The Data Show Competition Works! Building Upon a Strong Broadband Foundation — Part II

April 30, 2009

First quarter financial results prove that the success of the broadband sector’s facilities-based competition, is an exceptionally strong foundation on which to build a National Broadband Strategy. (See 1Q09 results: AT&T, Verizon, Comcast and Time Warner Cable, companies are listed by revenue size.) The results show:

  • Rare financial/economic stability:
    • With the overall U.S. economy in greater decline than any time since the 1950’s, — a 6.1% decrease in GDP — the broadband sector is a rare brightspot — out-growing the overall economy by 6-11%.
  • Broadband penetration increasing strongly:
    • Reported broadband connections of the broadband bellweathers indicate the broadband industry added between 1.5-2.0 million new broadband users in the first quarter of 2009 alone — despite the worst economy and consumer spending in 50 years.
  • Speeds are increasing:
    • Speeds are increasing as cable is upgrading quickly to DOCSIS 3.0 which currently enables 50-100 megabit offerings and Verizon’s Internet FIOs had a record quarter in fiber to the home broadband additions.
  • Value is increasing:
    • Competition is driving increased value, (price per megabit) as broadband providers routinely increase speeds for the same price to retain customers.
      • Cablevision will be offering 100 Mbs downstream for $99.95 to its whole footprint in response to competition from Verizon FIOS.
      • And Sprint is offering deeply discounted data plans to stay competitive in wireless broadband.
  • Strong infrastructure investment/deployment:
    • The first quarter results also indicate that the broadband sector continues to invest more in infrastructure than any other industry in this severe economic downturn.
    • Investment and deployment of next generation infrastructure, Wimax, LTE, DOCSIS and Fiber also remain strong relative to the rest of the economy, which has drastically reduced investment in innovation because of the deep recession.
  • Sustaining other sectors:
    • Finally, in further evidence of the competitiveness of the sector, broadband companies continue to advertise at a very high rate, which is a rare bright spot in the advertising sector.
    • This leading adverising spending by broadband providers is also a key economic lifeline to many struggling newspapers and broadcasters ravaged by the collapse of other traditional big advertisers — autos and housing.

In sum, broadband is not a sector that is failing, underperforming, or in need of government assistance or intervention.

Facilities-based broadband competition is succeeding in all the measures that matter: economic growth; jobs stability with above average pay/benefits; broadband penetration, investment, and deployment; and increased speed, value (price per megabit) choice.

  • Broadband is a shining success story of stability, growth and value during one of the toughest economic periods since the Great Depression.

In addition, the broadband sector continues to be a consistent and positive partner in solving many of the nation’s most pressing problems — by helping lower the costs of education and health care and by helping reduce energy use and pollution, through increased telecommuting.

The FCC’s pending National Broadband Strategy should build upon the strong foundation of broadband competition and economic growth.


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