Minimums, median and maximum all are valuable indices in life, business and nature, including measures of internet access adoption or “quality.” It also has to be noted that constantly moving goalposts--changing our definitions--is a way of creating permanent problems.
That is not to deny the usefulness of revising our definitions over time. It is a truism that yesterday's power user is today's typical user.
The percentage of U.S. customers buying internet access at the minimum speeds keeps dropping, as customers migrate to tiers of service that offer higher speeds at the same or only slightly-higher cost.
But such definitions matter for both consumers and suppliers. Customers might sometimes buy services that actually are overkill. Most internet access customers buy what they believe is good enough to support their actual use cases, and rarely what is the “best” available level of service.
Suppliers might imperil their business models by forcing investment in facilities that customers will not use, overprovisioning service in ways that raise sunk costs of doing business without providing capabilities customers actually buy.
Those buying patterns also suggest why some ISP offers that are not state of the art can still be commercially viable. The reason is that, beyond a certain point, additional speed provides no tangible user experience benefit.
And permanent problems are essential for those who claim to be in the business of “solving those problems.” That matters for education, health, disease, economies, social and economic equality, sports and just about anything else you can think of. In other words, one cannot marshall public policy support to solve a problem that does not exist.
To be sure, our definitions of “broadband” have evolved, and will continue to evolve. 50 years ago, broadband was defined as any speed at 1.5 Mbps or faster. Once upon a time, Ethernet ran at 10 Mbps, while fiber to the home offered 10 Mbps. Today’s systems all run much faster than that.
But it also makes a difference to “problem solvers” that definitions are revised upwards. Doing so always creates a “bigger problem.”
Changing the minimum definition of broadband would shift the size of the “underserved” population or locations, for example. Today, perhaps 20 percent of U.S. buyers of fixed network internet access purchase services at the minimum speed of 25 Mbps.
Changing the definition to 100 Mbps would increase the size of the underserved locations to nearly half of all buyers. Again, we will keep increasing both minimum levels of service, customers will keep changing the speed tiers they purchase and internet service providers will keep supplying faster speeds.
The point, however, is that changing minimum definitions does not change the number or percentage of tiers of service customers purchase or that ISPs supply. Already, we find that the percentage of customers buying the fastest-possible speeds (at least 1 Gbps) is in mid single digits.
More to the point, the typical buyer prefers a service offering 100 Mbps to 400 Mbps. Changing “minimum” to “average” has consequences, arguably distorting our understanding of “good enough” levels of broadband speed.
Benchmarks are valuable when trying to measure “progress” toward some stated goal. A minimum speed definition for broadband access is an example. But that does not obviate the value of knowing maximum and median values, either, especially when the typical U.S. internet access buyer routinely buys services significantly higher than the minimum.
In the first quarter of 2020, for example, only about 18 percent of U.S. consumers actually bought services running at 40 Mbps or less. All the rest bought services running faster than 50 Mbps.
An analysis by the Open Technology Institute concludes that “consumers in the United States pay more on average for monthly internet service than consumers abroad—especially for higher speed tiers.”
As always, methodology matters. The OTI study examines standalone internet access plans, even if that does not account for the plans most consumers actually buy. The figures do not appear to be adjusted for purchasing power differences between countries. Were that done, it might be clearer that average internet access prices are about $50 a month, globally.
Global prices are remarkably consistent, in fact, when adjusting for purchasing power conditions in each country.
Nor does any snapshot show longer term trends, such as lower internet access prices globally since at least 2008. A look at U.S. prices shows a “lower price” trend since the last century. U.S. internet access prices have fallen since 1997, for example.
source: New America Foundation
The OTI study claims that, comparing average prices between markets with and without a municipal system shows higher prices in markets with government-run networks. Not all agree with that conclusion.
“The OTI Report’s data, once corrected for errors, do not support the hypothesis that government-run networks charge lower prices,” says Dr. George Ford, Phoenix Center for Advanced Legal and Economic Public Policy Studies chief economist.
“Using OTI’s data, I find that average prices are about 13 percent higher in cities with a municipal provider than in cities without a government-run network,” says Ford.
Our definitions of “broadband” keep changing in a higher direction. Once upon a time broadband was anything faster than 1.5 Mbps. Ethernet once topped out at 10 Mbps.
Today’s minimum definition of 25 Mbps will change as well. The point is that having a minimum says nothing about typical or maximum performance.
About 91 percent to 92 percent of U.S. residents already have access to fixed network internet access at speeds of at least 100 Mbps, according to Broadband Now. And most buy speeds in that range.
It is useful to have minimum goals. It also is important to recognize when actual consumers buy products that are much more advanced than set minimums.
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