THE BLOG
05/30/2014 08:23 am ET Updated Jul 30, 2014

Son's Cloudy Outlook on U.S. Broadband

At re/code's recent "Code Conference," Softbank CEO Masayoshi Son -- whose company currently owns Sprint -- set the table for his company's desire to merge with T-Mobile by rehashing largely debunked claims that America's broadband networks lag behind the rest of the developed world on speed, prices and competition. Leaving aside the subtle irony of implying that the best way to inject competition into a market is for Mr. Son's company to buy one of its competitors, it's worth revisiting the true state of broadband in the U.S.

The U.S. is among the world leaders in speeds. Among G-7 nations, the U.S. ranks second in both average connection speed and average peak connection speed according to Akamai, trailing only Japan. And the delta between first and second are not the vast chasm Mr. Son suggests in his remarks: Japan's average connection speed is 12.8 Mbps versus 10 Mbps here at home. Our average speeds increased 25 percent from the end of 2012 to the end of 2013, and we have entered the top ten in Akamai's measurement of the percentage of Internet connections at 10 Mbps or higher (we rank eighth). Overall, some 85 percent of U.S. households have access to networks capable of 100 Mbps speeds -- compare this to Europe, where many of our trading partners have far lower penetration of even 30 Mbps networks.

On price, the U.S. boasts the most affordable entry level broadband pricing among OECD countries and the third lowest price per GB of data among countries surveyed by the FCC. And the value proposition of broadband service continues to increase: the price per Mbps for the most popular service tier has fallen 92 percent since 2002.

Our market is also far more competitive than Mr. Son's narrative suggests. The U.S. owns the distinction of being one of just two nations -- the other being South Korea -- with two nationwide wired broadband technologies as well as fully deployed LTE wireless data service. The FCC estimates that 97 percent of Americans live in areas where they can choose from at least three broadband providers (including wireless).

And more competition appears imminent. Verizon FiOS and AT&T U-verse fiber-based services already reach more than 47 million homes combined (approximately 35 percent of U.S. housing units) as AT&T is in the midst of a three-year plan to invest $22 billion a year to extend its U-verse coverage to 33.5 million homes while delivering LTE service to another 50 million Americans. ViaSat and HughesNet blanket the country with next-generation satellite broadband service with download speeds as high as 15 Mbps. Fixed wireless services are available to 75 million homes and growing thanks to massive investment from Google, C-Spire and Cox. Sprint's own "Spark" wireless service promises 120 Mbps connectivity. And a promising technology called G.fast being tested by European ISPs could coax gigabit bandwidth out of our existing copper infrastructure.

America's superior position rests largely on the high level of capital investment that Mr. Son asserts is non-existent. American broadband companies have funneled $1.2 trillion since 1996 into the broadband networks we have today, and continue to pony up to improve speeds and quality of service. According to the Progressive Policy Institute, the largest American ISPs invested $50.5 billion in 2013, trailing only energy companies in non-financial sector domestic investment.

The data Mr. Son employs to make his negative case are subject to a number of methodological shortcomings, not the least of which being a bias toward smaller, more densely populated countries. For example, in the Ookla speed rankings Mr. Son cites, four of the top ten spots are occupied by Hong Kong, Singapore, Andorra, and Macau. If countries of this size are to be compared apples-to-apples with the U.S., then perhaps a better comparison would be to include U.S. states by themselves. Using Akamai's rankings and including individual states, seven U.S. states would be among the top ten locales in the world in terms of average speed.

Mr. Son is right about one thing: "Scale" is the word of the day in the technology and telecom markets, in which new entrants are competing on a national stage with traditional regional players. But this is a sign of a dynamic and competitive market, not the monopolistic laggard devoid of investment that Mr. Son describes.