The OECD has released its broadband report for 2008. The numbers paint a very unflattering portrait of our standing in the 30 member countries.
Michael Geist provides a good summary of the findings, entitled “OECD Report Finds Canadian Broadband Slow, Expensive.” In his conclusion he writes:
Most Canadians recognize the critical importance of broadband networks for communication, commerce, education, and access to knowledge. Canada was once a global leader, yet today the marketplace suffers from high prices, slow speeds, and throttled services that have led to an unmistakable decline in comparison with peer countries around the world.
While I agree with Geist’s overall assessment, I’m not at all sure that “most Canadians” have any clue about the importance of broadband for our future or how much we’re being short-changed in the present.
Affordability, the forgotten metric
One of the most unflattering ratings is reflected in the graph above. I took the subset of G7 countries from the wider OECD coverage to illustrate a point about Canada’s so-called global broadband leadership. It’s one thing to be faced with prices 2.6 times higher than those in the US. It’s quite another thing to have our government leaders make claims such as the following – in the 2009 budget:
To this day, Canada remains one of the most connected nations in the world, with the highest broadband connection rate among the G7 countries.
Across the 30-member OECD – as opposed to the G7 – Canada rates 28th on the affordability index, second only to Mexico and Poland. And affordability is, as Geist puts it, “the most telling metric, since it confirms that Canadians pay more for less.” “Most connected” is bafflegab. Price matters.
Why does Canadian broadband appear to be so expensive? One explanation is retail rates for broadband aren’t regulated in Canada. The regulatory presumption behind rate deregulation is market forces can be relied on to keep competition robust and prevent one firm or a small number of firms from amassing undue market power. And that effect in turn is supposed to prevent prices from rising to an unacceptable level. The OECD data point to the opposite presumption: Canadian prices are higher than they would be in a truly competitive market.
That said, it’s not easy to prove that the pricing anomalies identified by the OECD in Canada reflect anti-competitive behavior.
Part of the puzzle is to what extent should cross-national comparisons be taken into account in making policies that affect residential Internet access? Such comparisons are open to the charge that special circumstances – like population density – may make them misleading or irrelevant. Maybe. But our government can’t have it both ways. If one OECD cross-national dataset, like penetration, is invoked to make Canada look good, then the 40-plus other OECD datasets have to be let through the door as well.
FCC plunges in
In the US, where a real public debate is taking place about broadband, the new and improved FCC is actively soliciting cross-national comparisons as part of its implementation of the Broadband Data Improvement Act, passed into law last October. (The Benton Foundation has an excellent summary here.) As part of a much more extensive mandate to make broadband policy on the basis of solid information, the FCC issued a public notice at the end of March seeking information on
the extent of broadband service capability (including data transmission speeds and price for broadband service capability) in a total of 75 communities in at least 25 countries abroad for each of the data rate benchmarks for broadband service utilized by the Commission to reflect different speed tiers.
In the same PN, the FCC promises to undertake periodic surveys of both residential and business broadband markets, of the kind that allow for assessment “on a statistically significant basis” – not of the self-selected e-consultation kind the CRTC has just finished conducting.
ITIF on international leadership
In May 2008, the highly respected Information Technology and Innovation Foundation (ITIF) released its study of cross-national broadband comparisons: “Explaining International Broadband Leadership” (summary and links page here). The authors state explicitly that “we can learn from best practices in other nations” – and suggest the US take a highly inclusive approach to cross-national studies:
While we shouldn’t look to other nations for silver bullets, or assume that practices in one nation will automatically work in another, we can and should look to broadband best practices in other nations, particularly from individual programs and initiatives to spur broadband deployment and broadband demand, and where appropriate, emulate those. Doing so will enable the United States to increase our broadband performance faster than in the absence of these proactive policies.
The ITIF study includes a meta-analysis of parts of the OECD’s 2007 broadband data. This analysis incorporates standard deviation scores and weighting to create a more accurate basis for combining and comparing three specific broadband measures: penetration by household, not per 100 inhabitants; speed, i.e. average download speed in Mbps, weighted by the penetration level of each delivery platform in each country (DSL, cable, fiber); and lowest available monthly price per Mbps, using the US$ PPP formula.
Based on the 2007 OECD data, here are some of the key ITIF findings:
Penetration (subs per HH)
OECD 30-country average: 0.51
Highest – South Korea: 0.93
Lowest – Mexico: 0.20
Speed (average downlink in Mbps)
OECD 30-country average: 9.2
Highest – Japan: 63.6
Lowest – Greece: 1.0
Price (lowest monthly price per Mbps, USD PPP)
OECD 30-country average: 3.77
Highest – Mexico: 18.41
Lowest – Japan: 0.13
Composite score (sum of standard deviation scores for each indicator)
OECD 30-country average: 10.00
Highest – South Korea: 15.92
Lowest – Mexico: 4.41
The ITIF’s composite ranking puts Canada in 11th place among the 30 OECD countries.
These figures provide a good snapshot. But they only begin to reveal the analytical nuances that must be aired in a full-blown debate on 21st-century broadband. This summer, the CRTC will be holding its inquiry into ISP traffic management practices. This is a useful first step. But until the Commission and its political masters take a long, hard look at what’s going on in the rest of the world, nothing much is going to change here at home.