The Future of the Internet in America
This post was submitted by CEI research assistant Nicholas Nigro
In January 2014, the U.S. Court of Appeals for the D.C. Circuit struck down the core provisions of the Federal Communications Commission’s (FCC) Open Internet Order, vacating rules that required broadband providers to treat all Internet traffic equally. Since then, the FCC has published a notice of proposed rulemaking, while many have called for the agency to reclassify broadband providers as common carriers under the Communications Act. Two of the main purported justifications for this reclassification are that U.S. Internet speeds are lagging behind those in other developed countries and that U.S. broadband providers have spent too little on upgrading and expanding their existing networks.
But according to data from Akamai – which operates a content distribution network responsible for serving between 15 and 30 percent of the world’s Internet traffic – neither of these claims hold true.
Akamai’s 2014 Q1 “State of the Internet” report ranked the U.S. 11th in the world in average Internet speed. Although it may seem disappointing that the world’s most prosperous and powerful country has only the 11th fastest Internet, this reality is much more reasonable when one considers the other factors involved.
The top 10 is almost entirely composed of small, wealthy countries. The average population density of countries in the top 10, excluding the ultra-dense Hong Kong, is 203 pop/km2, almost six times higher than the United States’ density of 34 pop/km2. This relationship between speed and population density makes intuitive sense, as revenue from a broadband network scales primarily with the size of its user base, whereas costs scale primarily with the land area covered — the denser an area, the greater the incentive for companies to invest in broadband networks.
Average Internet speeds in specific U.S. states (and the District of Columbia) support the idea that the sheer size of the United States and the prevalence of its rural areas drag down average Internet speeds. Average Internet speeds in 22 states are faster than that of Finland, the tenth-ranked country, while six northeastern states offer faster speeds than fourth-place Switzerland. The average population density of five of these six states, D.C. excluded, is 245 pop/km2, more than seven times that of the United States. In contrast, the average population density of the 10 states with the slowest average Internet speed is 18 pop/km2.
Just as important as the current state of U.S. Internet speeds is the rate at which they are improving. The United States experienced a quarter-on-quarter increase in average connection speed of 11.9 percent, greater than both the global average of 1.8 percent and average of 7.66 percent for countries in the top 10. The United States’ year-over-year increase of 30.2 percent puts it ahead of the global average of 24 percent and on par with the average of 30.1 percent for countries in the top 10, excluding South Korea*.
Moreover, average connection speeds in the slowest twenty American states have grown swiftly over the past several years. Largely rural areas with below average Internet speeds is to be expected in a country as large as the United States. What matters is that these speeds are improving, which thanks to investment by ISPs in broadband networks, is clearly happening.
Internet in the United States is far from perfect, but reclassifying ISPs as common carriers would only lead to a degradation in the quality of American internet. U.S. Internet speeds are on par with those of other leading countries and have been growing rapidly over the past several years, despite the difficulties that accompany the U.S.’s lower population density. Declaring ISPs common carriers would put the continuation of this growth in jeopardy by removing incentives for ISPs to upgrade and expand their networks, instead encouraging providers to invest in more government lobbying. Advocates of reclassification love to cite the unpopularity of ISPs but seem to forget that reclassifying providers would entail putting the future of the internet in the hands of one of the few groups less popular: politicians. The future of America’s Internet infrastructure should depend on market demand and technological innovation, not on the will of government bureaucrats.
* South Korea is excluded because its increase of 145 percent is more than three times greater than that of second-place Finland. Were South Korea to be included, all but one country in the top 10 would fall below the new average of 41.6 percent.