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Utility Regulation and Broadband Network Investment: The EU and US Divide

04.25.2017

USTelecom today issued a research brief, “Utility Regulation and Broadband Network Investment: The EU and US Divide” examining the adverse effects of restrictive Title II regulations on U.S. broadband investment per capita. Based on European investment levels, which take place under a Title II–like regime, U.S. broadband investment per capita could decline toward much lower European levels over time. According to USTelecom analyst Patrick Brogan, “based on OECD data, U.S. broadband investment could decline as much as 50% if it fell to European levels, a reduction in infrastructure investment of roughly $44 billion dollars yearly.”

Broadband networks – wireline and wireless – depend on billions of dollars of capital investment every year. In fact, broadband providers are currently the biggest investors in our nation’s economy, the results of which directly benefit U.S consumers:  

  • More competition: 84% of households have a choice of two or more wired broadband providers in the U.S. compared to 43% in Europe. (FCC and EU 2015 data)
  • More Next Generation Wired Broadband: In the U.S., wired broadband at 25 mbps download and 3 mbps upload is available to 88% of households (and 57% of rural households); in Europe, Next Generation Access, typically at 30 mbps download and any upload speed, is available to 71% of households (and 28% of rural households). (FCC and EU 2015 data).
  • More Wireless Broadband Sooner: LTE mobile broadband is available to more than 99% of households in the U.S., up from 97% in 2013 and 71% in 2011. In Europe, LTE mobile broadband is available to only 86% of households compared to 59% in 2013 and 8% in 2011. (FCC and EU 2015 data). The U.S. has multiple wireless networks at scale to deliver continuing increases in speed and coverage.
  • Networks that Support World Leading Usage: U.S. broadband networks are the most robust in the world as measured by the amount of traffic they carry in both absolute and per capita terms.  The U.S. represents less than five percent of world population in 2015, but it generates almost one-third of the world’s data traffic.  (USTelecom analysis of Cisco Visual Networking Index 2015 data.) 

Following the FCC’s 2015 decision to start treating the industry like local water and gas companies, broadband investment ticked down a billion dollars. “The gap between per capita investment in the two regions is enormous,” said Brogan. “Any substantial decline toward European levels could pull the rug out from the U.S. position as the leader of the Internet ecosystem, and further disincent investment.”