 33% and 30% for 02-03, 03-04 and 04-05. Without the FCC's bogus inclusion of mobile broadband, the growth rate of 27% is right in line.

How does 27% growth stack up to the rest of the world? I do not have the 05-06 figures, but in 2004, OECD countries Greece, Turkey, the Czech Republic, the Slovak Republic Mexico and Ireland all had growth rates above 100%. These, without exception, reflect the law of small numbers.

Looking at the second tier, OECD countries with growth between 27% and 100% in 2004-2005, we find Australia, Hungary, New Zealand, Germany, Luxembourg, United Kingdom, Finland, Norway, Italy, Iceland, France, Spain, Portugal, Sweden, Austria, Netherlands, Switzerland, and Denmark. The law of small numbers no longer applies; six of these have higher overall broadband Internet access penetration than the U.S. -- AND they are growing faster.

At 27%, the U.S. has approximately the 26th fastest growing number of broadband Internet access lines. Even including mobile data access, like the FCC report does, 54% growth rate is only the world's 10th fastest growth. In other words, even counting mobile data, the U.S. is tied with Luxembourg's 2004-2005 growth rate.

The FCC data have another weakness that is not generally noted. This FCC gives a lot of lip service to facilities based competition, but when it comes to counting so-called competitors in a given zip code, there's no distinction whether the so-called competitor provides its own wires or re-sells somebody else's. So when the FCC says over 75% of zip codes have four or more providers, we do not actually know what that means.

Meanwhile, the FCC has quietly dropped Kevin Martin's 2005 claim that the U.S. leads the world in total number of broadband connections. As I noted on July 8, 2005, China was scheduled to blow the doors off the U.S. by 2007. Apparently it already has.

The bottom line, we need to go beyond industry-supplied, FCC-massaged data. It is time for an end-user-in study of U.S. Internet facilities and competition. It should probably be part of the 2010 census. Census agents should determine, for a representative sample of households, how many forms of Internet connectivity they have, how many competitors they're aware of, what competing service they could actually buy and install and use, how many resellers of ILEC service there are, how many DSL providers use ILEC lines, et cetera. This is the only way we will get accurate, non-double-counted numbers about the competition that is actually available to the end user in the U.S.

What is right about the FCC Report: They've dropped the consumer-consumer-consumer language that used to pervade the FCC. (Information is non-rival, nothing is consumed. In fact, as information disseminates, there's more of it! ) The word "consumer" does not appear once in the report! Instead, the more accurate "end user" occurs 19 times. There are seven uses of the word "customer," and three uses of "household" as a noun. This is a huge improvement! Maybe someday the FCC will also use "citizen" (zero uses) or, better yet, "our bosses."

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"(b) the largest providers impose covert throughput limits"

Those limits are becoming increasingly overt, listed in terms and conditions or even on the sign-up page. They're almost boasting that usage above a certain, very low amount constitutes a misuse of service.
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