Phillip Dampier

The Wall Street Journal’s not-living-in-the-real-world editorial page strikes again.

The commentary pages have always been the weakest part of the Journal, primarily because they screech pro-corporate talking points in contrast to the more balanced reporting in the rest of the newspaper.

Mr. Holman W. Jenkins, Jr. decided to distort broadband reality (again) in yesterday’s edition with a glowing commentary on how wonderful broadband providers are in his piece, “Springtime for Broadband.” The only thing missing was a border in fine print labeled, “Sponsored by Verizon, AT&T, and your cable company.”

While your Internet bill is being hiked at the same time your provider is slapping usage limits on your connection, Jenkins dismisses consumer-fueled complaints about broadband price gouging, assaulting Net Neutrality, and overall poor customer service as part of Washington’s “broadband policy circus.”

Charges fly hourly that Google or some other company is guilty of gross insult to net neutrality (that sacred principle nobody can define). Oregon Sen. Ron Wyden has introduced legislation to regulate data caps and Internet pricing. Law professor Susan Crawford, until recently a White House technology adviser, clearly craves to be America’s next go-to talking head on broadband. Lately she’s been everywhere calling for a crackdown on the competing “monopolists” who supply Internet access.

How dare they complain, decries Jenkins in a robust defense of the 21st century version of the railway robber barons.

Comfortably playing patty cake with provider-fed talking points from the industry echo chamber, Jenkins is ready for battle, facts or not.

But wireless providers have invested big money to deploy high-speed mobile networks, and fixed and mobile are inevitably beginning to compete. The latest evidence: Australia recently predicted that up to 30% of households will go the all-wireless route and won’t be customers for its vaunted national broadband project.

Jenkins

Not exactly. The basis for this 30% figure is the National Broadband Network’s own business plan, which warns –if– the company raised prices to a maximum theoretical level, up to 30 percent of its customers would rely on wireless instead… by the year 2039. That is 26 years from now. You have nothing better to do in the meantime, right?

In fact, conservative critics of the fiber network, some defending the big wireless cell phone industry in Australia, have suggested fiber optics is a big waste of money because “wireless is the future.”

That old chestnut again.

“Now you can present a bulletin without touching a typewriter … it’s just there on the computer system, you don’t need a reel to reel tape recorder. I’ve got a touchscreen in front of me. Back then I had a big cartridge deck,” said Ray Hadley on 2GB radio. “Can you imagine the advances in technology in the next 26 years? I can’t. I can’t comprehend it. By the time they finish the NBN, it could be superseded by something we don’t even know about.”

NBN Myths, a website set up to tackle the disinformation campaign from political and industry opponents has one simple fact to convey: “Despite what you may have read from certain clueless commentators, there is not a single country or telecommunications company anywhere in the world that is attempting to replace fixed networks with wireless in urban areas, or even planning to do so in the future.”

Which would you rather have?

Even Telstra, the biggest telecom company in Australia scoffs at such a notion, noting a growing number of its customers have both wired and wireless service, and they do not depend on one over the other.

Research firm Telsyte found that 85 per cent of Australians want speeds of 50Mbps or higher, speeds impossible for wireless to offer. In fact, when the NBN fiber network became available to Australians, almost half the current users as of October last year had chosen an even-faster 100Mbps plan option. But Australians also want mobile broadband, and they are signing up for that as well.

The Australian Bureau of Statistics notes the number of mobile broadband Internet connections also grew by around 40% in Australia between 2009 and 2010. But here is the Achilles heel of wireless: it cannot deliver the same speeds or capacity, and providers charge high prices and deliver low usage caps. As a result, the wireless industry has pulled off a coup: they earn enormous revenues from networks they have successfully rationed. The total amount of data downloaded over Australia’s wireless networks actually fell on a per user basis, despite the growth in customers.

Much of Jenkins’ commentary is spoon-fed by the industry-funded Information Technology and Innovation Foundation, which produces industry-sponsored studies designed to tell America all is well in our broadband duopoly.

In the latest federal survey, the average broadband speed in America is up to 15.6 megabits per second, from 14.3 a year earlier. Nearly half of customers who six months ago made do with one megabit or less have now moved up to higher speeds. Since 2009, the U.S. has gone from 22nd fastest Internet to the eighth fastest.

