EQUAL FOOTING

For an industry that can spin positive news out of the most dismal earnings reports, it would seem odd that U.S. carriers and vendors should be concerned about broadband growth. But that's exactly what some recent reports have predicted. If it comes to pass, the end result is going to bring a lot of unnecessary hand wringing from politicians and pundits.

In a recent report, iSuppli projected that the number of global broadband subscribers will continue to increase through at least 2009, but that the growth rate would slow from 52% in 2004 to 12% in 2009. Some of the most advanced countries already are seeing a slowdown as broadband reaches saturation levels. South Korea, often pointed to as the broadband beacon for others nations to follow, has seen its overall broadband penetration growth rate slow to less than 2%, according to the latest study from Point Topic.

In the U.S., it's become a common refrain that until we as a country can increase broadband penetration rates above 20% and ubiquitously deliver access speeds comparable with Asia, we will be at an economic disadvantage.

While all that makes for great sound bites that the press eats up, it's simply unfair to compare the U.S. to most other developed markets. Lining up broadband penetration rates doesn't take into account the unique aspects of the U.S. market that explain why perhaps even we are beginning to reach a broadband plateau. First, the geography of the U.S. makes it far more expensive and time consuming to provide ubiquitous national coverage than in a country where 80% of the population lives in just a couple of major markets. Despite the success of urban renewal projects in many cities, growth patterns in farm towns that are quickly becoming exurbs of large markets suggest that the term “metro area” will continue to include larger swaths of land.

Second, American consumers are different than Koreans, Japanese, Germans or Finns. Our buying behavior is different and, more important, our spending priorities are not the same. Add our generally abysmal savings rates, and you're got a completely different economy. When politicians pontificate on the need for ubiquitous broadband coverage, it would be helpful if they were reminded that even “utilities” such as running water and electricity are not in every home in the U.S.

Instead of comparing U.S. broadband penetration rates to other countries, perhaps we should measure it next to other services such as pay TV. After all, while the vast majority of American households have the option of cable or satellite TV, the service is far from ubiquitous.