America is Lagging in Internet Speed

Americans invented the Internet, but the Japanese are running away with it.

Broadband service here is eight to 30 times as fast as in the United States -- and considerably cheaper. Japan has the world's fastest Internet connections, delivering more data at a lower cost than anywhere else, recent studies show.

The speed advantage allows the Japanese to watch broadcast-quality, full-screen television over the Internet, an experience that mocks the grainy, wallet-size images Americans endure.

Ultra-high-speed applications are being rolled out for low-cost, high-definition teleconferencing, for telemedicine -- which allows urban doctors to diagnose diseases from a distance -- and for advanced telecommuting to help Japan meet its goal of doubling the number of people who work from home by 2010.

About 8.8 million Japanese homes have fiber lines -- roughly nine times the number in the United States.

Japan's lead in speed is worrisome because it will shift Internet innovation away from the United States, warns Cerf, who is widely credited with helping to invent some of the Internet's basic architecture. "Once you have very high speeds, I guarantee that people will figure out things to do with it that they haven't done before," he said.

Every time I read one of these articles, it makes me want to move. Besides Japan, Hong Kong is now offering 100Mbps service for $48.50 a month and Europe is now the most aggressive market for IPTV. And the US is nowhere near the top in broadband speed (and is behind France!?!) as this graph shows.

High speed internet access will allow HD video on demand, telemedicine, telecommuting, super fast downloads of applications, music, and documents as well as future applications that have not yet been thought of.

Mr. Ferguson said the substandard American broadband infrastructure shaved as much as 1 percent off the nation’s potential productivity growth. Faster broadband services would allow telecommuters to use better videoconferencing equipment and more easily share multimedia documents, he said.

Whenever I read one of these articles, I always wonder why the US is a laggard. I figure it is one of these four reasons, but I am not sure which.
1) Government policy/more competition between companies
2) Government subsidies
3) Better Telecom companies/more focused on increasing bandwidth/lower profit
4) Smaller country, cheaper to wire

According to this article, it looks like 1, 2 & 3.

"The experience of the last seven years shows that sometimes you need a strong federal regulatory framework to ensure that competition happens in a way that is constructive," said Vinton G. Cerf, a vice president at Google.

The opening of Japan's copper phone lines to DSL competition launched a "virtuous cycle" of ever-increasing speed, said Cisco's Pepper. The cycle began shortly after Japanese politicians -- fretting about an Internet system that in 2000 was slower and more expensive than what existed in the United States -- decided to "unbundle" copper lines.

For just $2 a month, upstart broadband companies were allowed to rent bandwidth on an NTT copper wire connected to a Japanese home. Low rent allowed them to charge low prices to consumers -- as little as $22 a month for a DSL connection faster than almost all U.S. broadband services.

Masayoshi Son, head of a company called Softbank, offered broadband that was much cheaper and more than six times as fast as NTT's. He added marketing razzmatazz to the mix, dispatching young people to street corners to give away modems that would connect users to a service called Yahoo BB. (The U.S.-based Yahoo owns about a third of it.) The company's share of DSL business in Japan has exploded in the past five years, from zero to 37 percent. As competition grew, the monthly cost of broadband across Japan fell by about half, as broadband speed jumped 33-fold, according to a recent study.

With the help of government subsidies and tax breaks, NTT launched a nationwide build-out of fiber-optic lines to homes, making the lower-capacity copper wires obsolete.

Indeed, the stock price of Nippon Telegraph and Telephone, which has two-thirds of the fiber-to-the-home market, has sunk because of concerns about heavy investments and the deep discounts it has showered on customers. Other carriers have gotten out of the business entirely, even though it is supported by government tax breaks and other incentives.

And analysts note that the Bush administration has largely stood on the sidelines rather than provide financial incentives to promote fiber services.

I am not sure what the US needs to change to get to Japan's levels, but I think we need to look at government policy regarding competition between telecoms, possibly toss in some subsidies and put some pressure on the telecoms to get their act together and increase bandwidth for the good of the country.

via Washington Post and NY Times