The Chairman highlighted the economic force that broadband has become in the American economy, especially as a technology that powers job creation, and he cited a recent report by McKinsey which shows that broadband now creates 2.6 jobs for every one lost.

As cable was America’s first broadband provider, I welcome the Chairman’s remarks and enthusiasm about how broadband is sparking a renaissance in America’s economy.  But the irony of the entire speech is that not a single broadband company was even mentioned nor did we hear about the millions of jobs created by broadband providers which have built the networks that are the “indispensible infrastructure for America in the 21st Century.”

Sure, it’s to more fun talk about garage start-ups or cake delivery success stories, but let’s not forget who brought us to the dance.  Broadband is not some mystical force of nature. Broadband is the result of hard work and private investment, first from the cable industry and now many others.

The cable industry launched residential broadband service in the late 1990s and after $170 billion in construction and network upgrades, our broadband service is available to 93 percent of U.S. households – more than 123 million homes.  Cable’s broadband networks offer speeds of 5 Mbps or faster to more than 90 percent of U.S. households. Cable is also now providing next-generation wideband service, with speeds of 50 Mbps or more (in some cases, over 100 Mbps) to more than 90 million American homes.

Currently, 45 million customers rely on cable for their broadband Internet connections. As Chairman Genachowski notes, those broadband connections have become indispensible.

I know it’s been 15 years, but it’s important to remember that it was cable that brought broadband to life and gave birth to everything we delight in today.

But we also help impact the economy. Just this past March, we released the latest study by Bortz Media and Sports Group, Inc. on the economic impact of the cable industry. The study found that the U.S. cable industry supports nearly 1.8 million jobs representing gross economic output amounting to more than $251 billion.

Since 2002, direct and indirect employment attributable to the cable industry has increased by 638,000 jobs.  The industry added 4,700 jobs over the last three years at a time when the U.S. economy’s net loss of jobs was more than seven million.

We deployed broadband first; we offer some of the fastest speeds in the marketplace; we help keep American employed. When you think of the economic impact of broadband, don’t forget the critical role that cable has played.

In response to the study – which was prepared by economists Jeffrey Eisenach and Kevin Caves of Navigant Economics – RUS said: “The projects highlighted in the NCTA study are in rural areas that lacked sufficient broadband for rural economic development, as required by the statute,” the spokesman said. “All were carefully vetted on the ground by RUS field staff, received strong support from the local community, and will vastly increase broadband capacity in their communities.”

The RUS is correct in that some small sections of the three case studies lack sufficient broadband access, but when looking at the overall project area, the vast majority of consumers in those areas were already being served.  So instead of using limited government resources to extend broadband to unserved homes, these projects allow for the construction of duplicative networks.  The Navigant study simply demonstrates that the cost of building duplicative networks means that the small number of unserved homes that will be reached comes at an extremely high – and clearly inefficient – cost.

The funding of duplicative networks is also at odds with the prudent strategy that the FCC is implementing in its reform of the universal service system.  As we have noted before, both the National Broadband Plan and the Commission’s February 2011 USF/ICC NPRM recognized that the key to a successful broadband subsidy program is targeting scarce funding to those areas that do not have broadband.  Such an approach achieves the benefits of extending broadband to new areas without the negative consequences of subsidized overbuilding that were identified in the study.

Specifics of the Study

The economic analysis released yesterday shows that the RUS’ history of funding duplicative service has continued under its Broadband Initiatives Program (BIP) despite findings by the Department of Agriculture’s Inspector General and the Government Accountability Office that such projects are not cost effective.

The study examined three large BIP subsidy awards which total $231.7 million, or about seven percent of the total BIP $3.5 billion combined loan and grant program, and found:

• Of the three projects analyzed, more than 85 percent of households were already passed by existing broadband providers, and in one project area, more than 98 percent of households were already passed by at least one provider.
• The estimated cost per incremental home passed will be $30,104 if existing coverage by mobile broadband providers is ignored, and $349,234 if mobile broadband coverage is taken into account.
• The RUS funding approach was at odds with the National Broadband Plan recommendations; the approach used would massively increase the cost of extending broadband to all unserved homes.

