Critics of U.S. ISPs are always quick to hold up Europe as overperforming its counterparts in price, speed and coverage, but the Information Technology & Innovation Foundation said that comparison does not hold up to the facts about business cases and cost structures.

According to a new report, “Apples vs. Oranges: Why Providing Broadband in the United States Costs More Than in Europe,” any comparison to the respective broadband markets must take into account their major differences.

“Comparisons between U.S. and European broadband prices are meaningless at best and misleading at worst when they fail to account for the difference in deployment and operating costs that must necessarily be assumed, at least in part, by consumers,” the report said.

The report illustrates what ITIF said are several key takeaways within the larger takeaway that U.S. providers must spend 53% more for the equivalent labor, infrastructure investment, spectrum licenses and advertising and taxes, even taking subsidies into account.

1.) The unfair narrative that U.S. broadband prices are exorbitantly higher than in Europe undergirds calls for unbundling and a regulated U.S. marketplace.

2.) U.S. ISPs have to pay more in wages while spending more on infrastructure, neither of which even U.S. ISP critics would argue for cutting. For example, the average wage among Comcast, Charter Communications, AT&T, T-Mobile and Verizon Communications is $64,510 while for European ISPs Vodafone, Deutsch Telekon, Telefónica and Telecom Italia is $55,935 (U.S. dollars).

3.) European telecoms are taxed at a lower rate and get more in government subsidies. “In every regard, U.S. providers must pour proportionately higher amounts into essential expenditures,” the report said.

4.) European ISPs actually have higher average profits than U.S. ISPs.

Authors of the report were ITIF research assistant Jessica Dine (who gets top billing) and ITIF founder and president Robert Atkinson.

“The idea that Europe has a better broadband system has been a perennial favorite for critics angling for a strong government role instead of relying principally on the private sector,“ Atkinson said in releasing the report. “But it turns out to be a false comparison, and when you break it down, the U.S. system actually provides better value for the money.” ■

Although U.S. broadband networks have weathered the COVID-19 traffic surge better than most technically advanced nations, the "shortcomings of competitive networks [that] don't adequately" serve customers "should galvanize policymakers to ensure broadband can serve as an essential lifeline for everyone, including low-income and rural residents," according to the Information Technology and Innovation Foundation. ITIF issued its "Lessons From the Pandemic" report on Monday (July 13), showing that home broadband traffic is up by between 20% and 40%, compared to a year ago. It concludes that, "reliance on facility-based competition and light-touch regulation set the stage for the consistent, above-average private investment that sustained U.S. broadband networks through this crisis."

But the U.S. needs "a more robust subsidy program for low-income broadband users that can swell with crises like this one," said the report's author Doug Brake, who directs the Washington think tank's broadband and spectrum policy program. "Most households with school-aged children have broadband available to them, but some lack the resources to subscribe or purchase computers."

"Congress should support, through general funds, a program whereby schools are able to purchase computing devices," the report suggested. "At the same time, tools within the FCC’s E-Rate program could be expanded to reimburse schools for Wi-Fi hotspots or wired broadband installation kits to provide connectivity for students in their homes." ITIF says that that the FCC has such authority today, "but Congress should clarify and put the funding source on surer footing."

Related:  COVID-19-Related Broadband Funding Bill Introduced

"Despite the increased importance of broadband during the COVID pandemic, many still have not adopted a fixed broadband network in their home. This is for a variety of reasons, but usually stems from a combination of affordability, lack of perceived relevance, and the option for close substitutes such as mobile broadband through smartphones."

ITIF's study endorses plans at the FCC and in Congress to meet the "urgent, short-term need for a subsidy that helps Americans pay their broadband bills including the commitment by hundreds of broadband providers not to disconnect consumers when they are unable to pay.

