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Page 1: Days of Our Broadband Dennis Weller Chief Economist Verizon Progress and Freedom Foundation Center for Public Integrity 28 June 2007

Days of Our BroadbandDays of Our Broadband

Dennis WellerDennis WellerChief EconomistChief Economist

Verizon Verizon

Progress and Freedom FoundationProgress and Freedom FoundationCenter for Public IntegrityCenter for Public Integrity28 June 200728 June 2007

Page 2: Days of Our Broadband Dennis Weller Chief Economist Verizon Progress and Freedom Foundation Center for Public Integrity 28 June 2007

Page Page 22

Where Did the Hand-Wringing Start?Where Did the Hand-Wringing Start?

The OECD’s October 2006 Broadband Statistics rank the US as 15th in penetration per 100 inhabitants

Page 3: Days of Our Broadband Dennis Weller Chief Economist Verizon Progress and Freedom Foundation Center for Public Integrity 28 June 2007

Page Page 33

Household Internet AdoptionHousehold Internet AdoptionPercentage of Households Taking BroadbandPercentage of Households Taking Broadband

0%

10%

20%

30%

40%

50%

60%

70%

US Average: 42%

EU Average: 23%

NV

NJ

DK

CA

CT

DE

AZ

MA

UT

FL

WA

GA

NH

NY

SE

MD

VA

CO

ID WY

TX

OH

IL NE

OR

ND

NC

MO

PA

NM

WI

RI

SC

LA

MI

MN

SD

TN

IA AL

AR

OK

ME

IN MT

KY

VT

MS

WV

UK

NL

KS

FI

BE

FR

EE

MT

LU

AT

SI

DE

ES

LV

PL

PT

IT HU

CZ

LT

CY

IE SK

EL

US States & EU Member Countries

Data from household surveys taken in late 2005 and early 2006. Sources: European Commission, “E-Communications Household Survey,” July 2006; US average from Pew Internet & American Life Project, “Home Broadband Adoption 2006”, May 28, 2006; US states from Render Vanderslice & Associates, September 2006

Page 4: Days of Our Broadband Dennis Weller Chief Economist Verizon Progress and Freedom Foundation Center for Public Integrity 28 June 2007

Page Page 44

Examining the Data to Understand the MarketsExamining the Data to Understand the Markets

• Sorting out Business – How many desktops?– OECD does not count connections over office LANS and leased lines

– How does technology choice differ in different markets?

– What is effect of composition of business?• By size or industry segment

• Sorting out Geography– Density, concentration

– Composition – comparing large units with small ones

• Sorting out Demographics– Household size

– Age, income

• Sorting out Wireless

* Ovum, Mobile Market Trends, 2005-2010, at 15.

Page 5: Days of Our Broadband Dennis Weller Chief Economist Verizon Progress and Freedom Foundation Center for Public Integrity 28 June 2007

Cap-Ex of US Companies and OECD TelecomsCap-Ex of US Companies and OECD Telecoms

Source: Yahoo Finance data

Year Ending Sept./Dec.

Page Page 55

Page 6: Days of Our Broadband Dennis Weller Chief Economist Verizon Progress and Freedom Foundation Center for Public Integrity 28 June 2007

Page Page 66

Broadband Speed – the Limits of CopperBroadband Speed – the Limits of CopperCustomers in the US live farther from central offices.

So average loop lengths (the distance that a signal must travel over a copper line from office to customer) are longer here than in many other countries.

In Italy, 80% of customers are within 2km – In the US, only 20%.

Short (and conditioned) loops can permit higher speeds over the legacy infrastructure.

DSL performance is highly dependent on distance.

DSL speeds drop dramatically as loop length increases.

Countries with short loops have made near-term progress with DSL, but will soon reach the limits of DSL technology.

Page Page 66

Page 7: Days of Our Broadband Dennis Weller Chief Economist Verizon Progress and Freedom Foundation Center for Public Integrity 28 June 2007

Page Page 77

Extending Broadband AvailabilityExtending Broadband Availability

• How can we do better in getting broadband where it isn’t?

• Data gathering and use of the data should be integrated– Micro data are best gathered locally

– Success of public-private partnership model • Connect Kentucky, Connected Nation

• Various means for helping the market to work– Not universal service

– Demand development

– Matching demand with investment

– Tax and other incentives, existing funding sources

• State public-private partnerships as a “farm system” to identify projects for federal funding– New mechanisms for tax incentives, loans, or grants

– Learn from other countries

– Competitive bidding for contracts