I keep thinking about a post I wrote five months ago, in which I marvel that some people never seem to be satisfied, no matter how much broadband improves or the proliferation of connected devices continues to grow. Any good news about broadband doesn’t seem to get the traction of the not-so-good.

In June, we highlighted an FCC survey entitled “Americans’ perspectives on online connection speeds for home and mobile devices.” That study found that 91% of home broadband users report being satisfied with the speed of their service. Those results were echoed by a report from Leichtman Research Group that came out that same month. Leichtman found that “71% of US broadband Internet subscribers are very satisfied with their current Internet service at home.”

Now, a new post on the FCC’s Blogband blog offers the results of a new survey which focuses on commercial broadband service.  In talking to managers, owners or IT directors at businesses with 5 or more employees, the survey determined that nearly all businesses report having at least one broadband Internet connection.

When looking at attitudes towards broadband service suppliers, 95% of businesses report being very or somewhat satisfied with their current service. In addition, 85% of businesses were not planning to upgrade their service in the next 12 months, citing the adequacy of their current connection.

Of course, this is only the beginning. The cable industry continues to improve the speed and quality of its broadband service and we all need to do more to promote broadband adoption by the general population. But we should also step back on occasion to remind ourselves of the amazing success story that broadband has already become.  The FCC’s latest survey is a nice opportunity to do just that.

I know, moment’s over – back to work.

While acknowledging these successes, the FCC’s Sixth Broadband Deployment Report – or 706 Report – nevertheless concludes that broadband is not being deployed to all Americans on a “reasonable and timely” basis because five percent of American households don’t have access to broadband with speeds of at least 4 Mbps.

It’s worth noting that the 4 Mbps threshold is new and represents a significant increase from the 768 Kbps used in the 2008 report, and the 200 Kbps used in the first four reports.  We have no problem using a 4 Mbps threshold for defining broadband:  I have argued for several years that 200 or 768 Kbps was an inadequate threshold for a policy definition of broadband (pages 5-6).  But if the 706 Report is to retain any value as a measurement tool, the Commission must heed its own advice and use the definition as “a relatively static point at which to gauge progress and growth… from one Report to the next.” If the Commission continually increases the speed threshold to reflect “current demand patterns” and “estimated future demand” as it did this year, it becomes a circular nullity and it will be a certainty that deployment never will be considered reasonable and timely.

While we respectfully disagree with the report’s overall conclusion, I do understand and agree with some of the policy implications embedded in it. Why?  Because the report plainly acknowledges that there is no reasonable business case to be made for extending broadband facilities to many of the unserved homes.  So instead of viewing the report’s finding as an indictment of broadband providers, it’s  perhaps better read as a statement of principle by the Chairman and two commissioners that, in their opinion, broadband already should be universally available, and, if there is no business case for that universal deployment, the government may have to step in to achieve it. So far as that goes, we agree.  For example, we support the report’s call to action on specific items that will speed broadband deployment to unserved communities.  Immediate FCC action on Universal Service Fund (USF) reform and pole attachment policy is critical to connecting unserved areas.

As explained in comments we filed last week, our industry strongly supports the USF reforms recommended in the National Broadband Plan (NBP).  To fund the FCC’s broadband USF proposals, we recommend adopting our proposal – filed in a November 2009 rulemaking petition – to reduce subsidies in rural areas where ample phone competition exists.  The sooner the Commission reduces unnecessary funding in the existing high-cost support program, the sooner it can direct funding to broadband deployment and adoption.

We also strongly support the recommendations in the NBP to establish low and more uniform rates for pole access, expedite the attachment process, and improve rights-of-way management.  As we’ve explained in numerous pleadings, lowering the cost and improving the process for attaching broadband network to utility poles will make a significant difference in the business case for broadband in rural areas.

