The handwringing about broadband adoption in the US continues unabated with yet another group calling for either some sort of government intervention or some form of nationalization (though Vint Cerf now claims he was joking – mostly). In trying to clarify his comments, Cerf actually added more confusion.

“Maybe we should treat the Internet more like the road system, look for ways of creating incentives to make the Internet more accessible to everyone, and less likely to be abused by the private sector,” Cerf said. … “It’s not likely you’re going to want to have multiple roads owned by the private sector to get to your house. Generally speaking, that’s true of the power system — you don’t have multiple wires going to your house to carry power.”

It’s good that Cerf cleared this up. He doesn’t want nationalized Internet. He just wants one wire going to your house, no “multiple roads” run by the private sector and something that resembles the road system (which is run by government, right?)

As just one example of why making the Internet like roads is a bad idea, look at the Big Dig in Boston. It was completed five years late for almost five times its original $2.6 billion budget. Just after it opened, a huge chunk fell on a passing cars causing injury and a fatality. It is a perfect example of government inefficiency on large scale building projects. Not exactly a great model when compared to cable’s $130 billion investment in its network and the more than $200 billion the telephone companies are expected to invest in their upgrade.

While I’m still confused about how making the Internet like roads isn’t actually a call for nationalization (to me, it looks like a duck, walks like a duck, and quacks like a duck…), fortunately, in the midst of the confusion comes a voice of reason.

The Pew Internet & American Life Project released its latest report on broadband adoption on Wednesday. Pew isn’t a group you can write off as Astroturf. They’ve done a lot of extraordinary research into how Americans are using the Internet. What did they find?

• The average price of broadband dropped 4% since the last survey (12/2005) to $34.50;
• Prices dropped despite the fact that 29% of respondents reported opting for a premium tier of broadband service – taking cable’s high-value offerings of faster speeds at a higher price;
• Across the board, broadband adoption grew 17% nationwide for the 12 months ending May 2008 – the strongest growth areas were among senior citizens, lower-middle income households and rural areas;
• The number of dial-up users who report disinterest in upgrading to broadband service remains roughly constant at 62% - even though the average price of dial-up actually increased 9% since the 12/05 survey;
• Of respondents who do not use the Internet, only 7% said that price was a deciding factor.

What this clearly demonstrates is what cable has been saying all along – while the goal of connecting every American is certainly a priority, and one we are working towards – the notion that there is a national crisis which requires immediate government intervention is simply overblown.

Contrary to assertions that the price of broadband in the US is prohibitively high, very few respondents in the Pew study agreed. This correlates nicely with the a Parks Associates Study last year that found very few people refused to get connected due to cost considerations. Adoption increased among Americans in households earning between $20-40k per year by 24% - the highest growth rate among any economic group.  Only among household earning less than $20k a year did adoption rates actually fall.  Given the state of the economy and the weakened dollar, this is not surprising. 

It does, however, highlight the need to specifically target the barriers to adoption that low-income families face – ranging from lack of computer ownership in the home to lower education attainment. In stark contrast to the OCED figures touted by groups like Internet for Everyone – figures about which there is considerable debate regarding methods and measurements – Pew finds that when you actually ask America what they’re paying for broadband you get a very reasonable-sounding number.

Further, the 17% growth rate in broadband adoption is astounding given the level of economic uncertainty gripping other sectors of the economy. This speaks to the steady march toward near-universal nationwide adoption. With more than 55% now connected, broadband Internet has passed the 50% barrier faster than any technology in history – faster than cell phones, radio, television, and computers, Will all Americans be online next year?  No, but we’re definitely getting there – and as we do, cable services are improving to keep pace with faster speeds and lower prices.

Last, but not least, note that 24% of dial-up users in rural America report that they would adopt broadband if it became available to them.  The big takeaway here is that the US, working with ISPs on policies such as the changes to the broadband loan program that were included in the Farm Bill, is doing exactly what it should be doing – focusing on the small percentage of Americans who are either unserved or underserved. There is clearly demand in rural America for broadband, and we ought to use the power of the government wisely to provide the right incentives for companies to connect the unconnected.

