It was just last year that those of us raising alarms about the massive half-decade market failure in the United States to adequately provision broadband services were facing a misinformation campaign that raw numbers mattered more than percentage rankings. According to this argument, the US broadband market was sound because we had more broadband lines than anyone else.

The misinformation brigade got so much attention (mainly due to incumbents funding a propaganda campaign that "everything is fine here, nothing to see"), that public interest groups had to issue reports systematically refuting the PR are marketing hype. In fact, Free Press issued a point-by-point rebuttal, "'Shooting the Messenger' Myth vs. Reality: U.S. Broadband Policy and International Broadband Rankings" -- and myth #3 was:

The OECD’s reporting is suspect because they don’t emphasize the total number of connections. If they did, they’d see that the United States is No. 1 because we have more lines than any other country in the world.

As Derek Turner, the report's author, rightfully concluded:

The United States is the largest country in the OECD, and the third-largest country in the world. Reporting the total number of connections is meaningless without context. Lines per-capita or lines per household is the proper way to conduct comparisons.

Defenders of the broadband status quo often argue that the penetration data doesn’t matter, because the United States is No. 1 in total number of connections. In his recent speech, Commissioner McDowell said, “The [OECD] study does not emphasize the fact that the United States is simply the largest broadband market in the world with over 58 million subscribers, according to the OECD report – more than twice the number of America’s closest competitor.”

This is true. But it is not a meaningful critique of the comparative performance of nations on a per capita basis. Using this logic, we could say the United States has more unemployed people than any other country in the OECD, including developing economies like Mexico, so therefore the U.S. economy must be in the tank. But when viewed through the sensible per capita lens, which accounts for country population, the United States has one of the lowest unemployment rates in the entire OECD.

The argument that relatively poor U.S. performance is excused by the total number of broadband lines irrespective of population is misleading. Looking from another angle, China now has almost as many broadband connections as the United States and will likely overtake us this year. But China has four times as many people as the United States. Our household adoption rate is nearly four-times higher than China’s. When China overtakes us in the raw number of connections, we will rightly not point to the Chinese as the world leaders in broadband performance.

And here we are, one year later, and the headline last week was, "China Overtakes U.S. In Number Of Broadband Lines." The original critique certainly holds -- raw numbers of broadband lines are not a good indicator of the health of a country's broadband market. But when free market institutes are still touting the health of the US broadband market, I can't help but wonder, how bad does a market have to fail before certain people agree that it isn't doing so well? As with the all-too-obvious comparison with the US financial market (which McCain was touting as fundamentally sound in mid-September), the US broadband market is fundamentally and dangerously problematic.

The end result? Even with a major stimulus, it will take years for the United States to achieve parity (much less pull ahead) of our global competitors. The United States is currently at a competitive disadvantage in a digital economy -- the best thing we can do is to launch a broadband bailout now. Otherwise, we'll be paying far more, and achieving far less, down the road.

I was recently looking at data over the course of a week from the US Census, the ITU, and the OECD, all looking at indicators of broadband services in the United States. What grabbed my attention was the remarkably close relationship between the diminishing number of Internet Service Providers and the global standing of the United States when it comes to broadband penetration rates. Clearly there's a relationship here, the question is, what's driving this mess? Here's the data in graphical format (sources are the US Census, ITU, and OECD):

Back in August of 2005 many of us were already decrying the FCC's Broadband penetration rate figures -- Free Press had issued this report, which, in my own words, offered "a devastating critique of the FCC's findings." Now the Congressional General Accounting Office (GAO) has weighed in with its own 70-page report, coming to much the same conclusion, but soft-pedaling its significance.

Tucked into the end of the report are some pretty damning statistics regarding broadband deployment characteristics in the United States. The GAO found that income (especially), race, and education levels all had significant correlations with broadband adoption rates -- adding credence to the many red-lining concerns raised from countless quarters over the years. Meanwhile, Internet taxation was found to have no significant effect on broadband deployment.

From the Baller Herbst List:

GAO says FCC's method of reporting broadband deployment is questionable and significant rural gaps exist: "For its zip-code level data, the FCC collects data based on where subscribers are served, not where providers have deployed broadband infrastructure. Although it is clear that the deployment of broadband networks is extensive, the data may not provide a highly accurate depiction of local broadband infrastructures for residential service, especially in rural areas"

To me, here's the most telling problem:

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