The 15.6Mbps figure comes from the Federal Communications Commission. The statistics about our global speed ranking come from Akamai’s voluntary speed test program. Other studies rate America much lower. More importantly, while providers in the U.S. try to squeeze out more performance from their copper networks, other countries are laying speedier fiber networks that are destined to once again leapfrog over the United States. Most charge less for their broadband connections as well.

Jenkins also quotes the ITIF which touts 20 million miles of fiber were laid in America last year. But the ITIF, when pressed, will admit the majority of that fiber was “middle mile” connections, institutional or business network fiber you cannot access, or fiber to cell towers. Fiber to the home expansion has stalled, primarily because Verizon has suspended expansion of its FiOS network to new areas after Wall Street loudly complained about the cost.

Jenkins argues that if we leave providers alone and stop criticizing their growing prices, declining competition, and fat profits, the marketplace will suddenly decide to invest in network upgrades yet again.

“The day may come when even Verizon, which visibly soured on its $23 billion FiOS bet, rediscovers an urge to invest in fixed broadband infrastructure to meet growing consumer lust for hi-def services,” writes Jenkins.

Would Wall Street rather see providers invest in network upgrades or return profits to shareholders? Investment expansion in the broadband industry comes when a company senses if they do not spend the money, their business will be swept away by others that will. Cable broadband threatens telephone company DSL, so AT&T cherry-picked communities for investment in its half-measure U-verse fiber to the neighborhood network. Google Fiber, should it choose to expand, will be an even bigger threat to both cable and phone companies. Municipal fiber to the home networks upset the incumbent players so much, they spend millions of ratepayer dollars in efforts to legislate them out of existence.

Jenkins’ view that giving the industry carte blanche to do and charge as it pleases to stimulate a better broadband future is as fanciful as NBN critics in Australia suggesting fiber upgrades should be canceled in favor of waiting 20+ years for improved wireless to come along.

He even approves of Internet Overcharging schemes like usage caps and consumption billing, calling it proper price discrimination in a “fiercely competitive” environment to defray a network’s fixed costs.

Do you think there is fierce competition for your broadband dollar?

Broadband’s fixed costs are so low and predictable, it literally calls out consumption pricing as just the latest overreach for enhanced profits. As Suddenlink’s CEO himself admitted, the era of big expensive cable upgrades are over. Incremental upgrades are cheap, the costs to offer broadband are declining, so it is time to reap the profits.

Jenkins closes with one recommendation we can agree with: “A low-tech way to stir up broadband competition would be to relax the regulatory obstacles to the actual physical provision of broadband.”

We can start by scrapping all the state laws the industry lobbied to enact that prohibit community-owned broadband competition. If big cable and phone companies won’t provide communities with the quality of broadband service they need to compete for 21st century jobs, let those communities do it themselves.

The mouthpiece of Big Telecom.

The Information Technology and Innovation Foundation has looked and looked, and just does not see America’s broadband problems aptly described by industry critics including Susan Crawford, David Cay Johnston and Tim Wu. As far as the ITIF is concerned Americans have little to complain about with respect to broadband availability, speeds or pricing.

That finding is part of a new research paper, “The Whole Picture: Where America’s Broadband Networks Really Stand,” authored by Richard Bennett, Luke Stewart, and Robert Atkinson.

The report sniffs at critics complaining about uncompetitive, high-priced service, dismissing them as misguided “holders of a particular ideology or economic doctrine, which is Neo-Keynesian, populist economic thinking in this instance.”

Bennett, Stewart, and Atkinson, who have all penned pro-industry reports for years, prove another economic doctrine: the free market for industry bought-and-paid-for-“research” is alive and well.

The summary finding of the report:

Taking the whole picture into account, this report finds that the United States has made rapid progress in broadband deployment, performance, and price, as well as adoption when measured as computer-owning households who subscribe to broadband. Considering the high cost of operating and upgrading broadband networks in a largely suburban nation, the prices Americans pay for broadband services are reasonable and the performance of our networks is better than in all but a handful of nations that have densely populated urban areas and have used government subsidies to leap-frog several generations of technology ahead of where the market would go on its own in response to changing consumer demands.