We appreciate that the report did not point to the Commission’s pending “Third Way” or “Open Internet” proceedings as potential solutions for connecting unserved areas.  There has been, and will continue to be, extensive debate on the merits of the Commission’s proposals in those proceedings.  But no one could credibly argue that adding Title II regulation, in any form, will have the effect of encouraging providers to invest in remote areas that they are not serving today.

But we’re disappointed with the Commission’s use of data in the report.  The report relies almost completely on stale data, flawed data, or undisclosed data.

The key statistics in the report are drawn from Form 477 data for December 2008, data that was out of date when it was released earlier this year and is now 18 months old.  Broadband providers have made two subsequent Form 477 filings (with another one scheduled in a few weeks), so the reliance on stale data is frustrating.

Equally troubling is the Commission’s repetition of the NBP’s claim that “actual” broadband speeds are only half of “advertised” speeds.   After the NBP was released, we submitted an expert technical report demonstrating that the comScore data used was deeply flawed.  Since then, cable and telco ISPs have been working constructively with Commission staff on a hardware-based testing regime that should produce more accurate results.  Given the hard work that has been devoted to produce accurate speed measurements, it is disheartening that the 706 Report chose to perpetuate the NBP’s flawed speed data conclusions.

Finally, some of the data relied on in the 706 Report is not publicly available.  The report relies extensively on a cost model created for the NBP, but that model hasn’t been released, making it impossible to validate its results.  The Commission also repeatedly refers to an FCC staff report on international trends, but that report also has not been released.

The good news is that these data hurdles can be overcome, and the Commission is embarking on a major initiative to revamp its data collection and reporting processes.

As we continue to reflect on the findings of the 706 Report, keep in mind that broadband has been adopted faster than any other major consumer technology ever.  We still have some work left to ensure that every American can reap the benefits of this service but let’s not lose sight of our success.

I think about this when I hear people complain bitterly that the U.S. is dangerously behind on broadband – there’s not enough broadband available, it’s too slow, it’s too expensive. Nobody can get online!

Of course, we have to ensure that as many Americans as possible have access to the Internet. Read this February post from Kyle McSlarrow or this one from James Assey in March. The cable industry has deployed broadband to 92% of American households. We continue to regularly increase broadband speeds and we’re rolling out wideband service based on the DOCSIS 3.0 standard (now reaching 65+ million homes). We proposed the Adoption Plus program to bring broadband to lower income households.

This is a time when:

• 95% of U.S. households have availability to Internet access with speeds of 4 Mbps or more
• 82% of HHs can choose from two or more wireline platforms
• More than 90% can choose from several 3G mobile options

Internet access is important. We can and should do more to get Americans connected. But are we really so bad off?

I Don’t Think We’ve Surrendered to Sweden.

Last month, we blogged about how high consumer satisfaction is with their current Internet connections, but all you’ll hear is about how slow our connections are.  Surveys show that an increasing number of people are using mobile devices to access the Web, but some wouldn’t count those consumers when measuring “broadband.”

Adam Theirer pointed out last year that the speed of adoption for Internet access is far faster than other technology developments (See this Pew report). With three-quarters of Americans currently using the Internet, adoption hit 50% in a decade, ahead of multichannel video (35 years), wireless phones (20 years), home computers (20 years), telephone and electricity (50+ years). Are we crawling along or well ahead of schedule?

Nokia Siemens Networks’ annual broadband development index, the Connectivity Scorecard, just came out and it showed that the U.S. just lost the #1 slot to Sweden. Sweden is beating us!

Of course, Sweden’s population is 3% of the U.S. population; it’s 4.57% of our land mass; the Swedish government owns 37% of the incumbent telecom provider (TeliaSonora) and the Finnish government owns another 13%, making the incumbent half-owned by the government.  Still, look at how bad we have it.

