With Broadband, The Grass Is Always Greener

Americans and Europeans have long sparred over who leads in broadband. Some Americans advocate for the U.S. to introduce a European Union regulatory model of unbundling and government intervention, while top E.U. officials have pushed for a more cautious approach to spur private investment.  

So who is right?

My own, European perspective offers instructive lessons.  I am from Estonia, the home of Skype. Estonia is frequently mentioned as a model for Europe because of its digital readiness.
But these reasons don’t explain the whole situation.

While Estonia is proud of Skype, one company cannot create the vibrant innovation seen in the U.S. To create economic development in information and communications technology, a country needs continued innovation and massive capital investment to deploy and continually improve its broadband networks.

Two decades ago U.S. policymakers decided on a light regulatory approach. This ultimately made America the world’s digital leader.
From the early days of the Internet, the government incentivized providers to invest in infrastructure and develop new technologies. Consequently, since 1996, the U.S. broadband industry has invested more than $1.2 trillion into the economy. Furthermore, recent OECD estimates show that investment in U.S. Internet networks is more than 50 percent higher per capita than in Europe.

The lack of European infrastructure-investment is evident in the penetration of the advanced networks across the continent: Europe had only 6 percent of global LTE connections in 2012; (the U.S. accounted for 47 percent). This is not to say that the U.S. has the perfect Internet policy for today’s digital age. America’s communications laws were last updated 18 years ago and have grown increasingly obsolete as the Internet rapidly evolves. The Communication Act, which cautioned against heavy regulation of nascent Internet providers, spurred investment and innovation; but its time has passed.

As U.S. policymakers begin their work, they can look to Estonia – which built its ICT sector from scratch – for a foundational principle: we created regulation in which all networks are equal.
The U.S. should eliminate old classifications and silos. Distinctions between telephone, cable, fiber, VOIP, and mobile have no value in an all-digital world. 

Regarding the U.S. versus E.U. debate, the right regulatory path has produced clear results. Every day, I use software, hardware and social platforms developed by American companies. Fifteen of the top 25 Internet companies are American, while only one is European.

The E.U.’s top broadband policymaker, Neelie Kroes, recently stated that “success or failure in wireless does not happen by chance: it depends on the policy decisions we take.”  The U.S. wisely chose light regulation, and as a modernized Communications Act is developed, policymakers must remember this approach.

Karin Kalda is a senior consultant with Insight and Analytics, a Denmark-based digital marketing agency.