Although the report is extensively footnoted to bestow credibility, once a reader begins to check out those footnotes, trouble looms:

1. Some footnotes lead the reader to business or Wall Street media reports, which can favor an industry point of view or extensively quote from executives and insiders;
2. Several certain critical assertions include footnotes that link only to the home page of the source, making it impossible to find the exact source material used;
3. Many footnotes come from earlier articles, position papers, and statements from the authors or others affiliated with the ITIF — hardly independent sources of information.

Bought and paid for research.

ITIF’s report is riddled with customized benchmarks the ITIF appears to have invented itself. Ars Technica caught one in the executive summary and questioned the relevance of measuring broadband adoption among “computer-owning households” at a time when an increasing number of Americans use broadband for video streaming on televisions, use smartphones, or rely on tablets for access.

We also noted the authors making several assertions without facts in evidence to support them. Among them is the unsupported notion that “the high cost of operating and upgrading broadband networks in a largely suburban nation” makes today’s broadband pricing understandable and fair.

In fact, the most significant costs borne by cable operators came during the early years of their initial construction — one, even two decades before broadband over cable was envisioned. When cable Internet service was introduced, it was praised for its relatively inexpensive start-up costs and its ability to deliver ancillary, unregulated revenue for cable operators. Those cable networks over which broadband is delivered have been paid off for years.

The authors avoid the actual financial reports of the largest phone and cable companies in their study, because as public shareholder-owned companies, they are obligated to disclose reality. Those financial reports show a consistent drop in capital expenses and infrastructure investment and a major increase in revenue and profits from broadband service. Cable industry executives have repeatedly asserted the reason they raise broadband prices is not because the costs to run their networks are very high, but rather because “they can.”

From there, Bennett, Stewart, and Atkinson play endless rounds of Statistics Scrabble.

Claim: America enjoys robust competition for broadband.

Phone Company

Fact: The cable industry has declared itself the victor for delivering high-speed broadband in the United States. DSL has long since given up competing on speed, and even AT&T’s hybrid fiber-copper U-verse platform is rapidly losing ground in the broadband speed race. Wireless and satellite plans are almost all slower and routinely cap usage, often to levels of just a few gigabytes per month.

The cable industry also won the right to keep its network to itself, not allowing third-party wholesalers on-demand access to resell broadband over those networks. Phone companies have been able to charge discriminatory wholesale pricing to access their networks, and only for certain types of connections.

Abroad, most networks are open to third parties on non-discriminatory terms. In places like the United Kingdom, customers have their choice of ISPs available over a traditional BT DSL line. In Asia, public subsidies and incentives helped push providers to construct fiber to the premises networks, but those networks are open access, helping spur competition and lower prices.

Domestically Time Warner Cable permits competitors like Earthlink on its network on a voluntary basis, but unsurprisingly Earthlink charges the same or higher prices for service that Time Warner charges once a six month promotion ends. That represents “competition” in name-only.

Claim: Most speed-test-based research rankings on broadband speeds around the world are wrong.

Cable Company

Fact: ITIF at one point makes the unfounded assertion that since many people only test their broadband speed when something seems wrong with their connection, most speed-test-sourced “actual speed” data is not very useful because there often is something wrong with a broadband connection when testing it, resulting in flawed data. This ‘picked out of the sky’ claim is one of the primary arguments ITIF makes about why broadband rankings (produced by those other than themselves) are irrelevant.

ITIF’s press release about its report makes the completely unsubstantiated assertion that “the average network rate of all broadband connections in the United States was 29.6Mbps in the third quarter of 2012; in the same period, we ranked seventh in the world and sixth in the OECD in the percentage of users with performance faster than 10Mbps.”

DSL customers may find a statistic rating America’s broadband speeds as better than one might expect to be less than useful when it only counts broadband connections faster than the average DSL user can buy themselves.

This cherry-picking may help the ITIF’s arguments look more credible, but it does nothing to improve your broadband speeds at home or at work.

Claim: Broadband provider profits average less than 2% annually.

Fact: Another clever statistic (poorly sourced as ‘from the home page of Bloomberg.com’ — check back with us when you find the original article yourself) that fails to tell the whole story.

We aren’t THAT profitable, really.

