Carriers Focused On ROI
The existing large telecommunications providers invest their money where there is maximum return on investment, which results in a patchwork of coverage throughout the U.S. Telecom providers maximize profits and spend millions of dollars lobbying to create laws that decrease competitive challenges, while having little incentive to provide new services to less population-dense areas of the country, or to increase speed and lower costs for those who already do have service. This state of affairs stands in marked contrast to the situation in those nations that are truly broadband leaders.
In the absence of widespread government initiatives and incentives to roll out broadband services in rural areas, telecom providers have made the decision to maximize profits by rolling out service in those areas that have the highest population density and lowest cost of build-out per customer. The free market wins in the short term, quarterly profits are maximized, but the customers in less-profitable geographic areas lose, and the nation as a whole loses out over the long term, falling behind other nations with more farsighted policies.
While there's certainly a degree of competition in the country's broadband market, and broadband access prices are trending slowly downward, prices are still much higher in the U.S. than in many of the countries that lead the world in broadband use. Part of the cause for this pricing disparity can be attributed to the fact that competition brings lower prices and greater innovation, and the U.S. broadband market is, in many ways, not highly competitive.
In many areas of the United States, the choice largely comes down to a dominant DSL carrier and a dominant cable carrier, both protected by historical and regulatory environments that allow cable and telecommunications companies to control the "last mile" to the home. The top four cable and DSL companies (Comcast, AT&T, Verizon, and Time-Warner) provide more than 55% of the U.S. broadband market. If, as the government policy seems to be stating, the goal is robust competition, the policy is failing. The availability of wireless broadband changes the environment somewhat, but wired speeds and bandwidth will almost always be higher than that available via wireless, so exclusive control of that "last mile" of wire to the home still means that competition for the highest-speed telecommunications services will continue to be limited.
Losing The Lead
The United States may be a technology leader, but it isn't a broadband leader, in relative coverage and use of broadband, in speed and capability of the services that are widely available, or in price. Broadband infrastructure in the United States, while healthy by some measures, is marked with surprisingly little competition in some key critical areas, and in others, such as wireless communication and data services, a patchwork of incompatible technologies has led to inconsistent and often substandard regional service, duplication of effort, and waste of resources -- exactly the problems that telephone regulation in the 20th century was designed to address.
It's clear that broadband access isn't just a faster and more convenient way to view Web pages and download songs or e-mail. Many applications in use now, such as videoconferencing, IP telephony, and video-on-demand, and many more which are still over the horizon, are dependent on broadband access.
Broadband is a leveler. It opens markets and possibilities to people who may be geographically distant from traditional centers of commerce -- people who could be doing valuable, productive, high-skilled work, or bringing new products to a global market -- if they had the capacity to do so. Many nations have recognized that widespread broadband access is a critical strategic asset, pumping billions of dollars into their economies and enabling entirely new kinds of business models and economic opportunities.
Developing nations see broadband as an invaluable tool for their economic growth -- India's government, for example, has finalized a policy to accelerate the growth of broadband services, noting the services' potential to improve GDP as well as quality of life.
Those nations able to craft genuinely forward-looking telecommunications policies that promote universal access as well as enhancing competition, and which can balance short-term market forces against long-term national priorities, will reap the current and future benefits of increased economic productivity. They will be the true trailblazers, and the first to see and make use of the rich possibilities which lie ahead. It remains to be seen whether the United States will regain the initiative, and be among those leaders.