Emerging Countries Outperform US Broadband Services

New chips are improving DSL modem performance and allowing faster speeds over longer distances. New home network devices perform better and are less expensive than the past. It might lead you to conclude that broadband is getting better in the U.S. But that’s not the whole story.

Lets start with cable, which still leads the U.S. in total broadband subscribers. Many cable subscribers are not happy with the performance of their broadband and say they would switch to DSL if given the choice. As a result, DSL is recently outpacing cable adoption. In the third quarter of 2007, about one million additional homes subscribed to broadband cable for a quarterly growth rate of 3.3%. Each of the major telephone carriers handily beat the cable growth rate with new DSL subscribers.

Globally, telephone companies continue to improve the use of their existing 1.3 billion copper subscriber lines. Broadband DSL subscribers worldwide outnumber broadband cable subscribers four to one. About 65 million broadband DSL lines were turned on globally in 2007. That’s more than the number of households in California, New York and Texas combined. In China, DSL remains the favorite. According to the Xinhua news agency, China has 122 million broadband users, the highest in the world. Sixty percent of them access the Internet over broadband DSL. 

Shanghai Telecom provides fixed line broadband to three million subscribers. About 85% of them access the Internet at more than 2 Mbps, considered the lower end of broadband in China. By comparison, “broadband” in the U.S. as stated by the FCC is “at least 200 kbps in one direction”, an embarrassingly dated definition that’s due for a rewrite.

The Chinese government plans to restructure six existing fixed line and mobile units into three operators with both fixed and mobile network assets. China Netcom with 114 million fixed line customers, including more than 18 milion broadband customers, will join mobile operator China Unicom with 118 million TDM customers.  China Telecommunications with 222 million fixed line customers, including 35 million broadband subscribers, will merge with China Unicom 41 million CDMA wireless subscribers. China Mobile Communications with 332 million wireless subscribers will merge with national fixed line operator China TieTong Telecommunications 20 million fixed line customers, including more than 3 million broadband subscribers. 

This suggests even more growth for DSL in China, and at higher speeds than the U.S.  China is not alone in offering better bandwidth. India also sets a higher broadband definition for carriers. Recently the Indian telecom regulator, TRAI, notified all Indian service providers not to use words like “up to” and has instructed them to unambiguously indicate the minimum speed to customers — at least 256 kbps in case of broadband subscription plans. Most US-based broadband providers still use the vague “up to” language in their contracts and marketing.  

According to a 2006 consumer research report, a third of U.S. households are still stuck with dial-up, and another third lack Internet access of any kind. More than half of DSL subscribers in the U.S. do not receive throughput of 200 kbps in both directions. Compared to China, the U.S. telephone companies are making slow progress on improving the DSL capacity of their copper lines. Patterns of Internet use in China are different than the U.S. Nearly seventy percent of Internet users in China say they use instant messaging, compared to only 26 percent in the U.S. Far more Internet users in China say they download video and music. That’s probably because China has more bandwidth and fewer lawyers, a pretty good tradeoff. In the final analysis, U.S. subscribers might just have to quit their DSL and cable, and subscribe to 3G.