Thursday, September 24, 2009

The Broadband Numbers Racket

What the numbers really say:

Professor Thomas Hazlett takes issue with recent allegations that the U.S. is falling behind other nations in broadband adoption.

In a Financial Times op-ed, Hazlett takes a look at market data showing that the U.S. ranks first (at 71.1 percent) among the five wealthiest large economies, followed by France, the United Kingdom, Japan, and Germany (using calculations based on broadband subscriptions, population, and household size).

Deregulation, rather than regulation, has been the impetus behind strengthened competition and innovation, says Hazlett. "French and Japanese networks languished early in the WWW era, while unregulated US cable TV operators pioneered innovations in residential broadband," he says. "DSL growth in America then surged when it, too, was deregulated."

"Cherry picking broadband penetration numbers to imply the US is slipping into Third World status is fine for a quickie term paper, at least if Wikipedia goes down," says Hazlett. "But adults ought to sort through the multi-dimensional complexity of the real world—as The Economist attempts to do with its e-Readiness Index which, in 2008, ranked the US as first in the world."

Read Professor Hazlett's article here.

1 comment:

thinking said...

It's a difficult topic to rank.

Both the OECD and ITIF have the US lagging behind in some key indicators. So it depends upon whose statistics one wants to believe.

The situation is complex, what works for one country may not work in another, and some of the factors for the differences are not related to policy.

But there is certainly nothing wrong for any country, including the US, to decide to decide to do better.

As for deregulation, that is a hugely complex issue, but deregulation is not a panacea, just like tax cuts are not always a magic cure.

As with anything else, it's finding a good balance, and then always adjusting. Deregulation has not worked when tried in the energy sector...see Enron and California. We certainly wouldn't want to have no regulation of food or drugs, or transportation.

In the world of finance, we see what a lack of properly regulated mortgage industry brings, along with a lack of regulation for derivatives, such as MBS, credit default swaps, etc.