Related: NCTA: Cable Broadband Handling COVID-19 Load

Related: FCC's Pai: Congress Needs to Take Up Keep Americans Connected Pledge

"That current networks so well accommodated the jump in both download and upload traffic indicates there is no need to over-invest public resources to subsidize ultra-fast networks where broadband infrastructure already exists," ITIF said. "The remarkable resiliency of U.S. broadband networks during the pandemic should give us confidence that the basic regulatory framework is sound."

Critique of Capacity Measurements

Unsurprisingly, the ITIF report noted that COVID-19 broadband traffic increases are largely due to more streaming, pointing to studies showing that video constitutes more than 60% of internet traffic, with video game downloads consuming another major chunk of capacity.

At the heart of the capacity evaluation is the data collected from various analytical sources such as the Ookla Speedtest, SamKnows and a BroadbandNow gauge. The Ookla and SamKnows tests show about a 1% drop in U.S. broadband speeds compared with speeds before the stay-at-home orders. It also cited M-Lab’s Network Diagnostic Tool (NDT), calling it "not a reliable measure of network speed" because it is based on a measurement that uses a single TCP connection, which cannot reliably saturate an entire ISP access link.

IITF contended that a variety of factors, such as poor Wi-Fi performance and complaints when viewers sense a slowdown, may contribute to the appearance of network latency. But it dismisses the slight drop as negligible and says they are far lower than the speed declines in most other countries, according to an Organization for Economic Cooperation and Development (OECD) report. In particular, ITIF noted that the speed drops in many countries stemmed from peering arrangements that were difficult to change on the fly - which is not a factor in most U.S. network architecture.

Citing an array of sources, ITIF acknowledged that "the United States has relatively affordable broadband," but that "the relatively strong price discrimination of U.S. broadband" means that "low-end slower broadband is cheap while high-end faster options are relatively more expensive." The study pointed to "specialized low-cost products tailored to qualifying low-income users," such as Comcast’s Internet Essentials and Charter’s Spectrum Internet Assist, but recommended that because of extensive poverty pockets in the U.S., "the federal government must ensure everyone who wants a broadband connection is able to afford one."

But much work remains to be done to fill in the gaps such a system does not address," ITIF said.

The report characterized COVID-19 as "a cautionary tale highlighting the need to strengthen our public health-care system" and also as "a warning to strengthen and make more resilient a variety of sectors through better use of technology." It cited the value of "investments in technology and digital transformation would ...[create] better and more-efficient education, health care, manufacturing, transportation ... while making the economy and society more resilient should we face another similar crisis."

The ITIF report also cited the absence of messages to reduce internet usage as evidence of the current U.S. broadband strength. Pointing out that politicians in other countries have asked their citizens to cut broadband usage, ITIF humorously included in its report a 1918 advertisement during the Spanish Flu era in which the Bell Telephone company, "the nation’s predominant telephone provider at the time," encouraged customers not to use the telephone. 

Washington — Paid prioritization has gotten a bad rap, but the Information Technology & Innovation Foundation is trying to change that, including by looping the Federal Communications Commission back into the network-neutrality regulatory regime.

Paid prioritization has been branded as pay for play, and as fast and slow lanes, by net neutrality activists who oppose that practice. But in a new report, ITIF, whose honorary chairs include both Reps. Anna Eshoo (D-Calif.) and Darrell Issa (R-Calif.), is trying to burnish the brand and head off a push in Congress to include paid prioritization in new net-neutrality prohibitions.

Some ISPs have even suggested they would accept a no paid prioritization provision, though most throw in the caveat “anti-competitive.”

Even activists concede there is a need to prioritize, say, 911 VoIP calls over cat videos. But there would almost certainly be a carveout for that, or explicit language that emergency calls or telehealth video — remote accident-scene triage, for example — would be reasonable network management.

ITIF wants to make sure that is clear, but it also is suggesting getting the FCC back in the broadband oversight business, though not via Title II.

The FCC deeded net neutrality oversight to the Federal Trade Commission when it took ISPs out from under Title II.