The cable industry continues to work with Connected Nation to identify areas that are not reached by cable so every effort can be made to focus government resources on those areas that need it most.

Let’s also not overlook voluntary efforts by the private sector. For more than a decade, cable systems through Cable in the Classroom have been offering complimentary broadband service to any school within the cable system’s broadband footprint. That’s an offer that’s been accepted by thousands of schools already, and it continues to stand today.

What we should not be doing, and the Pew study makes this clear, is pursuing heavy-handed regulation (or even worse, the radical nationalization ideas proposed by Vint Cerf and others).

Popularity: 4% [?]

NCTA President & CEO Kyle McSlarrow will participate in a National Press Club “Newsmaker” Media Briefing today at noon (ET).

In his address, entitled “Cable’s Broadband Platform: Innovation for the Consumer,” he is expected to challenge the notion that there is a rivalry between innovation taking place at the edge of or in the network. In contrast, he will discuss the notion of an interactive “Internet ecosystem.” He will also discuss new developments in tru2way.

His speech will be webcast through this link [Archive available at this link for 6 months].

UPDATE: It’s also being streamed at C-SPAN’s site. The text of the speech has been posted at NCTA’s website.

Popularity: 20% [?]

As Time Warner cable this week begins their trial of tiered Internet pricing in Beaumont Texas, the blogs are aflutter over the various caps Time Warner has proposed.  Time Warner’s plans start with caps at 5 gigabytes and go up to 40 gigabytes. Going over the cap will cost $1 per gigabyte.  Time Warner is also bringing transparency to usage by giving customers a gauge that will allow them to monitor their bandwidth consumption the way cell providers allow you to track your minutes.

Despite all this complaints about Time Warner’s trial and claims its caps are way too low have been ringing around the Internet.

Exactly how much bandwidth do you consume?  It’s hard to say as the number various from user to user.  However, Plus.net put together a nice little graphic showing you what a single Gigabyte gives you - including 4 hours per day of web browsing, 10 song downloads per week, e-mail, Internet radio usage, etc.

What does all that equal?  Well, NCTA member BendBroadband operated with a tiered structure and found that 91% of their customers consumed less than 10GB per month.  BendBroadband found that 99.5% of their users consume less than 100GB per month and now uses that as their cap.

Somewhere above the 91% consuming 10GB per month, and the .5% consuming more than 100GB lies the heaviest Internet users.  Estimates in various studies suggest that 5-10% of Internet users consume half or more of all bandwidth.  Much of that traffic - though specific estimates vary greatly - consists of P2P (peer to peer) connections exchanging files.   A study by SafeNet, Inc. suggests the overwhelming majority of P2P traffic may also be illegal content:

But 90 percent of P2P downloads are still of illegally copied content, according to David Hahn, vice president of product management at SafeNet Inc., which tracks the networks.

Hahn said 12 million to 15 million people are file-sharing across the world at any one time, mainly on the BitTorrent and eDonkey networks. The attraction of file-sharing is not just that it’s free - there’s also content available that can’t be had by legal means, like TV shows that haven’t aired in Europe.

Absent an exact figure of P2P usage, and whether or not you accept SafeNet’s 90% estimate, one thing is undeniable - a small percentage of Internet users are placing a burden on other users.  That is one reason a number of P2P applications providers are working to identify ways to make P2P a better and more efficient means of distributing content.  We believe that is a worthwhile pursuit, which is why NCTA and various cable companies are participating in a “P2P Best Practices” effort led by the Distributed Computing Industry Association.

In many of the articles written about the Time Warner experiment, detractors point to the number of movies than can be downloaded as a specific reason the cap is too low.  An average movie downloaded legally from iTunes is around 1-1.5 GB.  A 40GB cap would allow you to download more than 30 movies per month (or one a day) if that’s all you did.  Most people, however, don’t consume one movie per day, let alone 30 per month.

Mark Cuban, one of the founders of Broadcast.com and a web pioneer, points out the folly of this argument in a post on his blog yesterday.

