Sunday, January 27, 2008

Why US connectivity is lagging

We have discussed the decline of the US in terms of connectivity. A recent article in the Economist asks why some developed nations are doing better than others, concluding that "The best explanation, in fact, is that broadband thrives on a mix of competition and active regulation, to ensure an open contest".

In South Korea, where half the population lives in large apartment buildings, each owns its own internal cabling and allows rival operators to install equipment in the basement. Tenants choose which to use. In Japan, politicians pressured the dominant operator, NTT, to connect people's homes by high-speed fiber lines. The Communications Ministry has indicated that it will make NTT open those lines to rivals.

In theory, France, Canada and the US also passed laws requiring incumbent telephone companies to allow competitors access to their local lines. Those laws have succeeded in generating competition in France and Canada, but not in the US where regulatory and court decisions have enabled the telephone companies to keep competitors out.

Average advertised download speed in Japan is 95 megabits per second. How does that compare to the speed in your home? What sorts of applications would such high speed make possible? In Denmark, the Netherlands and Switzerland, over 30% of inhabitants have broadband. In the US it is around 22%. How might that impact the economy?