Damned lies, etc

by Henry Farrell on July 25, 2007

Tyler Cowen is somewhat “suspicious”:http://www.marginalrevolution.com/marginalrevolution/2007/07/how-far-behind-.html of an FCC Commissioner’s statistical claims about broadband penetration. Given the FCC’s past form, a general suspicion of any statistics that it trots out on broadband penetration is entirely warranted. The FCC has generated copious statistics to support their claims that there is a thriving competitive market among broadband providers. However, as the General Accounting Office “points out”:http://www.gao.gov/new.items/d06426.pdf (pdf) in polite governmental administratese, their numbers are a crock. They pump up the number of competitors in a given local market by including satellite (not a significant option for most consumers), lumping together data on specialized business services and consumer broadband, and failing to consider whether the fact that two cable companies operate in the same zipcode means that they actually compete with each other (their coverage areas may not in fact overlap). When these biases are corrected for, the GAO finds that the median number of providers for a given respondent is two, and 9% of respondents have no access to broadband at all. Given the near-total lack of resemblance between these figures and the reality that American consumers have to deal with, it’s hard to avoid the suspicion that they were generated with the purpose of muddying debate.



Nick 07.25.07 at 5:20 pm

Why is satellite not a significant option for most consumers? I’d have thought that if a location is suitable for dish TV, it’s suitable for satellite internet, and many people have dish TV.

FWIW, we live in a house that lacks availability of both cable service and DSL. I considered Satellite and didn’t see any real problems. It was more expensive than roadrunner broadband alone but compared favorably to what many people pay monthly for their cable TV.

In the end, we went with wireless broadband for the same price as the satellite. We’re in a weird location that is close enough to a major metropolitan area for wireless broadband, but far enough out in the woods that the cable company can’t be bothered.


mpowell 07.25.07 at 7:00 pm

Satellite also does not have uplink ability.


Brian Cook 07.25.07 at 7:24 pm

Also, the FCC’s definition of what constitutes highspeed broadband is absurdly low (something like 0.2 kilobits per second). Japan is building out 100 kbps. Sweden (or at least Stockholm) is building out a GIG.


Steven 07.25.07 at 10:50 pm

Also, the FCC’s definition of what constitutes highspeed broadband is absurdly low (something like 0.2 kilobits per second). Japan is building out 100 kbps. Sweden (or at least Stockholm) is building out a GIG.

I’m far from expert in this area, but do you mean Mpbs here? Anyway, comparing a European capital to the rural areas addressed in this report doesn’t seem to be that illuminating to me. Do you have data comparing rural areas in the countries (I suspect Sweden would still come out on top, but that’s just a hunch)?

Nitpick: Henry, the GAO now stands for the Government Accountability Office, having changed from General Accounting Office in 2004, for no obvious reason.


Slocum 07.26.07 at 2:17 am

But the reason the median number is two is that most Americans have the option of either DSL from the local phone company or cable from the local cable monopoly. And why the cable monopoly? Because local governments maximize license fees by licensing just a single cable provider in their area. Stupid rent-seeking local government policies have create the “reality that most Americans have to deal with”. It’s really unfortunate that satellite-based broadband is not competitive technically.


stuart 07.26.07 at 8:43 am

Well the only sensible way to not have one company have a monopoly on cable service would be for the government to create (either directly or by contracting out) the infrastructure for it and then rent out the capacity created to private businesses to sell to consumers.


Barry 07.26.07 at 11:23 am

Slocum, do you really think that cable companies aren’t doing everything that they can to achieve local monopolies? IIRC, including lobbying for state laws to restrict the ability of local governments to set up truly competitive systems.

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