It’s not like I can buy a little device for a couple hundred dollars that I can carry around in my pocket and access most of the Internet, anytime and anywhere. It’s not like I can watch one of thousands of movies 24 hours day by firing up my Wii to reach the Netflix library or by tuning to my VOD service. It’s not like I can get on an airplane and fly across the country while surfing the Web.

Oh, wait. Yes, I can.

[NOTE: I should probably mention Louis C.K.'s terrific FX show Louie. And check out George Ou's debunking of the Berkman study – a key tool used to "prove" how the U.S. is behind – here and here.]

This received a lot of coverage (see this Ars Technica post), but lost in all the hubbub were the findings on consumer satisfaction: 91% of home broadband users report being at least somewhat satisfied with the speed of their service.

• 50% of home broadband users are very satisfied with their home connection speed.
• 41% of home broadband users are somewhat satisfied with their home connection speed.

How Do We Measure Satisfaction?

So, people generally don’t know their speed, but they are largely satisfied. Are these findings at odds? I don’t think so.

I’m a pretty savvy Internet user, but I couldn’t tell you off the top of my head what the speed of my Comcast home connection is. We also have Comcast here at NCTA’s offices, so I can check Speedtest.net and tell you I’m getting 35.74Mbs down / 4Mbs up. A colleague checked it earlier today and got 45 down / 6 up.

But I had to check to get those figures, because I don’t really need to know the speed I’m getting. What I’m interested in is whether I’m having a satisfactory experience. Are web pages loading? Is my streaming video buffering too much?

As NCTA has explained (See this previous post: The Measure of “Measurement”), and the FCC has acknowledged, online speed tests can provide a measure of the speed that a user experiences, but they do not necessarily provide an accurate measure of the performance of a user’s broadband provider because the results also are affected by the performance of home networks and the public Internet.

Occasionally, I’ll download really large files, but I don’t use any low latency applications. Therefore, for email, web browsing and streaming media, a steady connection covers my needs. My Internet experience is also affected by the computer I’m using and the sites I visit, which can only load the content so quickly in any case.

And since my cable provider keeps periodically increasing the speed of my cable modem service at home, I don’t keep up with what it is at any given point (although I know I passed 10 Mps some time ago). As long as it works and I can do all the things I need to do, I don’t otherwise pay attention.

The FCC’s survey suggests that the vast majority of users may have a similar view. In that sense, it is worth noting that the survey seems to present a very different – and more accurate – picture than you would get if you only read the comments that are posted on blogs that cover this issue.

The Future of Fast

Some people need a super-fast connection or do need to worry about latency, such as gamers. And as such applications as telemedicine or high-definition teleconferencing become more prevalent, more people will fall into this category. In the future, I may pay much closer attention to the speed I receive.

Cable operators appreciate that different consumers may need different levels of service and that some customers may be more concerned with the specific details of their service than others. That’s why NCTA has been working closely with the FCC on the testing initiative announced on Tuesday. The SamKnows test should be a good starting point in developing a common method by which all broadband providers can measure the speed they deliver to consumers.

But the reason 80% of users don’t know the speed of their connection may be because that’s not how they measure satisfaction.

The good news is that we have significant research which shows why these households haven’t yet subscribed.  In some cases, challenges in reaching these homes have been facilities-based – finding new and innovative ways of getting broadband service to rural and remote areas.

But in many other cases, as Pew Research and other firms have pointed out, the challenges involve “barriers to adoption,” namely, the availability of affordable computers, digital and technical literacy, an understanding of the relevance of broadband service, or the ability to afford the service itself (For further details, see the FCC paper entitled "Broadband Adoption and Use in America.").

We’ve been concerned about these issues for a long time.  Cable ISPs have invested heavily in building out their networks, making broadband service available to 92% of American households.  We’ve also focused on elements of digital literacy to help families better understand how to manage the content coming into their homes.  And, we are sensitive to the affordability of broadband service.  Many cable ISPs have established tiers of broadband service which allow subscribers to buy whatever level of service makes the most sense for them.

