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June 4, 2014 11:04 pm
The light touch of US regulators has helped increase investment in broadband and expanded access to high-speed internet in the US compared to Europe, according to a study which contradicts assertions that the US has fallen behind in the internet race as the country debates what rules should govern broadband access.
The University of Pennsylvania Law School study also showed that Europe’s treatment of broadband as a public utility, which some net-neutrality advocates are pushing for in the US, has hindered internet access growth there.
The study adds to the debate over how to regulate internet access. The US Federal Communications Commission has proposed new rules governing net neutrality, the principle that all internet traffic be treated equally, which has sparked an outcry among consumer advocates, technology companies and lawmakers opposing the suggested measures.
In Europe, telecommunications executives have argued the continent is lagging other regions in the internet race to push for consolidation. Telecom services revenues there have fallen by more than 12 per cent since 2008, which executives say has impaired their ability to invest in networks at a stage when creating next-generation internet-based communication has never been more important.
However, the quality of internet services in the US has also been widely criticised, including recently by SoftBank chief executive Masayoshi Son, who has been pushing for a tie up between his subsidiary Sprint and T-Mobile. Mr Son said US wireless speeds fell behind many countries, ranking just above the Philippines, and asserted that consolidation would improve quality. But the deal has faced opposition from US regulators, including at the FCC.
The FCC is seeking public comment on a plan that would allow internet service providers to charge companies such as Netflix and YouTube to reach consumers at higher speeds, but only if they meet “commercially reasonable” standards that will be highly scrutinised. Alternative approaches to preserving an open internet will also be considered by the FCC, which has lost two court cases on previous net neutrality rules.
The Penn study found that US consumers had more access to high-speed internet than their European counterparts, with 82 per cent of American households enjoying such service compared with 54 per cent in Europe.
“The empirical evidence thus confirms that the United States is faring better than Europe in the broadband race and provides a strong endorsement of the regulatory approach taken so far by the US,” said the study, which was written by law professor Christopher Yoo.
The differences in regulatory regimes also contributed to $562 of broadband investment per household in the US versus $244 per household in Europe, where regulators treat broadband as a public utility and promote service-based competition where new players lease existing facilities at wholesale cost.
The US has left building and modernising broadband infrastructure to private companies, with new entrants expected to build their own networks. The FCC is seeking public comment on the European model, which is favoured by net-neutrality advocates.
The latest study found download speeds in the US during peak periods was lower, averaging 15 Mbps versus 19 Mbps in Europe. For slower speeds, broadband prices were cheaper in the US than in Europe, but the US was more expensive for access to faster speeds, the study found.
It also said that higher cost was justified because US users consumed 50 per cent more bandwidth than their European counterparts.
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