New FCC Data Reveals A Broken Broadband Marketplace

So the FCC released its latest report on the state of internet services.

Most of the hullabaloo is about how more than half of America's so-called broadband subscribers aren't actually subscribing to broadband as defined at 4Mbps down and 1Mbps in the FCC's national broadband plan.

This is an extremely important thing to point out as it shows how even by the underwhelming bar of 4Mbps/1Mbps, America's still underachieving and there's a lot of work left to be done.

But at the same time we have to be careful about decrying this as evidence that there's a broadband supply issue as this report talks in terms of connections, and it could be that speeds greater than 4Mbps/1Mbps are available, it's just that consumers aren't seeing the need to pay more for more bandwidth.

Yet there are even more troubling facts that can be pulled from this data that not only clearly show America's broadband deficits but also the shortcomings of our entire national broadband strategy.

Taking on these issues in sequential order, the first figure shows the distribution of reportable connections by downstream speed.

What this highlights is not only that more than half of American broadband subscribers have access to less than 3Mbps downstream capacity, but also that there are nearly twice as many people in that situation as there are people subscribed to service above 6Mbps down. This demonstrates tremendous shortcomings either in supply or demand; there's just no way around it.

But the situation gets even worse in the next figure, which shows the distribution of reportable connections by upstream speed.

Half of American broadband subscribers have less than 756Kbps up, and another 40% only have access to between 756Kbps and 1.5Mbps. This is astonishingly putrid.

While some have called out America's upstream shortcomings, I continue to be amazed at how little serious attention this issue is given despite having profound economic implications. These implications are simply: what kind of a digital economy do we want in America? One where users simply consume content, or one where they're contributing content? Do we want to be a country of eaters but not farmers? Do we want a country of buyers but not manufacturers? Not to fall too deeply into hyperbole, but these are the clear ramifications of having a broadband infrastructure with such pathetic upstream capacity.

The next figures highlight America's upstream problem even more clearly. The first shows that if you have less than 3Mbps down, then you almost certainly have less than 1.5Mbps up. The same generally holds true if you have between 3Mbps and 6Mbps down. Only once you start to get above 6Mbps down do we start to see upload speeds above 1.5Mbps, but even then only about 10% of all broadband subscribers in America today are on a pipe that's greater than 6Mbps down and 1.5Mbps up.

Moving on to the next two figures is where things get really interesting. They both compare various speeds of service relative to the number of providers within specific geographic areas.

The first focuses on residential fixed location connections. What this grid shows is that the faster the speeds go the fewer providers there are to deliver it. Once you get above 6Mbps down and 1.5Mbps up, the best you can hope for is two providers, the vast majority of the time there's only one provider, and as often as there are two providers there are no providers.

To me this shows the fallacy of relying purely on market-driven facilities-based competition to move our country forward. Only having two competitors does not a robust marketplace make, and the reality is that unless we force open broadband networks, then the best case scenario for competition above 10Mbps is three competitors: a telephone company, a cable company, and a fiber overbuilder.

So many people refer to competition as the panacea for all our broadband woes, but unless that competition comes in the form of requiring all broadband operators to wholesale access to their network, then it'll never come as facilities-based competition won't work.

But some of you may be asking, what about wireless? Won't that provide the competition we need to drive up the speed and down the cost of broadband?

If you listened to the FCC's rhetoric you'd certainly think so given how much energy they've put on issues like spectrum and a desire to lead the world in mobile broadband, but their own data shows that this rhetoric does not match with reality.

In the next figure they take the same data as the last but then layer on mobile wireless networks. You know what happens? The number of providers in areas with 3Mbps down and either 200Kbps or 756Kbps up increases, but the number in areas with 6Mbps or 10Mbps down and 1.5Mbps up stay exactly the same.

What this clearly shows is that wireless does NOTHING in terms of providing greater competition to deliver faster broadband to Americans.

Now, some might cite the oncoming deployment of 4G wireless as a white knight racing to the rescue, but here's the thing: 4G services aren't delivering all that fast of service today, it's going to take a few years before they're anywhere near fully deployed and actually delivering 10Mbps-type service, and by the time this happens the bandwidth benchmarks the FCC's using won't be relevant any more as by then 10Mbps will (hopefully) be the lowest speed tier and not the highest.

What this all boils down to for me is that America's got a crisis on its hands when it comes to enabling a competitive marketplace for high capacity broadband networks. Sure when it comes to the slow stuff things are looking OK, but the rest of the world isn't waiting around for us to catch up. The fact that we're still ranking broadband based on a top-end downstream tier of 10Mbps and an upstream tier of 1.5Mbps should be a national embarrassment.

And yet that's not the rhetoric you hear coming out of the FCC. Sure they may allude to things not being optimal, but that's such a milquetoast response relative to the clear and present need this data shows. And this isn't just an issue of getting rural america connected; this data also represents America's cities.

When Chairman Genachowski entered office he claimed this was going to be a new era of data-driven decision-making at the FCC. Well here's your data showing that the current state and trajectory of America's broadband is abysmal and systemically broken. Now what are we going to do about it?