Broadband access for the two-thirds of American households that have it wouldn’t have been possible without the leadership of the private sector.  So we strongly agree with the Plan that one of the best ways to help connect more homes is through partnerships in which both the government and private industry bring something to the table.

Last December, after consultation with federal policy makers and other stakeholders, we proposed the Adoption Plus (“A+”) initiative.  A+ is a proposed two-year, public-private partnership.  It’s designed to promote sustainable broadband adoption for a vitally important population, middle school-aged children in low income households that don’t currently subscribe to broadband service.  Under the proposal, cable ISPs are prepared to offer deeply discounted broadband service and equipment, in partnership with schools, companies, and digital literacy groups that could help provide – to households where students qualify for free or reduced school meals – a package of affordable hardware and software, and training in digital literacy (See more in this previous post.).

Our strong interest in this kind of collaborative approach is why we’re happy to participate in a new pilot program that includes broadband ISPs, computer technology companies, nonprofits and the U.S. Department of Housing and Urban Development (HUD) to help bring broadband service to low-income homes around the country.

Under the leadership of One Economy, a global nonprofit committed to stimulating broadband adoption efforts in the neediest households, several parties have jointly filed an application to the National Telecommunications & Information Administration for funding through the Broadband Technology Opportunities Program.  The coalition will work with HUD to increase broadband adoption efforts in public housing and multi-family assisted communities. If the stimulus application is approved, federal funding – combined with actual and in-kind contributions from the various members of the coalition – would help bring broadband service to families in up to 250,000 government-supported housing units nationwide.  This target group encompasses many of the same families we propose to reach with the Adoption Plus proposal.

The coalition built around this HUD initiative comprises a unique collection of seemingly strange bedfellows.  There are the non-profits – One Economy and Connected Nation.  There are the hardware and software manufacturers – Intel, Dell, and Microsoft.  Telco ISP AT&T is involved in supporting the application, as are 14 of our member companies – BendBroadband; Bresnan Communications; Bright House Networks; Cablevision Systems Corp.; Charter Communications; Comcast; Cox Communications; Eagle Communications, Inc.; Mediacom Communications Corp.; Midcontinent Communications; Sjoberg’s Cable TV; Suddenlink Communications; Time Warner Cable; and US Cable Group, covering some 85%  of households across the country. Two trade associations – NCTA and USTelecom – also are in the mix.

The concept is simple.  Each entity involved in the initiative plays to its strengths in helping low-income families overcome barriers to adoption.  HUD will identify eligible households for the service.  The computer companies provide affordable hardware – which would be partly subsidized by the stimulus funding – and software, to help make families broadband-ready.  The nonprofits then provide training in digital skills and literacy, to families that are new to broadband.  And once these pieces are in place, the ISPs would offer deep discounts on broadband service, reduced-price or free modems, and free standard installation.

If you have read the Broadband Plan or its executive summary, the rationale behind this coalition may sound familiar.  The Plan highlighted the importance of creating, “public-private partnerships of hardware manufacturers, software companies, broadband service providers, and digital literacy training partners to improve broadband adoption and utilization by working with federal agencies already serving non-adopting communities.”

We think that with the formation of this coalition, and our ongoing efforts around Adoption Plus, we have hit the mark.

Twenty years ago, our industry founded Cable in the Classroom (CIC), which over the past decade has brought free broadband service to thousands of schools and community libraries.

In recent years, our industry has also focused on the digital divide and how to promote broadband adoption.  Cox Communications, for example, has participated in a widely praised program in Santa Barbara, California, in which it provides discounted broadband service to children who participate in the National School Lunch program, together with partners who provide discounted or free computers.

Even though broadband is available to more than 90% of the households in the United States, almost one-third of those households don’t take the service.  Why?  Well, recent studies by the Pew Research Center demonstrate there is no single reason, and some of the multiple reasons – such as understanding the relevance of broadband, digital literacy, computer ownership, and affordability – likely overlap.

