Another View of the US Position on Broadband

Another View of the US Position on Broadband

While there is much wringing of hands with regard to broadband in the US versus the rest of the world, I wondered if we were analyzing the numbers properly. Currently, broadband usage is measured using three factors price, speed and penetration. However, most of the time, I see price used as a measurement, it is not normalized to average income, disposable income or any other relevant measure of income across countries. Given that, I looked at several reports including a global study of broadband usage and penetration and average world salaries. This was important to do because then I could take the average monthly cost of broadband in the US ($53) and compare that against the average monthly cost of both industrialized nations and emerging nations. The results were indicate that the US has better pricing than usually attributed to it and not surprising the developing nations are more expensive than advertised.

Using Japan, UK, China, India and Sweden, let's look at some key factors.

Average monthly price for a broadband subscription is

Japan     $34.21

UK            $33.34

China      $13.25

India       $22.00

Sweden $34.00

US             $ 53.06


Most studies would then list the US as the highest costing broadband service. However, if we normalize these numbers based upon average salaries and disposable income using the US as the baseline you discover that Japan ($37) and the UK ($44) are below what would be expected. Citizens in these countries are getting good value for their broadband services. However, China ($10.03), Sweden ($28.63) and India ($1.21) are overcharging with India at over 18 times the appropriate value price.


Understanding this relationship also helps to understand penetration percentages and per megabit pricing better. This would have to much be more than a blog to completely work through all of the data I studied, but my conclusion for the US in terms of broadband positioning is we are okay with our the average cost of broadband services. However, when we look at the members of the G7, we are sixth highest in per megabit pricing, with only Canada higher. Finally, with regard to penetration, although, we lead the world in terms of total number of subscribers, when compared to the G7, we are dead last.


The net of this is that the US needs to increase its bandwidth speeds and, yes, we quickly need to address our level of penetration. However, our focus on penetration may be misplaced by expansion in rural areas rather than addressing why Americans who have access are not participating. More on that next week.


See you on Monday with a new recipe. Have a great weekend!

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