Critics of U.S. ISPs are always quick to hold up Europe as overperforming its counterparts in price, speed and coverage, but the Information Technology & Innovation Foundation said that comparison does not hold up to the facts about business cases and cost structures.
According to a new report, “Apples vs. Oranges: Why Providing Broadband in the United States Costs More Than in Europe,” any comparison to the respective broadband markets must take into account their major differences.
“Comparisons between U.S. and European broadband prices are meaningless at best and misleading at worst when they fail to account for the difference in deployment and operating costs that must necessarily be assumed, at least in part, by consumers,” the report said.
The report illustrates what ITIF said are several key takeaways within the larger takeaway that U.S. providers must spend 53% more for the equivalent labor, infrastructure investment, spectrum licenses and advertising and taxes, even taking subsidies into account.
1.) The unfair narrative that U.S. broadband prices are exorbitantly higher than in Europe undergirds calls for unbundling and a regulated U.S. marketplace.
2.) U.S. ISPs have to pay more in wages while spending more on infrastructure, neither of which even U.S. ISP critics would argue for cutting. For example, the average wage among Comcast, Charter Communications, AT&T, T-Mobile and Verizon Communications is $64,510 while for European ISPs Vodafone, Deutsch Telekon, Telefónica and Telecom Italia is $55,935 (U.S. dollars).
3.) European telecoms are taxed at a lower rate and get more in government subsidies. “In every regard, U.S. providers must pour proportionately higher amounts into essential expenditures,” the report said.
4.) European ISPs actually have higher average profits than U.S. ISPs.
Authors of the report were ITIF research assistant Jessica Dine (who gets top billing) and ITIF founder and president Robert Atkinson.
“The idea that Europe has a better broadband system has been a perennial favorite for critics angling for a strong government role instead of relying principally on the private sector,“ Atkinson said in releasing the report. “But it turns out to be a false comparison, and when you break it down, the U.S. system actually provides better value for the money.” ■