Several months ago, with the strong encouragement of FCC Chairman Julius Genachowski, we started working with the FCC’s broadband team to explore how we might help.  They were critical to helping with the data necessary to determine how to really focus in on a concept that could provide the maximum benefit.  Chairman Genachowski and Blair Levin, Executive Director of the FCC’s Omnibus Broadband Initiative, were very supportive of developing a proposal that would help low-income households that do not currently receive broadband.

The A+ pilot program builds on the experience of Cox Communications’ Santa Barbara initiative, by proposing a two-year, public-private partnership designed to promote sustainable broadband adoption for a vitally important-but-vulnerable population – middle school-aged children in low income households that do not currently receive broadband service.  The program is called Adoption Plus because it is a comprehensive approach that treats broadband adoption as a multi-faceted problem that requires multi-faceted solutions.  Barriers to adoption – e.g., relevance, digital literacy, computer ownership, affordability – are interwoven and cannot be resolved in isolation.

The goal of the A+ program is to help give millions of students the opportunity to become digital citizens of the 21st Century by driving sustainable broadband adoption and positively and materially affecting educational outcomes.

Here is how it would work (a more detailed summary can be found at NCTA’s website):

• A+ would promote the adoption of broadband service to households that do not currently receive it, by offering comprehensive digital media literacy education, discounted computers, and discounted home broadband service to households representing up to 3.5 million American children in grades 6 through 9 who are eligible to receive a free or reduced-cost meal through the National School Lunch Program.
• We propose that school districts administer the program, apply for federal funding, and partner with non-profit corporations promoting digital media literacy, computer manufacturers and/or retailers, and cable and other broadband Internet Service Providers (ISPs).
• Perhaps the most important role of the school districts is to implement digital media literacy programs, including online safety training, and training on how to use computers and broadband.  Including administration costs, we recommend that $100 million of federal funding be used for school districts which apply to set up an A+ program.
• We also anticipate that computer manufacturers would supply discounted computers as partners in A+, but ask the government to consider whether and to what extent federal funding is appropriate to help further discount the cost of computers.
• For each eligible household, participating ISPs would provide free installation of broadband service; a 50 percent discount off the monthly subscription cost of their entry level broadband service; and a 50 percent discount off the cost of modem equipment, whether purchased or rented.
• It is important to note that, while we recommend federal funding for digital media literacy training and administration of this program by school districts, we are not seeking any government funding of the ISPs’ contribution to A+.

While the A+ program is open to other broadband ISPs who wish to participate, so far, all of the cable ISPs represented on NCTA’s Board of Directors have agreed to participate in the A+ program as outlined above.  Those companies also have committed to air public service announcements explaining and promoting local A+ programs.  We estimate the value of the cable ISP contribution to the A+ program, with full student participation, at well over $500 million.

Our industry will continue to creatively harness the power of technology, including broadband, for educational purposes in other ways as well.

For example, A&E Television Networks, through HISTORY, has partnered with more than a dozen major cable operators around the country in creating Take a Veteran to School Day, where veterans are welcomed into local schools for special assemblies and oral history projects – a program that was recognized by President Obama at the White House just a few weeks ago.  And Viacom has partnered with the Bill & Melinda Gates Foundation in the Get Schooled initiative to identify effective approaches to increase high school and college graduation rates, improve post secondary readiness and promote the fundamental importance of education.

With the nation’s new emphasis on science, technology, engineering, and mathematics (STEM) education, major cable companies have stepped up with new commitments, such as the $100 million Connect a Million Minds initiative launched in November by Time Warner Cable, to introduce young people to opportunities and resources that inspire them to develop the STEM skills that will help solve our economic, environmental, and community challenges of the future. Discovery Communications is supporting STEM education by offering a commercial-free programming block for middle schoolers on the Science Channel, and through Discovery Education, which will provide STEM Connect, a new broadband delivered curriculum-based career development resource helping students link their science, math, engineering and technology education to their future careers. President Obama recently recognized both Time Warner Cable and Discovery in a White House announcement on STEM initiatives.    Earlier this year, Comcast teamed with One Economy to launch the Comcast Digital Connectors program in more than 20 markets nationwide, an initiative designed to teach broadband technologies to young people ages 14-21 from diverse, low-income backgrounds, who then put that knowledge to work in their local communities.