ITIF is telling Congress that the FCC should oversee prioritization agreements and that, in legislation, Congress could prohibit exclusive differentiation deals and require that prioritization be offered on similar terms and conditions.

A non-neutral network “can unlock new, real-time services without harming general best-effort traffic and preventing any potential anticompetitive consequences,” ITIF argues.

The Information Technology & Innovation Foundation did not find a lot to like in President Donald Trump's new budget.

Following the final budget's release May 23, ITIF vice president for global innovation policy Stephen Ezell said that it would "slash" investments needed for research and workforce education and skills. He said Congress should declare the budget DOA.

ITIF said the country already has underinvested in science, R&D and commercializing tech innovation.

"Further reducing federal investment in these kinds of foundational goods will set back the country even further," Ezell added. 

Noting the proposed 10% cut in non-defense R&D -- while the budget boosts defense spending -- Ezell said there is a big difference between wasteful spending and critical investments. 

ITIF points to, among other things, zeroing out the Manufacturing Extension Partnership, an 11% cut for National Science Foundation grants, and a 70% cut in Manufacturing USA, as well as the elimination of the U.S. Trade and Development Agency and 21st Century Community Learning Centers.

"Lawmakers should exercise their constitutional power to approve a budget that better meets the nation’s economic need," he concludes.

While the President proposes and Congress disposes the budget, Office of Management and Budget director Mick Mulvaney conceded that the President's budget would not pass as proposed, but signaled the exercise is important in telegraphing the President's priorities.

He said the budget was drawn up with hard-working taxpayers in mind and what programs the government should ask those taxpayers to fund. He said compassion was not defined by the number of programs or dollars but what bang taxpayers were getting for their bucks, plus the need to address a $20 trillion deficit and the need to boost investment in defense and security.

The FCC should continue freeing up high-band spectrum for next-generation 5G mobile broadband rather than control the standards-setting process, and local governments should help streamline the deployment of new infrastructure.

Those are the key policy takeaways from a new report being released Thursday (June 30) by the Information Technology & Innovation Foundation.

Policymakers on every level of the government should aim to make infrastructure deployment as efficient as possible to see the flourishing of 5G networks," said report author Doug Brake, a telecom policy analyst with ITIF.

"Given the fact that many of the technological components of 5G are still in flux, that deployment scenarios are still being explored, and that there is still a good deal of gas in the LTE tank, government action around 5G should be more stage setting than full industrial policymaking," Brake said in the report. "There is certainly a role for government in encouraging 5G to flourish, but industry-led standard setting better allows discovery of new technologies and a more nuanced understanding of what areas are most economical to explore."

Related:Hillary Clinton says she will push for 5G.

Brake said that given the explosion of data traffic, particularly bandwidth-hungry video, speeds will have to increase if wireless is to be a more robust competitor to wireline. For that to happen, wireless only has a few levers to pull. Finding more spectrum is one, another is increasing capacity by improving spectrum efficacy.

But he says there are limits to increasing that efficiency and network engineers are close to butting up against them. "As hard as getting Congress to pass a new law can be, bending the laws of physics is even harder. There are also trade-offs in any system designed—a protocol designed purely for maximizing throughput may not handle other usage scenarios as well," he said.

Brake gives the FCC high marks for 5G stage-setting so far. "The FCC deserves credit for moving quickly to get high-band spectrum into the hands of innovators, and for not being beholden to international bodies, such as the ITU, who are slow to allocate this spectrum to mobile," he said.

The FCC has set aside 30 MHz of low-band spectrum in the broadcast incentive auction that can potentially be auctioned to competitive carriers at discount prices. But Brake cautions against that model for high-band spectrum.

"Regulators should exercise caution in setting reserve prices or payments when it comes to auctioning high-band spectrum. Unnecessarily high auction prices discourage investment in new, unproven technologies that will have significant deployment costs of their own."