Its been amusing to read all the blog posts with the math telling all of us just how many standard def or high def movies tiered subscribers will be limited to. You can have 2 or 3 of your favorite SD TV shows per day, or X number of HD movies per month. Say what? 

I have news for all of you that want to dedicate their internet connections to downloading movies. There is a new and exciting development. Its called an Application Specific Integrated Video Service (ASIVS). What is an ASIVS ? Its a computer dedicated specifically to downloading and playing both standard definition and high definition video. You connect it to a network that is dedicated to delivering GIGABITS PER SECOND of high quality video with ZERO buffering. It’s amazing, it always works and connects right to your standard def or High Definition TV, easily. Most of the systems I have seen have a pretty good programming guide and scheduling system and they will let you download AS MUCH VIDEO AS YOU WANT, limited only by the size of its hard drive!!

If you haven’t heard of the ASIVS, its because most people call it a DVR.

If downloading TV shows is so important to you, add a DVR to your cable or satellite service for 5 bucks a month and download all you want. If you want to watch those shows on your laptop, connect the composite video out in your DVR to the composite in on your laptop. Same with movies.

Can’t download movies illegally, tough.

The internet is a great resource for unlimited quantities of video. Downloading video is an internet given right. Using the internet to fill up your PC turned DVR at the expense of the performance of every user around you is not.

Mark’s right on the money with this.  Using the Internet to download video is your right and prerogative.   Using your Internet connection to consume all the available bandwidth and degrade your neighbor’s Internet experience simply isn’t.

As for Time Warner’s caps, are they too low?  Time Warner will soon find out.  They have described this as a test and will determine whether the model works and whether the caps are sufficient.  Unlike many of their critics online, Time Warner is unwilling to pronounce something a failure before even giving it a chance to prove itself.

Popularity: 27% [?]

For about a year now, NCTA has been shining a light on the DOCSIS 3.0 specification. Thanks to channel bonding, cable operators will be able to offer wideband service to consumers, with speeds exceeding 100 Mbps downstream. About a month ago, we noted the first deployment of DOCSIS 3.0 in the U.S.

A new article in CED Magazine (”DOCSIS 3.0 arrives“) takes a look at deployments by Videotron and Comcast.

After a year-long trial, [Canadian operator] Videotron is serving up two tiers of the wideband service with speeds of 30 Mbps and 50 Mbps. The slower “Ultimate Speed” costs $64.95 a month while the faster speed checks in at $79.95 a month.

Currently, Videotron’s Ultimate Speed services are available to 112,000 homes in Quebec, with the goal of offering the service to Videotron’s entire footprint of 933,000 homes by next year.

The article notes that, although Videotron didn’t need to do so, some operators may need to use Switched Digital Bandwidth to free up additional DOCSIS channels.

Comcast also picked a system where it wouldn’t need to clear room for more spectrum when it unveiled its first wideband deployment last month in the Minneapolis/St. Paul area with speeds of 50 Mbps on the downstream and 5 Mbps on the upstream.

The service is available to residential customers for $149.95 a month while small to medium-sized businesses can get the increased speeds for $199.95 a month.

Some operators are apparently planning on deployment in 2009.

Popularity: 25% [?]

The cable industry has consistently demonstrated its commitment to policies that ensure all Americans have access to affordable broadband. This includes:

• Proposals to create a fund tailored to expanding broadband into unserved areas.
• The Broadband Data Improvement Act which would improve federal data collection regarding where broadband services have been deployed in the United States to achieve the goal of ubiquitous broadband availability for all Americans.
• Tax credits or other tax incentives to providers that build out in rural areas that are unserved by an existing broadband provider.
• Reform of the RUS broadband loan program so that funding is targeted specifically to unserved areas.
• Expansion of the FCC’s Lifeline and Link-Up Programs to help ensure that broadband access is extended to low-income households.
• Public-private partnerships to provide broadband in unserved areas.

We recognize that the government can play an important role in making certain that the economic and social benefits of broadband connectivity are extended to all areas of this country. While broadband deployment to every community in America merits the full attention of policymakers, legislation calling for “network neutrality” or government intervention into the operation of networks would undermine the goals of broadband deployment and adoption.

