How America Can Improve Broadband Access and Speed: Lessons from Australia

Sometime in the twilight decades of the twentieth century, as our avowed allies caught up with and sometimes outpaced us economically, a new cottage industry arose in America. It went something like this: you would first name a particular field of achievement, like science and math education, health care, public transportation, or state infrastructure. Next, you'd roll out a profusion of statistics, all demonstrating with startling unanimity that the United States was fast falling behind it's peers in the industrialized world.

The latest episode in this ongoing drama concerns America's lackluster position in worldwide rankings for broadband connections. In the most recent OECD statistics, the U.S. has stagnated at 15th place in terms of overall broadband penetration. Moreover, our internet connection speeds are relatively sluggish, with an average download rate of 5.1 Mbps: the populations of South Korea, Japan, Sweden, Denmark and Norway all have much wider access to fast fiber-based connections.

The Great Recession offered an opportunity for expanding broadband access in this country. Unfortunately however, The American Recovery and Reinvestment Act of 2009 (otherwise known as the stimulus bill) includes only $7.2 billion dollars spread out over several years for this purpose, with a focus on serving rural hinterlands and Indian reservations. This isn't nearly enough.

Australia provides a striking alternative model of how a geographically large and relatively sparsely populated country, can make a long-term investment in broadband. Over the next eight years, Kevin Rudd's Labor government is going to spend an extraordinary $31 billion dollars (or $43 billion AUS) on providing a nationwide fiber optic broadband network. Fully 90% of Australian homes, including those in remote outback settlements will be linked into the network, with the remainder being offered wireless connections. Most importantly, because the main network will be fiber optics based, it will provide extremely fast 100 Mbs download speeds.

To put this in perspective, the United States is about 15 times larger, by population, than Australia. So, by at least this crude measurement, a comparable broadband development program here would require an unbelievable $465 billion dollars, or almost half a trillion dollars. Of course, this is misleading because we would benefit from economies of scale, and from the fact that the continental U.S. is about the same size as Australia. Nevertheless, this provides some perspective on at least this one small portion of the stimulus bill, and how in reality the U.S. is spending much less per capita on infrastructure than even relatively conservative countries like Australia.

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