First, ITIF defines net profits specifically as “simply the difference between revenue and expenses.” But that definition may not account for a range of corporate accounting activities which can diminish net profits but still let the company walk away with high fives from Wall Street. Share buybacks or dividend payouts, acquisitions, costs and expenses from other divisions not related to broadband, etc., can all affect the bottom line and mask the enormous earnings and profit potential of American broadband.

Take Time Warner Cable, which has a 95 percent gross margin selling broadband. Broadband service is just one of three primary services sold by the cable operator. Broadband does not suffer from landline losses in the phone business or from escalating TV programming expenses. Broadband is clearly the most profitable service in Time Warner’s product arsenal because it occupies only a small part of the company’s wired infrastructure. Supplying broadband service also costs Time Warner relatively little money as a percentage of their earnings and has helped offset revenue loss from the television side of the business. Bandwidth costs have also declined year after year. Infrastructure upgrades are more than covered by pricing that has begun to creep up over the last few years. In effect, broadband earnings are covering for other products that are not selling as well.

ITIF’s claim that supplying broadband is costly and that current rates are justified just isn’t true.

Claim: Europe is behind the United States in broadband.

Fact: The one legacy network that both Europeans and Americans share in common is the copper wire basic telephone service. From there, telecommunications service diverged.

North Americans embraced cable television while much of western Europe (especially the UK) preferred direct-to-home satellite service. That difference set the stage for some significant broadband disparity. Cable broadband technology has proved more robust and reliable than DSL service. Phone companies that rely on basic DSL are falling behind in broadband speeds. Investment to bring fiber online is the only way these phone companies can stay competitive with cable broadband. Some countries with particularly decrepit telephone networks, especially those left over from the Communist era in eastern Europe, are being scrapped in favor of fiber to the home service. Many western European countries are incrementally introducing fiber to the cabinet or neighborhood service, which leaves the last mile copper phone wire connection in place.

This is why speeds in many eastern European countries and the Baltic states with full fiber networks are so high. Advanced forms of DSL are more common further west, using technologies like VDSL2+. But DOCSIS 3 cable upgrades (and those to follow) continue to leapfrog over telephone company DSL advancements. Speed disparity is often the result of fewer cable systems in Europe as well as the amount of fiber optics replacing basic telephone service infrastructure.

Despite that, many Europeans pay less, particularly for faster service, than we do. Plus, fiber optic upgrades are within the foreseeable future in many European countries. In the United States, fiber deployments are now crawling or stalled in areas served by AT&T and Verizon. Neither company shows much interest in spending money on further wired upgrades and no competitive pressure is forcing them to, especially as both phone companies increasingly turn attention to their wireless divisions for most of their earnings.

The kind of research produced by the ITIF is tainted as long as they don’t reveal who is paying for these research reports. As Stop the Cap! readers have learned well, following corporate money usually helps expose the real agenda of these so-called “think tanks,” which are created to distort reality and quietly echo the agenda of their paymasters with a veneer of independence and credibility.

The Roku set top streaming device.

The days of renting expensive set top boxes from Time Warner Cable may finally be coming to an end, at least if you happen to subscribe to the cable company’s broadband service.

Time Warner Cable this week announced a new partnership with Roku that will bring 300 Time Warner Cable channels to the video streaming device.

Time Warner Cable customers who also own Roku devices will soon find a TWC “channel” on the menu, from which subscribers can access the same streamed content found on the cable company’s viewing apps for iOS and Android devices. The service represents true IPTV television — an all digital experience streamed over Time Warner Cable’s broadband service.

Customers only have to pay for the Roku device, which ranges from $50-100. Lower priced units do not deliver a true HD viewing experience. Higher priced models support 1080p viewing and support additional features like motion control for games and external USB and Ethernet ports. Time Warner Cable currently limits HD viewing to 480p on its streaming apps, so a cheaper unit may suffice for secondary television sets.

Roku boxes also offer cable customers other viewing options apart from Time Warner Cable, including independent networks, games, movie channels, foreign language and ethnic programming, religious entertainment, global news, and a variety of self-produced and public access programming from cities around the country. Roku boxes also support Netflix and Amazon Video on Demand.

But there are a few downsides, at least for the moment. Local broadcast channels are not currently available except in New York City, but that is expected to change soon. Recording programming delivered over a Roku box is not easily possible, and viewing will reduce available bandwidth on your broadband connection.

