 | Issue: | Global-ICT 2003 |
| Article no.: | 2 | |
| Topic: | Following a Roadmap to the High-Speed Future | |
| Author: | Robert E. Switz | |
| Title: | President and CEO | |
| Organisation: | ADC Telecommunications | |
| PDF size: | 120KB |
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Article abstract
Broadband is not merely an incremental economic improvement, but a profoundly transforming one underpinning economic development and creating new businesses and markets as commerce and the way people work shifts to the Internet. Countries like South Korea, Canada, Hong Kong and Sweden have become world broadband leaders due to government action at the highest levels creating an environment for broadband growth and real competition. Ultimately, tough private sector competition is needed to lower costs, the one true driver of growth.
Full Article
Judging by the notion of first move? advantage, it would be logical to name the United States as the worlds broadband leader. The U.S., after all, introduced the Web browser and Americans took to the Net faster than other countries. But little more than one-third of American Internet users connect to the Internet via broadband. It is South Korea, which just a few years ago weathered the Asian financial crisis, which leads the world in broadband connections per capita, with approximately 95 percent of all online subscribers connecting at high speed. By now it is clear, especially to public and private sector leaders, that these rankings are not merely bragging rights. Nation by nation, the debate over broadband and availability shows no signs of ebbing. Broadband is recognized as not merely an incremental economic improvement, but a transforming one, on a level with the railroads of the 19th century and the interstates of the 20th. Broadband will be the underpinning of economic development for nations seeking to create new businesses and markets and to transform existing businesses, as commerce and the way people work shifts more and more to the Internet. Perhaps most importantly, broadband is transforming the way people live. In South Korea, broadband users consult doctors and watch TV online, and multimedia conversations have become part of everyday communication. With these changes in mind, it is no surprise that the debate over broadband availability is most intense in places such as the U.S., the U.K. and Australia—industrialized nations that are behind the broadband curve and trying desperately to catch up. Countries venturing to attain the universal goal of widespread broadband deployment should take note of those that have succeeded. South Korea, Canada, Hong Kong, Sweden and other global broadband leaders do not owe their success to having populations that are particularly bandwidth-hungry or technologically savvy (thought these factors help), or to the conventional wisdom, held by many observers, that broadband uptake ultimately rests with the introduction of high-bandwidth, next-generation services. Success in these countries stems instead from definite steps taken by the public and private sectors. Their actions constitute a roadmap the rest of the world can follow. Leadership, Not Just Rulemaking Competition and the presence of multiple providers are vital to the spread of broadband, but the private sector cannot do it alone. Without exception, successful broadband countries have shown that governments—at the federal level but also increasingly at the local level—must work to create an environment where broadband can thrive. Of primary importance is determining clear and agreeable rules and regulations that open the market to competition, balancing the needs of service providers and the government. Both South Korea and Japan created national broadband policies that set clear rules that allow rival providers to enter the marketplace and compete with the traditional monopolist incumbents. By contrast, in the U.S., the Telecommunications Act of 1996 set rules opening monopoly telephone markets. These rules have been in contention ever since, with service providers battling regulators and each other rather than focusing on the kind of investment that has brought Japan, in just two short years, from the back of the broadband pack to the front. The resulting slow start of telephony incumbents into the DSL market is one major reason the U.S. is playing catch up. The ability to implement stable regulatory environments originated in part from the enthusiastic support of government leaders who recognized broad band’s importance early. The very creation of national broadband policies in Japan and South Korea offered a platform for politicians to spotlight the importance of broadband for their people and economies, galvanize public attention and support and unify the public and private sectors behind it. In touting their broadband policies, the governments of South Korea and Japan signaled they would put their muscle where their mouth was in supporting the widespread deployment of high-speed connections. And prominent politicians—not just regulatory officials—played a visible role. Last year, South Korean President Kim Dae Jung announced his country’s intention to hook up every single home with a high-speed connection and transform his country into a “knowledge superpower.” How often do you hear the top leaders of other countries make such a clear and strong articulation? More recently, beneficial and proactive government involvement has seeped down into local or municipal governments, especially in rural areas concerned about parity with urban areas and intra-regional competitiveness. In some cases, national governments are even encouraging more local government involvement. In China, service provider’s work with community groups and municipal governments to overcome barriers to high-speed connections, while Japan’s telecom ministry recently made wireless frequency available to local governments to extend service to rural communities. In America, individual states are becoming much more involved in efforts to create their own broadband infrastructures—even to the point of building it themselves—as they pay careful attention to keeping or strengthening their competitive edge. TechNet, a U.S.