Battle of the broadband studies (1)

The FCC is doing its due diligence on the National Broadband Strategy, due for delivery to Congress on February 17, 2010. One of the most anticipated pieces of this big puzzle is the international benchmarking study commissioned of Harvard’s Berkman Center for Internet & Society. A draft of the study has just been released, entitled “Next Generation Connectivity: A review of broadband Internet transitions and policy from around the world” (pdf). It makes very interesting reading, especially when contrasted with the ISP-financed, Canadian consulting study released here last week – “Lagging or leading? The state of Canada’s broadband infrastructure” (pdf).

The Lagging study has two points to make. The general point: broadband in Canada is in fine shape, thank you. And the more particular point: we get a bad rap because of what the author refers to as “serious methodological errors” – especially on the part of the OECD.

While the devil’s in the data details, let’s not lose sight of the bigger regulatory picture: the CRTC has done a dreadful job of implementing market-based competition for broadband. Non-facilities-based broadband competition is a lousy idea to begin with. But if you have no real options and go with unbundling and resale in what is basically a duopoly, it’s not great policy to let your incumbents traffic-shape downstream to all their wholesale customers – and allow them to impose usage-based pricing on everyone as well. Don’t take my word for it. The Berkman study is all over this problem.

Acid rain? What acid rain?

The Lagging study is positively Reaganesque in its effort to make our broadband infrastructure sound “not awful” as Geist put it the other day. The study blames a) the media and b) bad research for sullying the reputation of our hapless ISPs:

“The frame of the media narrative has been that Canada is not doing well; that we lag our international peers. We are concerned that too much emphasis is placed on superficial headline numbers, without sufficient critical analysis of the meaning behind the data. … International comparative statistics have been conflicted on Canada’s broadband performance. Based on our review, we have determined that this conflict arises in large part because of serious methodological errors that plague some of the research and bias the resulting rankings” (p.1: my emphasis).

Superficial? Conflicted? How’d the shoe get on that foot? If there’s a dominant narrative at work here, it’s the self-congratulatory story the Commission and incumbent ISPs have been stroking for years. In its August 2009 Monitoring Report, the Commission keeps making breezy references to our good fortune. For example: “Canadians continued to embrace technologies including broadband access to the Internet as the number of residential subscribers to high-speed Internet services increased by 9%” (p. iv). Over the page we read that “Canada has the highest proportion of households with broadband connections among the G7 countries” (p. v).

Where have you heard that tired old bullshit before? At the July ISP hearings, where the broadband supplicants were all chanting the same hymn: Canada’s the best, although our customers are using way too much bandwidth so we’re spending billions to keep up. (Btw, of course the international stats have been “conflicted” – though that’s not a term of art in econometrics. Different studies undertaken across many different countries over a multi-year period are going to give you lots of apples and oranges. Get over it.)

The Lagging report’s allusion to “serious methodological errors” quickly turns into “methodological flaws,” and the #1 culprit is the OECD:

“Canadians … have access to among the most affordable entry-level services, ranking behind only the United States on this indicator, according to the International Telecommunications Union (ITU). This stands in contrast to the OECD’s measures of price and price per Mbps which we found to suffer from methodological flaws. … Canada is surpassed by South Korea, Iceland, Netherlands and Denmark regardless of the measure of adoption. However, almost all of these countries have much higher population densities. In fact, we have found that Canada is doing very well in terms of availability, affordability and coverage (p.2: my emphasis).

I’ll just note in passing the futility of making policy for the future around entry-level services: “high-speed” access is defined by our regulator as a blistering 128 Kbps. Not to mention the sophistry in using population density as a limiter of next-gen networks. Canada’s density overall is about 3.2 people per square km. What’s that got to do with our lousy broadband options here in Toronto, with a density of nearly 4,000 people per square km? According to the Bell and Rogers Web sites (once you work your way through all the bundles, special offers, contracts, little extras like modems, etc), their best current offerings of 16 and 18 Mbps respectively cost well over C$100 a month.

As we’ll see, it isn’t just our retail pricing that has set records. Here’s a piece of data you probably never encountered before: Canada has the highest wholesale rates for incumbent unbundling across the entire OECD. Next up: the Berkman study slams Canada’s broadband market and the CRTC’s “hesitant” broadband regulation.

5 thoughts on “Battle of the broadband studies (1)

  1. From the Lagging study (p.4): “With regard to the few outlier statistics that suggest we are lagging,
    namely the OECD penetration and performance numbers, we, like others, have found
    significant methodological problems. The OECD broadband metrics suffer from inconsistent
    data sampling across countries and a bias in favour of countries with smaller household sizes.
    As a result, the validity of their broadband rankings is suspect.”