Considering Time Warner now charges just shy of $8.50 a month for each set top box, switching to Roku will pay for itself in as little as six months. Time Warner Cable expects most customers will consider the streaming device for televisions in bedrooms and guest rooms.

Saratoga, Calif.-based Roku has had a blockbuster year, doubling the number of its employees and approaching five million units sold. Last year, consumers watched more than one billion hours of television over Roku devices.

[flv width=”534″ height=”320″]http://www.phillipdampier.com/video/NY1 TWC and Roku 1-8-13.mp4[/flv]

Time Warner Cable’s NY1 reports on the Roku-Time Warner partnership that will let customers stream the cable company’s lineup without a traditional set top box. (1 minute)

The views of the Adam Smith Institute, despite the near-global financial meltdown engineered by the Masters of the Universe.

Forbes columnist Tim Worstall is unimpressed with Google’s foray into fiber optics.

Worstall, a Fellow at the Adam Smith Institute in London, has repeatedly penned columns tsk-tsking the global broadband speed race.

In his world view, nobody except certain specialists needs any connection faster than 2Mbps:

The most obvious being that outside certain very specific uses (video editing for example, where people can pay up for their own T1 line) there’s not really much evidence that speeds above 2 Mbps or so actually improve productivity or economic performance/growth. Sure, they’re great for consumers who want to download movies but that’s not really a justification for a large scale infrastructure program.

Worstall’s Luddite-like knowledge of broadband technology makes it difficult to take him seriously. Notwithstanding the fact a T1 line delivers just 1.5Mbps (at a cost several times a typical cable or DSL broadband connection), Worstall’s declaration that faster speeds are only good for “downloading” movies (the concept of streaming also escapes him) is simple nonsense.

Worstall’s tantrum is really part of a bigger discussion about how to do broadband better in both the United Kingdom and the United States. Incumbent providers are dragging their feet while reaping profits for overpriced, too-slow service. Consumers and businesses are fed up, and some are now increasingly turning to the government to do-something to shake up the status quo.

Government? For those slavishly devoted to free market ideals at the Adam Smith Institute, such a notion guarantees an intemperate outburst with phrases like “government takeover,” “government interference in private business,” or “government monopoly” — all ideas Worstall complains are “blindingly awful.”

“The idea that the solution to anything is a government run engineering monopoly just boggles the mind,” Worstall declares.

In his piece, “Why High Speed Broadband Just Doesn’t Matter,” Worstall has just a single litmus test to define broadband worthiness: how much economic value can be extracted from the Internet — Ferengi economics at their finest.

Worstall (Image: Forbes)

Worstall:

So more people can watch TV. Apologies, but this doesn’t really convince. Higher definition TV just isn’t the sort of technology that boosts the economy of a country. It might be nice to have but it most certainly does not justify taxing some to provide the service to others.

[…] The truth is that as long as you’re getting broadband of a kind (2 Mbps say) then it’s possible to extract that economic value. Faster speeds might be nice but they’re just not necessary for economic development.

Even if you accept Worstall’s inaccurate contention fast Internet is only good for watching online entertainment, he evidently forgets PricewaterhouseCoopers estimated the value of that industry at $2 trillion, and that was by 2011. Why even have a cable television business, if the only thing it is good for is watching reality shows and Law & Order reruns? Because it makes money — lots of it.

Back to Google, which is creating a bit of a pickle for the cable and phone companies — an increasingly fat and happy bunch earning easy profits selling broadband at duopoly market prices. Proponents for better broadband advocating for new, publicly-owned broadband networks have had to confront astroturf and conservative groups using popular memes that “big government” cannot do anything right and if there was a market for gigabit broadband, private companies would already be selling it.

Starting this summer, Google is.

That spells t-r-o-u-b-l-e for the corporate love muffins at the Adam Smith Institute and their industry friends who are quite happy with the way things are today, thank you very much. Google just happens to be an example of a free market success story — a ‘responsible’ company willing to invest money in the game-changing broadband Worstall and friends spent years arguing we don’t actually want or need.

As Kansas City residents line up around the virtual block, eagerly plunking down $10 to “pre-register” for Google service, it becomes difficult to continue the standard line that super-fast Internet is just a tech-geek curiosity.

So what does a free-market-knows-best-devotee do in light of all this? Change the story.

