The U.S. Department of Justice recently filed some comments on the American National Broadband Plan that deserve attention in Canada. These comments point out that the market for broadband services cannot ever resemble a textbook “perfectly competitive” market with multitudes of suppliers. They acknowledge that something approaching an oligopoly of a few suppliers is always of concern in this market, but they are acutely conscious of the limits of market engineering by way of ambitious regulatory solutions. The “chief architect” of the U.S. National Broadband Plan, Blair Levin, has also observed in recent interviews that the circumstances of the North American market are in any case different from those in Europe and Asia, making alleged solutions from those markets particularly difficult to export. Although they are concerned by the reports of a “broadband gap,” it appears that U.S. authorities will take measured steps to deal with the genuine problems of low-income and rural residents, rather than performing radical surgery that would rip the heart out of a generally healthy broadband market.
THE NEXT GENERATION
In fact, Europe as a whole trails the United States severely in the deployment of next-generation broadband infrastructures. This performance gap is far less ambiguous, far more dramatic, far more accurately measured and far more meaningful than most of the measures of penetration rates, speeds, prices, Wi-Fi hotspots, etc. that are doing the rounds. Yet North America's broadband cognoscenti often look upon European regulation with admiring eyes.
International comparisons almost always suffer from limited data and limited comparability, particularly comparisons of prices and speeds. This is why great humility and caution are required in drawing policy conclusions from such comparative data. Regulation curtails economic freedom, which is why a very high standard of evidence is required to justify regulation. It would be quite a novelty if further regulation of broadband services were imposed on the basis of selective international comparisons with countries that by many other measures are doing less well.
Leonard Waverman is dean of the Haskayne School of Business at the University of Calgary. Kalyan Dasgupta is a managing consultant at LECG in London.
