Global Broadband Battles: Why the U.S. and Europe Lag While Asia Leads

Review by Jeffrey Barlow <barlowj@pacificu.edu>
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Global Broadband Battles: Why the U.S. and Europe Lag While Asia Leads.
Fransman, Martin
Stanford University Press, 2006.

This volume, edited by the prize-winning Professor Martin Fransman, [1] is both timely and important. While it is best suited for an audience with a high level of interest, that interest could be in Broadband, in the international hi-tech environment, or in the legislative and economic environments of Japan, Korea, China, the United States, France, Germany, Italy or Sweden. Each of these nations is the subject of a complete chapter in the edited work.

The value of any edited work must lie largely in the quality of the individual contributors. These are, like the editor himself, a highly qualified group. The majority are both natives of the nation about which they write, and well-trained economists.

Fransman, however, provided a strong editorial hand, and contributed excellent summaries of each of the three groupings of chapters. In fact, it would be possible to take away considerable understanding and value from a reading of only Fransman's general introduction and his summaries. These summaries each serve as a more detailed introduction to the book's three sections: Part I, Asia: Japan, Korea, and China; Part II, North America: The United States; and Part III, Europe: France, Germany, Italy, and Sweden.

The work logically follows this particular organization because it is the thesis of the book that broadband development in Asia far outpaces that in either the United States or Europe. The larger question the work attempts to answer is why that is true.

A major value of the book is that it very much respects the influence of both history and culture in the nations concerned and treats each as a specific individual case. We learn, for example, that whereas it is true that Asia leads, the reasons why Korea and Japan are far in advance of the rest of the world may differ for each nation.

While each of the two has created a policy and economic environment which greatly facilitates the development of broadband, Korea has the advantage that more than half its population lives in apartment blocks, greatly simplifying the so-called "last mile" problem—how to get full fiber conduits to the end user.

Japan does not have this advantage, though it is also highly urbanized. But seeing the importance of broadband development, Japan chose to create a policy environment which encouraged disruptive newcomers to the industry even at the expense of the Japanese governmental corporation, National Telephone and Telegraph (NTT).

The United States is a particular analytical problem because the development of communications and of computer technology is, of course, amongst the highest in the world. But its ranking in terms of both quality of broadband—the U.S. defines "broadband" as including the slowest speeds of all the nations covered—and in terms of its distribution among the population as well, unfortunately, continue to slip steadily. At present, it is ranked as 24th internationally. [2]

So the question becomes, "Why does the United States, with such an early start and a highly developed hi-tech industry, provide slower speeds of access to a lower percentage of its population, and usually at higher prices, than twenty-three other nations?

The contributors to Global Broadband Battles, being largely cautious academic economists, do not attempt to answer this question with certainty. The editor views this work as necessary to establishing the understanding to eventually answer it.

However, the overall perspectives of the contributors are quite clear: The United States has chosen to permit an oligopoly of non-competitive firms to control the industry. Moreover, competition has declined rather than increased in the industry, due to federal policies.

In the absence of competition in America, disruptive technologies are restrained. The competitors tend to compete with each other over service and inconsequential factors, rather than to markedly increase speed or to develop new technologies or even to carry current technology to its logical end-point, full fiber to the home. In short, in America, competition is restrained largely to the allocation of advertising budgets.

However, to their credit, the contributors do not risk broad generalizations but rather continually point out that there are often no simple answers in this field. There are cases in which market regulation clearly facilitates the development of broadband, and others when competition is critical.

Recently, I had an opportunity to, in effect, field test the information in the work as I was an observer at the August 2007 Aspen Institute Forum on Communications and Society (FOCAS). [3] The group was composed of more than fifty luminaries from publishing, hi-tech and government—including two members of the FCC, and Viviane Reding, European commissioner for Information Society and Media. [4] Following three days of conversation and debate, the group identified improved broadband and much greater access to it as the central issue in U.S. telecommunications policy for the immediate future.

Broadband policy is, of course, a very complex and controversial issue. I found, however, that reading Global Broadband Battles more than prepared me to understand its history and its present context in the sometimes highly technical discussions at FOCUS. In fact, I felt that many of the participants could have benefited from reading the work as well, as they were ill prepared to understand some of these issues, particularly as they bore upon both the history of the issue in the United States and in non-American contexts.

Endnotes

[1] Fransman has won prizes both in the United Kingdom and in Japan for his books on hi-tech topics. See his personal page at: http://www.jets.man.ed.ac.uk/staff.htm , His works include: The Market and Beyond: Information Technology in Japan (Cambridge University Press) which won the Masayoshi Ohira Prize; Japan's Computer and Communications Industry (Oxford University Press);? Visions of Innovation (Oxford University Press); Telecoms in the Internet Age: From boom to bust to ...? (Oxford University Press).

[2] See http://www.msnbc.msn.com/id/19389299/site/newsweek/

[3] http://www.aspeninstitute.org/site/c.huLWJeMRKpH/b.612663/k.F561/Aspen_Institute_Forum_on_Communications_and_Society_FOCAS.htm

[4] http://ec.europa.eu/commission_barroso/reding/index_en.htm Commissioner Reding was, in my estimation, the true star of this conference in that she was very nearly the sole voice at the conference with extensive knowledge of the conference topic outside the United States. While she was unfailingly polite and restrained, she more than once was visibly exasperated at our collective lack of knowledge. At one point she asked why Americans seemed incapable of learning from foreign experience and insisted on redeveloping everything regardless of other's successes. A member of the audience answered simply, "Hubris."

Global Broadband Battles: Why the U.S. and Europe Lag While Asia Leads

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