Worstall picks up a premise first offered by The Guardian and runs with it. Namely, Google is actually riding the wave of past phone company failures to cheaply benefit from assets those companies deployed first:

There’s a very large difference between being able to do something usefully experimental with an orphaned asset and having to pay for the construction of that asset in the first place. The telecoms companies lost fortunes on laying that fibre (indeed, several, including such as Global Crossing, went resoundingly bust for billions in doing so). That something that was built for $100 can find a use when it is sold for $1 (just to make up some numbers) is not an argument in favour of spending the $100.

Yet that is exactly what the argument being proposed is. Look, Google’s got really cool fast broadband, now we should build it for everyone! What’s being missed is that, at least so far as we know as yet, that really fast broadband isn’t worth the cost of building it. It only makes sense even for Google because they’ve not had to pay full price for it.

Google got a discount, so that is why they are in the business.

Worstall’s declaration is news to Kansas City, which has been enduring Google’s construction crews for months as they lay fiber infrastructure across the metropolitan area. Evidently Google hired illusionist David Copperfield to perform the masterful trick of shading the truth:  re-purposing already-there fiber while pretending it was being buried and strung for the first time.

Adam Smith didn’t have super fast broadband when he posited his views on unfettered free markets in the 1700s. If his devoted followers are left in charge, you won’t either.

The Federal Communications Commission’s July report on America’s broadband speeds shows virtually every major national provider, with the exception of Frontier Communications, made significant improvements in delivering the broadband service and speeds they advertise to customers.

Utilizing thousands of volunteer testers agreeing to host a router that performs automated speed tests and other sampling measurements (full disclosure: your editor is a volunteer participant), the FCC speed measurement program is one of the most comprehensive independent broadband assessments in the country.

Hourly Sustained Download Speeds as a Percentage of Advertised, by Provider—April 2012 Test Data

The FCC found Cablevision’s improvements last year paid off handsomely for the company, which now effectively ties with Verizon Communication’s FiOS fiber-to-the-home service for delivering promised speeds during peak usage times. The cable operator was embarrassed in 2011 when the FCC found Cablevision broadband customers’ speeds plummeted during Internet use prime time. Those problems have since been corrected with infrastructure upgrades — particularly important for a cable operator that features near-ubiquitous competition from Verizon’s fiber network.

“This report demonstrates our commitment to delivering more than 100 percent of the speeds we advertise to our broadband customers – over the entire day and during peak hours – in addition to free access to the nation’s largest Wi-Fi network and other valuable product features and enhancements,” said Amalia O’Sullivan, Cablevision’s vice president of broadband operations.

Verizon also blew its own horn in a press statement released this afternoon.

“Verizon’s FiOS service continues to demonstrate its mastery of broadband speed, reliability and consistency for consumers as represented in today’s FCC-SamKnows residential broadband report,” said Mike Ritter, chief marketing officer for Verizon’s consumer and mass market business unit. “The FCC’s findings reaffirm the results from the 2011 report, which found that FiOS provides blazing-fast and sustained upstream and downstream speeds even during peak usage periods. This year’s results also show once again that FiOS Internet customers are receiving speeds that meet or exceed those we advertise, adding even more value to the customer experience.”

Average Peak Period Sustained Download and Upload Speeds as a Percentage of Advertised, by Provider—April 2012 Test Data

Cable operators’ investments in DOCSIS 3 technology also allowed their broadband networks to perform well even as broadband usage continues to grow. Comcast delivered 103% of promised speeds during peak usage, Time Warner Cable – 96%, and Cox – 95%.

Just one nationwide provider lost ground in the last year — Frontier Communications, whose DSL service has grown more congested than ever, with insufficient investment in network upgrades apparent by the company’s dead-last results.

Frontier managed 81% of promised speeds in 2011, partly thanks to its inherited fiber to the home network. This year, it managed only 79%.

Frontier performed adequately for customers choosing its lowest 1Mbps speed tier. It also performed well in areas where its fiber network can sustain much faster speeds. The biggest problems show up for Frontier’s DSL customers buying service at speeds of 3-10Mbps. At peak times, network congestion brings those speeds down.