The government’s consistent light regulatory touch since the introduction of broadband has worked. Only that continued regulatory freedom is likely to spur the investment and innovation that consumers have come to expect.

The cable industry is on the verge of making the leap — from “broadband” to “wideband” — with a technology which can enable dramatically higher download and upload speeds. Several weeks ago, for example, Comcast launched a “wideband” service in Minneapolis-St. Paul that offers speeds of 50 Megabits per second. Comcast expects to have wideband available to 20% of its systems by year-end 2008 and to all homes passed by mid 2010.

The efforts of broadband network providers to build larger and faster networks have helped ensure the success of countless numbers of new Internet businesses and applications. Despite concerns about alleged limited access to broadband, use of Internet video on demand has grown at the most dramatic rate. In February 2008, nearly 135 million U.S. Internet users spent an average of 204 minutes viewing 10.1 billion online videos. YouTube represented 34% of those online videos, or nearly 3.5 billion.

For years, net neutrality proponents have argued that without government intervention, broadband providers would stifle competing services and content providers; Internet development and usage would stagnate; and consumers would be unable to use their broadband connections to download video or access other emerging applications. In fact, cable’s investment in broadband has driven innovation and investment in new content and applications at the edge — the exact opposite of what was predicted by advocates of net regulation.

(more…)

Popularity: 28% [?]

This series examining the OECD broadband rankings has focused so far on methodology problems with the numbers.  But even despite the study’s flaws, there is a need to discuss the current state of broadband adoption and ways it can be increased.

Ensuring every American has access to broadband is a shared goal of industry and government.  Indeed, with the sheer volume of information available online, it is important for Americans to have access to this resource if they want it.

Statistics aside, everyone should have access to broadband

The Internet has dramatically changed the way we communicate and access news, entertainment, and information.  People who use the Internet every day for work or leisure may look fondly at days before we were so connected but never want to give up their access to this valuable medium.

The OECD stats, unfortunately, give people a reason not to explore some of the root issues related to broadband adoption (adoption, not deployment).  These rankings tempt people to focus on the state of availability rather than asking why consumers aren’t connecting to services that are already available.

However, like most consumer products and services, there are those who will simply resist the trend.  A Parks Associates study last year found that 29% of all U.S. households do not have any form of Internet access and do not intend to subscribe over the next 12 months.   That wasn’t really news, but the reasons cited were:

• 44% said they were not interested in anything on the Internet
• 17% were not sure how to use the Internet
• 14% stated that they have Internet access at work

Only 14% of this disinterested group cited cost of a computer as the reason and another 8% cited cost of HSI service.  Only 3% of the respondents claimed that HSI service was not available to their home.

Further, a Pew Internet & American Life Project  study estimates that approximately 15% of U.S. households still rely on dial-up service and nearly 60% of these dial-up users said they are not interested in switching to broadband.

Cable Internet service passes 92% of U.S. homes.  Throw in broadband via satellite and you’re nearing 100%.  Look at the Parks study again and consider that first number — 44% of offline Americans believe the Internet offers nothing of interest to them.  The Pew Study draws its own conclusions about the difficulty of growing this number.

Non-internet users do not have very positive attitudes about information technology.  Many report worries about information overload and few link information technology to greater control over their lives… Given that these non-users are people with worries about information technology and not a lot of extra disposable income, luring them online won’t be an easy task.

Another aspect that is largely ignored in this discussion is the simple truth that some consumers simply choose not to use the Internet.  There are still people in the US who have no phone service, and there are an estimated 13-20 million US households that rely solely on over-the-air broadcast TV.  As hard as this is for those who are connected to accept, there are simply a lot of people unconcerned with the consumption of mass media and telecommunications technology.

Nobody should be left behind

Disinterest in the Internet aside, however, these services should be readily available to anyone who wants access to them.  Connected Nation, a non-profit organization committed to increasing broadband adoption, is working to ensure both availability (by identifying and mapping areas that are unserved) and demand (by dispelling the idea that “nothing interesting is on the Internet”).

Connected Nation is supported by a growing number of states and major players in the telecommunications space and is trying to improve broadband access to unserved areas and get people connected.

