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Reason Foundation

Those Pesky OECD Broadband Numbers

Steven Titch
January 30, 2008, 1:58pm

No one follows the telecom policy scene long before coming across the broadband penetration statistics issued regularly by the Organization for Economic Cooperation and Development (OECD). For those just tuning in, the OECD places the U.S. 15th in the world in terms of per capita broadband penetration with 22.1 lines per hundred users. According to the OECD, Denmark leads the word with a penetration of 34.3 per hundred. Over the past few years, the U.S. rank has been steadily falling. Meanwhile, the OECD consistently reports the U.S. users pay more on a per-megabit basis for service than foreign counterparts. The numbers have been controversial, being as they rely on data provided by governments and don't measure the broadband penetration among businesses or the effect of wireless. That the stat tends to be used as a club for policy activism ("The U.S. ranks 15th, therefore the government should...[insert your favorite government telecom program here]"), served as the impetus behind a rather informative panel on broadband metrics at yesterday's State of the Net Conference in Washington, which discussed ways to better measure broadband penetration and use and provide context for the OECD numbers. Taylor Reynolds, communication analyst and economist for the OECD himself admitted concern that the U.S. media reports the ranking in isolation of a number of other OECD metrics, many of which reflect positively on the U.S. Among those include the amount of areas in the U.S. where broadband service is available, and, most pointedly, that in the U.S, broadband use is not capped–that is, users are not limited to the amount of broadband use within a given month. The average bit cap in the OECD is 10 gigabytes, after which additional charges kick in. In terms of content, 10 gigs amounts one season of half-hour TV episodes downloaded from a service such as iTunes. Bit caps are a critical counterpoint to the lower per-megabit prices many European and Asian users pay for broadband – and suggests that their low-price regime requires rationing. This would be expected whenever government interferes with market pricing, in this case creating a demand glut by urging service providers (in some cases companies in which the government maintains a financial stake) to keep prices artificially low.


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