On average, the FCC found fiber to the home service delivers the best broadband performance, followed by cable broadband, and then telephone company DSL. Five ISPs now routinely deliver nearly one hundred percent or greater of the speed advertised to the consumer even during time periods when bandwidth demand is at its peak. In the August 2011 Report, only two ISPs met this level of performance. In 2011, the average ISP delivered 87 percent of advertised download speed during peak usage periods; in 2012, that jumped to 96 percent. In other words, consumers today are experiencing performance more closely aligned with what is advertised than they experienced one year ago.

The FCC report also found that outlier performers in the 2011 study, with the exception of Frontier, worked hard to make their differences in performance disappear. Last year, the standard deviation from promised broadband speeds was 14.4 percent. This year it is 12.2 percent.

Peak Period Sustained Download Performance, by Provider—April 2012 Test Data

The FCC also found consumers are gravitating towards higher-priced, higher-speed broadband service. Last year’s average broadband speed tier was 11.1Mbps. This year it is 14.3Mbps, almost 30% higher. Along with faster speeds comes more usage. Customers paying for more speed expect to use their broadband connections more, and the FCC found they do.

Overall, the FCC was encouraged to see broadband speed tiers on the increase, some to 100Mbps or higher.

Highlights from the report:

• Actual versus advertised speeds. The August 2011 Report showed that the ISPs included in the Report were, on average, delivering 87 percent of advertised speeds during the peak consumer usage hours of weekdays from 7:00 pm to 11:00 pm local time. The July 2012 Report finds that ISP performance has improved overall, with ISPs delivering on average 96 percent of advertised speeds during peak intervals, and with five ISPs routinely meeting or exceeding advertised rates.
• Sustained download speeds as a percentage of advertised speeds. The average actual sustained download speed during the peak period was calculated as a percentage of the ISP’s advertised speed. This calculation was done for each speed tier offered by each ISP.
  • Results by technology:
    • On average, during peak periods DSL-based services delivered download speeds that were 84 percent of advertised speeds, cable-based services delivered 99 percent of advertised speeds, and fiber-to-the-home services delivered 117 percent of advertised speeds. This compared with 2011 results showing performance levels of 82 percent for DSL, 93 percent for cable, and 114 percent for fiber. All technologies improved in 2012.
    • Peak period speeds decreased from 24-hour average speeds by 0.8 percent for fiber-to-the-home services, 3.4 percent for DSL-based services and 4.1 percent for cable-based services. This compared with 0.4 percent for fiber services, 5.5 percent for DSL services and 7.3 percent for cable services in 2011.
  • Results by ISP:
    • Average peak period download speeds varied from a high of 120 percent of advertised speed to a low of 77 percent of advertised speed. This is a dramatic improvement from last year where these numbers ranged from a high of 114 percent to a low of 54 percent.
    • In 2011, on average, ISPs had a 6 percent decrease in delivered versus advertised download speed between their 24 hour average and their peak period average. In 2012, average performance improved, and there was only a 3 percent decrease in performance between 24 hour and peak averages.
• Sustained upload speeds as a percentage of advertised speeds. With the exception of one provider, upload speeds during peak periods were 95 percent or better of advertised speeds. On average, across all ISPs, upload speed was 107 percent of advertised speed. While this represents improvement over the 103 percent measured for 2011, upload speeds have not been a limiting factor in performance and most ISPs last year met or exceeded their advertised upload speeds. Upload speeds showed little evidence of congestion with little variance between 24 hour averages and peak period averages.
  • Results by technology: On average, fiber-to-the-home services delivered 106 percent, DSL-based services delivered 103 percent, and cable-based services delivered 110 percent of advertised upload speeds. These compare with figures from 2011 of 112 percent for fiber, 95 percent for DSL, and 108 percent for cable.
  • Results by ISP: Average upload speeds among ISPs ranged from a low of 91 percent of advertised speed to a high of 122 percent of advertised speed. In 2011, this range was from a low of 85 percent to a high of 125 percent.
• Latency. Latency is the time it takes for a packet of data to travel from one designated point to another in a network, commonly expressed in terms of milliseconds (ms). Latency can be a major controlling factor in overall performance of Internet services. In our tests, latency is defined as the round-trip time from the consumer’s home to the closest server used for speed measurement within the provider’s network. We were not surprised to find latency largely unchanged from last year, as it primarily depends upon factors intrinsic to a specific architecture and is largely outside the scope of improvement if networks are appropriately engineered. In 2012, across all technologies, latency averaged 31 milliseconds (ms), as opposed to 33 ms measured in 2011.