And Cablevision offers teachers important tools for using broadband and interactive technology as part of its Power to Learn program.

There are many other examples of creative initiatives that recognize how broadband can positively affect education of America’s children.  What they have in common is an understanding that partnerships and collaboration among interested stakeholders is required for success.  A+ is an ambitious step forward in this tradition, and we look forward to working with interested government agencies and other stakeholders to make it a reality.

For example, South Korea and Japan are viewed by some Westerners as great broadband success stories. In reality, those markets’ policies have prohibited certain kinds of competition, which has restricted broadband growth outside key areas. And as for their vaunted speeds, there is evidence to suggest that narrative is flawed as well.

Therefore, I’m pleased to present a guest post from John Medeiros, the Deputy Chief Executive Officer of the Cable & Satellite Broadcasting Association of Asia (CASBAA).  His organization is an industry-based advocacy group dedicated to the promotion of multichannel television via cable, satellite, broadband and wireless video networks across the Asia-Pacific.

Sitting in Asia, where the pay-TV industry is growing by leaps and bounds, and reading about the debate in the U.S. on the cable industry’s success (or lack thereof) in stimulating broadband development, leads one to muse about the definition of success.

Some American observers have argued that Asia is so far ahead in broadband that the U.S. should look here for tips on how to catch up.  But with 56% of US broadband connections supplied by the cable industry [according to SNL Kagan], and with many parts of the country witnessing aggressive, creative competition between cable companies, satellite providers, and traditional telcos, the U.S., as viewed from Asia, looks mighty good.

Of course, there’s no reason this had to be the case – what made the difference in North America was the shift of US regulatory policy beginning in the mid-1990s.   The pricing and bundling freedom that U.S. cable operators have enjoyed since then has made it possible to build out high-capacity networks and develop new, high-quality content offerings on a continental scale. It’s also spurred growth and competition from other platforms. The free hand the cable industry has enjoyed in making technological choices has ensured the networks meet the real demands of paying customers.

Contrast this relatively enlightened regulation with some of the protectionist psychology that still prevails in some Asian markets.  A good example is Taiwan, one of Asia’s richest markets, which has a regulatory system where the government applies a regulatory strait-jacket to all operators (cable and IPTV).   Cable operators are all required to run the same 90-plus analog channels, and – never mind the rising global prices for content – they have not been allowed to raise rates in over seven years (and last year, during elections, the companies were forced to swallow rate reductions that had no rational basis, other than “the constituents like it.”). The result has been very limited investment in new infrastructure or in quality content.  Taiwan is well behind Asia’s other advanced economies on the digital curve, with the first digital STBs rolling out only this year.

Another example of over-rigid regulation is India, at the other end of the per capita GDP chart.   Apart from rate controls that have no clear economic justification (why should every channel cost consumers precisely 5 rupees per month, no matter what kind of content it airs?), India’s regulators have hobbled the market by requiring that every pay TV system (whether cable, IPTV or one of the 6 DTH operators) has access to the same content on “non-discriminatory” conditions.  So TV becomes a commodity without differentiation.   The inevitable result is that in that country, too, cable network upgrades and digitization are proceeding slowly, and regulators fret that national digital development goals are not being met.

India’s initial cable-TV development was, by contrast, one of the great success stories of private entrepreneurship in human history.  In an infrastructure-weak developing country, totally private capital and skill were mobilized to wire more than 80 million homes in about 17 years – a huge accomplishment (in sharp contrast to the 50 million homes wired by the state-owned telecommunications establishment, in about 100 years of trying.)   But now, with the cable industry firmly established as a part of India’s modern infrastructure, the government insists on hobbling it in the name of “consumer interest.”   The result will be that cable networks – starved of enough revenue to justify rapid upgrading – will remain low-capacity and analog far longer than they should.