    The Lagging study is a perfect example of Reaganesque BS indeed. Completely shying away from issues of broadband quality, Lagging is out to prove Canada is in fact alright when it comes to deployment and penetration of broadband nationwide, despite unfavourable geographic conditions (which we are constantly reminded of). Textbook straw man argument. I find it ironic that Lagging accuses the OECD of including outliers in their research, when it only stands up because of the population density outliers they include in their study.

  2. Well, William, it sounds like you should scrap your ‘Berry and take a long vacation. And – I can’t believe I’m the one saying this – write shorter comments. When you say you’re “constantly stressed” by your professors, I assume present company is excluded. Futhermore, I have no data about correlations between broadband and stress levels, although I have experienced a lot of stress myself thanks to _inadequate_ broadband. Which brings us to a couple of points…

    Technological determinism. Much of what you say here presupposes that particular technologies actually cause people to behave in certain ways – a pretty wobbly theory. Digital technologies have been blamed for everything from making people illiterate to making them anti-social and even violent. The “Internet addiction” school would be part of that. If a guy is going to stay home all the time and get weird, I maintain that guy didn’t need the Internet to make him stay home and get weird. Could have been ham radio. My over-simplified theory is certain technologies make certain behaviors possible – and most of us have enough free will left to choose from a whole range of options. Don’t be denying your free will.

    Choice or not. That said, there’s certainly a big difference between having a broadband device that keeps you in contact with your boss all day and having a big plasma screen and home theatre with an ultra-fast broadband connection to thousands of great movies. Having to be alert too much is stressful. On the other hand, I’m surrounded by morose people here in Starbucks who would rather stare at their ‘Berry, hoping for a jolt of email love, than stare out the window contemplating the change of seasons.

  3. Tim Sanders, Chief Solutions Officer at Yahoo!, coined the term “New Economy Depression Syndrome”, which he used to describe “a state of work-related stress brought on by information overload, constant interruption by technology (think e-mail, instant messaging and cell phones) and the increasing personal isolation that technology affords us”.

    I find myself over worked and constantly stressed with both my employers and professors or colleagues being able to reach me anywhere I have 3G service, any day, at any time. Before you can even focus clearly on one task at hand, there another 5 piling up on your berry requiring your attention, forcing you to multi-task beyond a level of what I’d call ideal work conditions. This of course leads to an overload of information and an abundance of stress, conditions mentioned by Sanders.

    Technology essentially follows us like our shadow, but with the implementation of broadband improvements, it may as well be as close to us as the air we breathe. It may be the best thing that could ever happen to us from the perspective of capitalism, but it may be the worst thing to happen to us from a social and health perspective.

    My questions are:
    -Do workers in countries with higher qualities of broadband experience higher levels of stress?
    -Has or will life expectancy rate increase or decrease after improved broadband implementation phase in these countries?

  4. Actually, Alex, the demand/price relationship is badly skewed by 2 market distortions. First, the only 2 well publicized BB offers in Toronto are from the phone company, Bell, and the cable MSO, Rogers – the typical arrangement in many large North American cities. Whether this technically constitutes a duopoly or not, there’s lots of anecdotal evidence that many people are either not in the line of sight for satellite service; not aware of options like DSL resellers; or are simply afraid to take up a DSL option like TekSavvy or National Capital Freenet, because e.g. they don’t want to give up an established email address, like with Sympatico (a discussion I’ve had with numerous friends). The other distortion can be blamed directly on the CRTC: setting the wholesale price to DSL resellers too high, plus allowing Bell to interfere with what resellers can offer that would give them market differentiation.

    As to your point about efficiency… This suggests that the incumbents can’t afford to lower their prices because their margins are too thin. Highly unlikely. The problem of high prices stems from what the incumbents can get away with, i.e. they keep raising their prices because they can. Retail rates aren’t regulated and competition is very weak. The solution? a) Lower DSL wholesale prices sharply; b) make unbundling manadatory for high-speed cable; c) encourage the deployment of FTTx. And of course, let’s get the government working on a national digital strategy.

  5. It is ridiculous that the best offers for broadband from Bell and Rogers are only 16 and 18 Mbps. Not to mention the high costs! Since the population density in areas like the GTA is high, it makes sense that there is a high demand for broadband, which correlates to the high price.

    Is there any possible way to offer higher broadband speeds at cheaper prices if somehow these companies make broadband more efficient? IMO efficiency is the key here and if we not only want greater speeds but also lower costs, then there needs to be some kind of efficient way for meeting broadband demands. I’m still trying to figure out what that efficient method could be.

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