There has been a natural experiment in the US and EU for the last 10 years in broadband policy, the results are in. A decade ago the EU accounted for one-third of the world’s broadband investment; today that amount has plummeted to less than one-fifth. Meanwhile the US has invested at a steady rate, even through the financial crisis. While Americans comprise just 4% of the world’s population, they enjoy one quarter of the world’s broadband investment. America invests in broadband at twice the rate of Europe. The American approach favors economies of scale, consolidation, and private investment. The EU approach, on the other hand, has focused on managed access and price controls. Today three quarters of Europeans rely on DSL for broadband. Only 34% of Americans can say the same. Meanwhile LTE networks cover 97% of Americans but just 26% of Europeans.
To be sure, the EU has pockets of next generation access, but 24% of its households don’t subscribe to broadband at all. One exceptional country is Denmark which scores highly on many broadband measures and where private investment approaches the American rate. This is a country with two policy principles for broadband: technology neutrality (no one network is favored over another) and market freedom (the government does not meddle in the broadband market).
These two lessons are a wakeup call for the rest of the EU which is currently tortured by 28 layers of telecom regulation. While the EU Commission has made an attempt to address the imbalance with a Digital Single Market initiative, their effort relies on feel-good solutions such as roaming and the app economy without taking on the major issues that need fundamental reform, namely eliminating the failed managed access “ladder of investment” regime, removing barriers to consolidation, and reducing opportunities for tax arbitrage.
The barriers for the development of the broadband market have also hindered the development of Europe’s internet industry. Of the world’s 25 top internet companies, 15 come from the USA, just 1 comes from the EU. With 28 nations, 17 languages and 11 curries, the EU may never be able to create the true single market enjoyed by the US today, but EU leaders can do better than what they have proffered to date. My new report suggests a way forward.
Here is some media coverage I have received on this topic.
According to the EU, the US is leading in Broadband TechPolicyDaily blogpost
Don’t Buy the Hype About Lagging US Broadband RealClearMarkets op-ed
Debunking the EU Broadband Utopia Innovation Files (ITIF)
Availability of Broadband in the United States Is Two to Three Times Greater than in the European Union Center for Boundless Innovation in Technology
Don’t Miss Great AEI Report on EU Lagging US in Broadband Net Competition
New Report: How U.S. Broadband Compares to EU Consumer Awareness Project
Putting the Europe is better argument to rest Internet Innovation
Europeans Envy U.S. Broadband High Tech Forum
Europe’s regulatory framework for broadband not the model make it out to be Alliance For Innovation and Development
EU Policies Failed Corriere Communications (Italy)