The real state of broadband deployment

Using studies to misrepresent the current state of broadband availability and clamor for the government to either mandate deployment or simply jump into the broadband business is misguided.  As Pew noted:

With home broadband penetration poised to surpass 50% this year [Note: By our estimation it is now slightly greater than 50%], it will have taken 9 years from the time the service became widely available for residential high-speed service to reach half the population. To put this in context, it took 10 years for the compact disc player to reach 50% of consumers, 15 years for cell phones, and 18 years for color TV. Each of those technologies, like broadband, represented an upgrade from a good or service with which most consumers had experience.

Citizens in the US are adopting broadband at a rate almost unmatched in the history of technology.  Anyone who wants to get connected should be able to do so.

Connected Nation is working with states and Congress to gather data on broadband availability, so government resources can be focused on areas where citizens have no access at all.  Cable is working with them to achieve that goal.

We should not, however, rush to the government to insert itself in the marketplace when the metrics used to make the argument are questionable and the market is already growing at a fast pace. 

Popularity: 28% [?]

This week, we’re taking a look at flaws in the OECD broadband study and the problems with relying on it to justify broadband policy changes.  One of the oft cited examples of countries doing broadband “right” is Japan.  Ironically, Japan usually resides just below, or just above, the U.S. in the OECD rankings (in the latest rankings, they’re just below us).  Yet Japan still commands outsized adoration.

However, a closer look reveals that the nirvana of Japanese broadband has been greatly exaggerated.

The Miracle of Japanese Broadband

If Japan has been held up as the shining example of low-cost, high-speed connections available to all, how could they slip behind the US?

The short answer is they never were the beacon of broadband they were held out to be.  While the maximum speed available to “some” in Japan is 100 Mbps, the fact is that, in most cases, that is a theoretical top speed.  The problem is these studies often use “advertised speeds” rather than actual speeds.  Advertised speeds sometimes do not meet the promise.  Most Japanese FTTH providers also include caveats that such a speed is not guaranteed and will, in fact, be lower during times of congestion.

In reality, roughly half of Japanese broadband connections are carried over DSL at speeds nowhere near 100 Mbps.

Surely, though, even with the speed being less than claimed, the fact that it’s so much cheaper makes it okay, right?  Well, not exactly.  The dirty little secret that goes unspoken in discussions of Japan’s low-cost ISPs is the fact that you have to subscribe to two different services to get an equivalent product to that offered in the US.  For example, not only would you subscribe for the network connection (essentially the equivalent of getting the physical line), but you also have to subscribe to an ISP (the network in Japan is divorced from the content).

For access to a 100 megabit connection and Yahoo! ISP service, you’ll be forking out between $55 and $60.  You may reach peak speeds at 2 a.m. when nobody is surfing, but the cost is not significantly different as a monthly outlay.  While some studies look at this calculation as the cost per 100,000 bits per second per month, it’s hard to actually quantify that if your speed is not guaranteed (or even static).

Looking at the OECD stats, we’ve already uncovered problems with the definition of subscription and the mathematical issues that result from their unit of measurement.  When other parties disseminate faulty and misleading information about cost and speed metrics, one realizes that most of the discussions about global broadband are largely anecdotal and not at all scientific.

As we have said throughout this series, there is a conversation to be had about ways to encourage broadband adoption.  That conversation, however, should be driven by facts, not anecdotal evidence and faulty math.

In our next installment, we’ll look at the challenges the U.S. faces getting people online.

Popularity: 38% [?]

This week, we’re taking a close look at the issues with the OECD broadband rankings that are often cited when the state of broadband availability in the U.S. is discussed.  We started with a look at the problems and inconsistencies with what OECD does and does not consider a subscription – a flaw that excludes millions of US citizens from being counted.

Today, we’re looking at a the basic unit of measurement in their study – subscriptions per 100 inhabitants.  To understand this issue, you have to begin with a simple question.

What happens when everyone reaches 100%?

