FCC Chairman Julius Genachowski has already riled up the country's big ISPs in so many ways—network neutrality for wired and wireless networks, inquiries into wireless billing and competition—that he might want to have a staffer start tasting his coffee first. But a new report (PDF) commissioned by the FCC threatens to make all those other issues look petty by pointing out that mandating "open access" to broadband networks works really, really well as a way to boost speeds and lower costs.
If you thought ISPs hated the idea of network neutrality, imagine if Genachowski actually starts talking about forced line-sharing or "functional separation."
"Incumbent recalcitrance"
According to the 200+ page report, the idea of open access may be unpopular in the US, but a careful look at the data shows just how well it worked. "Contrary to perceptions in the United States, there is extensive evidence to support the position, adopted almost universally by other advanced economies, that open access policies, where undertaken with serious regulatory engagement, contributed to broadband penetration, capacity, and affordability in the first generation of broadband," it says.
In fact, "The lowest prices and highest speeds are almost all offered by firms in markets where, in addition to an incumbent telephone company and a cable company, there are also competitors who entered the market, and built their presence, though use of open access facilities."
If that's tough to digest, consider the following chart which graphs the costs and speeds of the fastest broadband offerings of providers from all over the world. The high-priced, low-speed options are in the lower-left, while the low-priced, high-speed options are in the upper right. We have highlighted the US ISPs on the chart with red boxes just to drive the point home.
(Canadians, you can stop laughing now; as the report notes, Canadian ISPs have a reputation for quality that is largely unearned; note the locations of Shaw, Rogers, and Bell Canada above.)
The report was commissioned months ago by the FCC, but it was done by Harvard University's Berkman Center for Internet and Society (cofounded years ago by none other than Joel Tenenbaum defender law professor Charlie Nesson). The money to fund the report didn't come from the FCC, but largely from the Ford and MacArthur foundations "so as to allow us to respond to this highly time-sensitive request to support the FCC’s efforts, while maintaining complete independence from the agency." The lead author was Yochai Benkler, author of The Wealth of Network (the curious can download the book as a PDF).
Julius Genachowski's FCC has been promising a "data-driven" approach to contentious issues since he arrived, and the new report is one of the fruits of that effort. But did Genachowski think he was going to get this?
"We find that in countries where an engaged regulator enforced open access obligations, competitors that entered using these open access facilities provided an important catalyst for the development of robust competition which, in most cases, contributed to strong broadband performance across a range of metrics. Today these competitors continue to play, directly or through successor companies, a central role in the competitiveness of the markets they inhabit. Incumbents almost always resist this regulation, and the degree to which a regulator is professional, engaged, and effective appears to play a role in the extent to which open access is successfully implemented with positive effects."
And if incumbents show "recalcitrance," government can always force them to "functionally separate" their ISP business from the underlying last mile network—as the UK has already done to BT.
Open access turns out to be so crucial that the report actually spends much of its time discussing the issue with case studies and lots of number-crunching.
"Open access" to broadband networks used to be the law of the land. From 1996 to 2001, telcos like AT&T were required to lease their last-mile copper networks to competitors (cable was never included in the scheme), and companies like Earthlink sprang up to compete with the telcos' own Internet offerings. Most other countries with developed Internet infrastructures have adopted open access schemes of various stripes—Canada forces telcos to share lines, while countries like the UK and Australia are working on massive fiber networks that will have to be leased to anyone (Japan already uses this scheme).
Even countries that initially opposed such open access rules, like Switzerland and New Zealand, changed course and adopted them in 2006.
The report doesn't tell Genachowski to push for open access in the US, but it comes pretty close. After analyzing all the data on US broadband and sifting through the controversies about each data source, the Berkman researchers synthesized the various rankings into a single score for penetration, speed, and price. The US was 17th in broadband penetration, 11th in speed, and 12th in price.
Better in Busan
One other list really brings the point home. When one looks at the actual download speeds in various cities around the world, no US city even makes the top 20. Instead, honors go to:
- Busan
- Seoul
- G?teborg
- Stockholm
- Yokohama
- Amsterdam
- Paris
- Tokyo
- Aarhus
- Helsinki
- Rotterdam
- Hamburg
- Kosice
- Bern
- Berlin
- Copenhagen
- Espoo
- Lyon
- Lisbon
- Oslo
So congratulations, residents of Busan and Aarhus. Of course, we all know that the only reason you're winning the broadband race is because we live among the amber waves of grain while you scuttle about in concrete high rises.
Actually, the Berkman report debunks the population density argument, too. "The surprise here is that despite its high density, South Korea actually outperforms even what its high urban density would predict, and that highly dense countries like the Netherlands and Denmark also outperform what their urban concentration would predict," it says. "In general, most of the countries that appear to be positive observation models, as identified by their levels of penetration, are above their predicted penetration levels given urban concentration, suggesting that their presence in the higher quintiles of penetration indeed marks them as potential models for policy observation, rather than simply as the beneficiaries of propitious geography."
"Models for policy observation" they may be, but does open access in the US really stand a chance of returning? And would Genachowski even consider picking such a fight in the near future? We wouldn't be surprised.
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