-based advocacy group, is working to get city and state governments to set up broadband friendly rules and regulations to help speed deployment. The group recently created a ranking that placed the traditionally industrial state of Michigan—not the digital Eden of California—at the top of its rankings for states with broadband-friendly policies. Real Competition While governments have a responsibility to open the door to markets and competition, service providers must walk through it. As noted, many inside and outside the industry have pointed to the lack of “killer apps” or services, such as online gaming, videoconferencing and voice-over-IP, that would make consumers and businesses stampede to their nearest broadband provider. It seems more likely, though, that people already understand the value of broadband, which has been around in theory for at least a decade, and given the opportunity, they will use it. Why? All over the world, the record suggests that all people need is the right price point. No other factor better predicts broadband uptake. Prior to government intervention last year, Japan had among the world’s highest prices for a basic DSL connection—as high as $90 per month. Today, Softbank’s Ethernet-based Yahoo BB service, which does offer next-generation services, is the fastest growing broadband service in the world, signing up 7,000 people a day. The difference? It can be obtained for less than a traditional dial-up line—around $17.95 per month (US dollars). In just the last year, Softbank’s subscriber base has skyrocketed and forced other service providers to follow its lead. It is no coincidence that the Japanese Telecommunications Ministry predicts that half of the Japanese population—60 million people—will connect to the Internet via broadband by 2007. Canada, among the smallest industrialized nations but long one of the top broadband countries, has for years enjoyed DSL prices around $30 per month. Again, the U.S. would be a leader if open markets were the only criterion for a thriving broadband market. The U.S. market had had a choice between DSL and cable modems for years, and subscription growth was still steady rather than explosive. Cable providers’ introduction of tiered services in the past year helped that situation, and now incumbent carriers Verizon, SBC and BellSouth have jumped on the price-cutting bandwagon. Already, there are signs, ever so slight, that DSL is beginning to make up ground in a market long dominated by cable modems. Price-cutting, of course, means that service providers must be willing to compete, and competition can be rough. Thriving broadband markets in Japan and South Korea owe their existence to a bruising marketplace where service providers have taken significant risks, and not all have survived — or will. Softbank in particular, in transforming the Japanese broadband market, has braved losses as it banks on new services to win new customers and revenue. Still, there is gold at the end of the rainbow, a fact already proven by U.S. cable providers. In the late ’90s, the cable companies weathered tremendous criticism as they spent billions to upgrade their plants for broadband. Today, they hold better than a two-to-one edge over their Telco competition and most are quite profitable with their high-speed data offerings. The Beginning, not the End If the economic story of the 21st century is broadband, we are closer to the beginning of that story than the end. Whether countries are leaders or laggards, there will be more opportunities as today’s technologies evolve. Just like any other industry or marketplace, leadership is not set in stone. It is interesting to note that, in separate parts of the world, there is some agreement on where broadband is going. A former chairman of the U.S. Federal Communications Commission has called for every American home to receive a broadband connection capable of carrying 100 Megabits per second—the digital economy’s equivalent of Universal Service. The chairman of Korea Telecom envisions making exactly the same type of connection standard in that country, where the government’s broadband policy explicitly calls for hooking up all South Korean homes by 2005. And TechNet, the U.S. advocacy group, also is aiming for 100 Megabit connections to the home. Conclusion Technology will change, and it is not be too late for broadband laggards to be leaders. Many developing countries have a relatively little legacy infrastructure to worry about, and have more leeway to switch to wholly new technologies without looking back. With a roadmap in hand, the public and private sectors of nations everywhere can make this race a lot more interesting.”