Despite these problems, the Asian pay-TV industry is growing very rapidly.   This continent is still in the rapid-build-out phase of connection.  One recent report estimated that the top 40 pay-TV operators will add 11 million new subs this year, for about a 20% annual growth rate.  Growth is strongest in the low-ARPU emerging markets such as China and India, but it is warped by uneven regulatory policies (because India’s cable regulations are so draconian, the biggest growth is coming on DTH platforms; China has lots of digital cable growth, but it is centrally-ordered not market-generated).

Of course, talking about “Asia” in a single breath is a bit nonsensical, as this continent is easily the world’s most diverse region when it comes to pay-TV development.  There are examples of over-rigidity in some places, but some other Asian markets have regulators who are among the world’s best – enlightened, transparent, market-friendly and globally aware.   And in places like Indonesia and Vietnam, the regulators and the industry are striving to liberalize their markets and bring them up to global benchmarks, in order to overcome the handicap of years of excessive state control.

It makes for a fascinating mix of issues.  People who are interested in learning more about the Asian pay-TV market – with all its opportunities and obstacles – should consider attending the Asian pay-TV industry’s annual convention. This year’s event will be held in Hong Kong from Nov. 3-5.  More info can be found here: www.casbaaconvention.com.

It’s worth noting that this isn’t the first time the FCC has visited this issue, since the Commission adopted a new definition just last year in connection with changes to the Form 477 broadband reporting process. The 477 process semi-annually collects information from service providers about broadband connections to households and businesses; info has been collected each year, starting with data as of December 31, 1999.  Last year, the Commission found that services with download speeds of more than 768 kbps and upload speeds of more than 200 kbps will be defined as “broadband” services. Such a definition was important for the NTIA and RUS to have for use in their broadband funding programs.

But, as we say in our filing, we don’t think it would be a good idea for the Commission to use the process of defining “broadband” as a vehicle for imposing obligations or setting goals with respect to factors such as speed, price, symmetry or “openness.”  The definition has been, and should continue to be, simply a way to describe what is being made available to customers.  Any discussion of national broadband goals or potential service provider obligations should be done separately.  As cable’s history of providing faster and faster speeds demonstrates, the FCC’s definition has never served as a constraint on what is offered to consumers. What’s needed is a generic definition that focuses on the core functionality of the broadband service that customers are receiving today.

We identify three key advantages to such an approach:

• Using the definitions already in Form 477 (also used by NTIA in its recent mapping Notice of Funds Availability), will enable the Commission to compare a consistent set of data over time.
• Using those existing definitions will avoid the need to make additional changes to the Form 477 reporting process.
• It’s helpful for government agencies to use a consistent set of definitions.

Consistency is important and if we try to measure aspects at too granular a level, it becomes difficult to achieve such consistency.  For example, some parties have raised concerns about using advertised speeds as the basis for measuring broadband deployment.  In the Notice, the Commission notes that advertised speeds “generally differ from actual rates, are not uniformly measured, and have different constraints over different technologies.”  But simply requiring providers to report “actual” speed won’t lead to more meaningful information because there is no uniformity in how it is measured and there are numerous factors beyond the control of the provider that affect upload and download speeds.  Consequently, in our comments, we encouraged the Commission to work with the Internet engineering community to develop a consistent, uniform, reliable method of measuring “actual” speed before making a change.

There are proponents who argue that symmetry should be required, but most broadband networks are engineered to provide higher speeds for downloading than for uploading. Such an approach is based on consumer preferences and behavior; if symmetrical services are required, that would prevent providers from offering asymmetric services that might better suit the needs of some consumers.

A comparison might be made to creating a definition of a “computer.” Such devices can range from a netbook costing a couple hundred dollars to several thousand for a Mac Pro. The core functionality of various computers is what remains the same. Such a straightforward approach is also best when attempting to define broadband, as it exists at this time.