  • During peak periods, latency increased across all technologies by 6.5 percent, which represents a modest drop in performance. In 2011 this figure was 8.7 percent.
    • Results by technology:
      • Latency was lowest in fiber-to-the-home services, and this finding was true across all fiber-to-the-home speed tiers.
      • Fiber-to-the-home services provided 18 ms round-trip latency on average, while cable-based services averaged 26 ms, and DSL-based services averaged 43 ms. This compares to 2011 figures of 17 ms for fiber, 28 ms for cable and 44 ms for DSL.
    • Results by ISP: The highest average round-trip latency for an individual service tier among ISPs was 70.2 ms, while the lowest average latency within a single service tier was 12.6 ms. This compares to last year’s maximum latency of 74.8 ms and minimum of 14.5 ms.
• Effect of burst speed techniques. Some cable-based services offer burst speed techniques, marketed under names such as “PowerBoost,” which temporarily allocate more bandwidth to a consumer’s service. The effect of burst speed techniques is temporary—it usually lasts less than 15 to 20 seconds—and may be reduced by other broadband activities occurring within the consumer household. Burst speed is not equivalent to sustained speed. Sustained speed is a measure of long-term performance. Activities such as large file transfers, video streaming, and video chat require the transfer of large amounts of information over long periods of time. Sustained speed is a better measure of how well such activities may be supported. However, other activities such as web browsing or gaming often require the transfer of moderate amounts of information in a short interval of time. For example, a transfer of a web page typically begins with a consumer clicking on the page reference and ceases when the page is fully downloaded. Such services may benefit from burst speed techniques, which for a period of seconds will increase the transfer speed. The actual effect of burst speed depends on a number of factors explained more fully below.
  • Burst speed techniques increased short-term download performance by as much as 112 percent during peak periods for some speed tiers. The benefits of burst techniques are most evident at intermediate speeds of around 8 to 15 Mbps and appear to tail off at much higher speeds. This compares to 2011 results with maximum performance increases of approximately 50 percent at rates of 6 to 7 Mbps with tail offs in performance beyond this.
• Web Browsing, Voice over Internet Protocol (VoIP), and Streaming Video.
  • Web browsing. In specific tests designed to mimic basic web browsing—accessing a series of web pages, but not streaming video or using video chat sites or applications—the total time needed to load a page decreased with higher speeds, but only up to about 10 Mbps. Latency and other factors limited response time starting around speed tiers of 10 Mbps and higher. For these high speed tiers, consumers are unlikely to experience much if any improvement in basic web browsing from increased speed–i.e., moving from a 10 Mbps broadband offering to a 25 Mbps offering. This is comparable to results obtained in 2011 and suggests intrinsic factors (e.g. effects of latency, protocol limitations) limit overall performance at higher speeds. It should be noted that this is from the perspective of a single user with a browser and that higher speeds may provide significant advantages in a multi-user household or where a consumer is using a specific application that may be able to benefit from a higher speed tier.
  • VoIP. VoIP services, which can be used with a data rate as low as 100 kilobits per second (kbps) but require relatively low latency, were adequately supported by all of the service tiers discussed in this Report. However, VoIP quality may suffer during times when household bandwidth is shared by other services. The VoIP measurements utilized for this Report were not designed to detect such effects.
  • Streaming Video. 2012 test results suggest that video streaming will work across all technologies tested, though the quality of the video that can be streamed will depend upon the speed tier. For example, standard definition video is currently commonly transmitted at speeds from 1 Mbps to 2 Mbps. High quality video can demand faster speeds, with full HD (1080p) demanding 5 Mbps or more for a single stream. Consumers should understand the requirements of the streaming video they want to use and ensure that their chosen broadband service tier will meet those requirements, including when multiple members of a household simultaneously want to watch streaming video on separate devices. For the future, video content delivery companies are researching ultra high definition video services (e.g. 4K technology which has a resolution of 12 Megapixels per frame versus present day 1080p High Definition television with a 2 Megapixel resolution), which would require higher transmission speeds.

Year by Year Comparison of Sustained Actual Download Speed as a Percentage of Advertised Speed (2011/2012)