All metrics should be equal.  No matter how you count it, when every nation reaches 100% broadband adoption, we’re all tied for first, right?  Actually, no.  This is an odd little side effect of the OECD’s reliance on “subscriptions per 100 inhabitants”.

If every country achieved 100% broadband access, there would still be clear winners and losers.  The OECD rankings would still produce disparate rankings because of the impact of calculating results this way.  In fact, a Phoenix Center study examined this specific problem.  By applying the ranking methodology to what it calls “Broadband Nirvana”, the study found that the United States would actually rank 20th - 5 places lower than where we are today - if every household and every business in every country had a connection.

By measuring total (primarily household) subscriptions per units of 100 inhabitants, the OECD fails to account for disparities in average household sizes throughout the world.  Those countries with fewer average residents per household (many of the northern European countries at the top of the OECD listing) will rank higher in the OECD statistics, yet the irony is that there are fewer residents in each of these homes who are able to take advantage of the HSI service.

Think of it this way.  If average household size is Denmark is 2.1 people, and you measure subscriptions per 100 inhabitants, you would have 48 subscriptions per 100 inhabitants.  One hundred subscriptions would cover 210 people.  In the US average household size is roughly 2.6 persons per household.  100 subscriptions cover 260 people.  However, based on the OECD methodology, you have only 38 subscriptions per 100 people.  The US ranking is much lower despite having roughly 20% more people with access. 

Because of that skew, the US, with more people accessing broadband through the same number of subscriptions, actually fares worse in the OECD outcome.  It’s a serious flaw.

That’s not to say that a serious discussion about ways to increase broadband adoption shouldn’t take place.  Tomorrow, we’ll take a look at Japanese broadband. Our final installment in this series will focus on some of the reasons people don’t adopt broadband and efforts to change that.

Popularity: 29% [?]

It seems hardly a week goes by without somebody sounding the alarm bell on the “crisis” in US broadband deployment. While we all share the common goal of bringing affordable broadband service to all Americans, it’s unfortunate that the most frequently cited source of broadband deployment – the semi-annual Organization for Economic Cooperation and Development (OECD) numbers – contains a variety of inaccuracies.

So, to help set the record straight, this week we thought we would take a look at the OECD broadband study and the real state of broadband today.  In our first two installments, we’ll examine flaws in several units of measurement utilized in the OECD study.  We’ll then move on to fact check the “miracle” of Japanese Broadband and finish by analyzing why consumers aren’t connecting to services that are already available.  

It depends on what your definition of a subscription is.

The most significant flaw in OECD’s methodology is their measurement unit of subscriptions per 100 inhabitants.  Average household size plays havoc with the “inhabitants” calculation, creating some serious unintended consequences.  We’ll cover that in tomorrow’s post.

Equally problematic, however, is what they do and do not consider to be a subscription.  In OECD’s definition of what constitutes a “broadband subscription,” there is no distinction drawn between business DSL or cable lines and residential DSL or cable lines, but there is a specific exclusion of direct fiber and T1 lines for businesses.  As a result, some businesses are counted and others are not.

OECD’s data fails to capture the tens of millions of U.S. workers that access the Internet via these special access connections.

The OECD measure also fails to count the approximately 16 million college students in the U.S., most of whom have access to both wired and wireless High-Speed Internet (HSI) service.   Also uncounted are the HSI users that access WiFi connections, and the growing number of mobile wireless and “Hot Spot” customers.

Undercounting these populations negatively impacts the US ranking, but counting them would be problematic as well.  Because so many people have broadband access at home, at work, via their mobile device, at college, or through some other connection, the risk of double or triple counting becomes fairly great.

Some have suggested that a better metric would be to simply measure the number of residential households that are subscribed.  The distinction is really very stark.  For instance, in the US, roughly 57 million households subscribe to cable, DSL, fiber, satellite, or fixed wireless service.  Using a measurement of how many “residences” have access would more accurately reflect the real state of residential broadband consumption, and would vault the U.S. ahead of 9 European countries which were ranked higher in terms of household penetration in the OECD rankings of December 2006.  (Note: Household data is not available for Korea, Canada, and Australia, so it’s unclear where they would rank).

Popularity: 36% [?]