For example, the United States has fallen from 4th to 11th in broadband penetration and stands to fall even further. Broadband penetration in Latin America varies greatly from country to country, but as a whole, the region's progress towards having widespread high-speed Internet use remains sluggish. Moreover, with few exceptions, most of the broadband infrastructure available today consists of relative slow connections in the 500kbps to 3Mbps range. A few countries, such as Korea and Japan, have plans to take their broadband infrastructure from current levels to next generation speeds of 100Mbps. In Japan, it is already a reality as many Japanese consumers can now get a 100mbps connection for approximately US$38 per month.
Because telecommunications is one of the most intensely regulated industries and it has a legacy of decades of government involvement, regulatory policy significantly affects broadband infrastructure investment. Regulators and government impact investment through the application of legacy regulation to new technologies, through attempts to artificially create competition, through spectrum allocation, through universal service subsidy systems and through direct government investment and tax incentives.
Impact to Business
In the US, industry has encouraged further deregulation and market driven policies to promote competition. Efforts to stimulate broadband deployment have been hindered by discussion of how and who to regulate (or not regulate), as well as legal hurdles, such as right-of-way issues for deployment across multiple legal jurisdictions. More recently, however, a major hurdle to broadband deployment in the US has been the issue of digital rights management - technological protections to prevent copying of digital content carried over the Internet. Several legislative initiatives are underway in the new Congress to stimulate broadband deployment through deregulation and targeted tax incentives.
The U.S. Federal Communications Commission (FCC) released its most recent report on Broadband penetration in the United States on September 9, 2004. At the end of 2003 in the US, there were 28.2 million broadband access lines in service with a speed of at least 200k. The majority of FCC Commissioners also concluded that broadband deployment was proceeding at an adequate pace considering other technology adoption rates. Two of the Commissioners, on the other hand, dissented by pointing out that the US is 11th in the world in broadband penetration and that the FCC's 200k definition of broadband is too slow given advancement in technology.
On March 26, 2004, President Bush set a national goal of making broadband available to all Americans by 2007. Cisco's President and CEO John Chambers applauded President Bush for his vision of universal, high-speed broadband access in the United States and his recognition of the positive impact that broadband could have on the nation's education and healthcare systems - two of our country's top priorities. Cisco believes that having affordable broadband for all Americans will help ensure the nation's competitiveness for decades to come. On June 24, 2004, President Bush reiterated that goal and added an additional goal of making America #1 in broadband penetration, up from its current #11 international ranking.
Additional world leaders are incorporating broadband into their national platforms. On September 28th, 2004 U.K. Prime Minister Tony Blair, speaking at the Annual Labour Party Conference, said that a third term for his government would mean "ending the digital divide by bringing broadband technology to every home in Britain that wants it by 2008."
On the European Union (EU) level, the European Commission continues to recognize the importance of broadband deployment. For example, the eEurope 2005 Action Plan seeks to accelerate the rollout of broadband. Countries have been instructed to use the EU's existing Structural Funds (regional and social funds, etc.) to facilitate broadband access in remote and rural areas. In addition, "the EU countries should eliminate legislative barriers [and] promote investments in broadband notably by easing 'right of way' restrictions." All Member States submitted national broadband plans by the end of 2003. They now need to provide an up-date of their national strategies to promote the use of broadband by the end of 2005.
As such, national broadband strategies in Europe are led by a common approach:
Over the past few years, the European Union has made significant progress in raising participation in the Information Society. In the past year, for instance, the number of broadband connections has nearly doubled and now reaches nearly 25 million households. The EU, including the accession countries, has the second largest global broadband region.
Belgium, Netherlands and Denmark lead the way. These countries have a competitive cable platform to DSL provided by the incumbent and have broadband penetration rates close to 15%. Finland and Sweden are also high-performers. The UK, while a slow starter, was among the fastest growing markets in Europe in the first half of 2004. France is showing strong growth in DSL connections over the last few months, namely due to regulatory intervention to decrease the price of unbundled local loops. Germany, Spain and Italy are clearly falling behind. DSL in Europe continues to represent around 74% of the total connections with cable around 22% while other technology platforms are still in the early stages. EU countries are feverishly working to catch up to Asia Pacific's dominant broadband global market share.
Market penetration figures indicate that broadband penetration in Asia-Pacific continues to be extremely strong. The latest figures confirm that South Korea maintains its global lead of market penetration. It is considered the greatest deployment success story because of a series of government investments and market enabling policy efforts. Through this effort, the South Korean government successfully stimulated one of the highest broadband penetration rates worldwide - a whopping 75 percent. The Government has made about $77 million in loans available to fund private networks since 1998. The South Korean government plans to invest $926 million by 2005 to continue the broadband deployment effort. Hong Kong ranks second in the world by penetration with Taiwan at sixth and Japan at ninth.
Leading countries must develop comprehensive national broadband infrastructure deployment plans and advance policies to implement them. A national broadband plan should include policies to:
Vital regulatory policies to implement these goals include: