David Isenberg highlighted in his blog (Isen.blog) a recent article from Business Week about how the U.S. has lost its broadband position vis-à-vis other OECD (Organization for Economic Cooperation and Development) countries.  The authors mentioned a troubling statistic: the U.S. broadband penetration dropped from the third spot (among OECD countries) in 2000 to the 10th spot (in 2003), behind not only Japan and Korea, but also countries such as Canada and Belgium.  As an interesting comparison factoid, a previous article in TF pegged the U.S. broadband penetration at 51 percent of home Internet users in July, versus 91 percent for Japan (in June). 

What's worse, the article points out, is that because of the loss of competitiveness in broadband, there could be a trickle-down effect in the applications space as well, since broadband access will be sine-qua-non for the development of technologies such as video conferencing, tele-medicine, IP telephony and even online gaming.

What is the chief culprit for the weak performance according to BW?  U.S. policy and the judiciary - more specifically, the Bells' victory of an eight-year battle to stop competitors from using their networks at deep discounts, forcing AT&T (NYSE:T) and MCI (Nasdaq:MCIP) to leave the consumer markets.  What was the consequence of that victory?  An oligopolistic market, which helps explain the imbalance between what U.S. consumers pay ($35) for a 1.5 megabit-per-second connection versus their Japanese counterparts ($25 for 26 megabits with Yahoo! BB).

So what is the catch-up plan?  Well, the article is a bit gloomy.  For instance, it does mention the promise of WiMax, but it claims that the better chunk of radio spectrum for wireless broadband is already taken up by TV broadcasters.  It also discusses some legislation that is being introduced and some RBOC plans to deliver FTTH and deploy more broadband infrastructure.

My own take on this story is that some tidbits of legislation are helpful - for instance, the Japanese and the Koreans already have created policies to promote the development of IPv6 products (IPv6 is the next-gen protocol for the Internet), whereas there has been no such initiative in the U.S.  That said the real force behind any catch up effort is competition.  If anything, the triple play threat from the MSOs will force the RBOCs to accelerate their plans to deploy FTTH or at the very least, FTTN and better DSL (via ADSL 2+).  Fierce rivalries are the key: the better the competition, the better the prospects for progress.  A lot of Japanese DSL and cable service providers are trying to emulate the success of the Yahoo! BB model, bundling VoIP with broadband Internet and other value-added services.  The uptake of WiFi in Japan has also been impressive: Softbank BB (a unit of Softbank Corp. and Yahoo Japan Corp., which jointly own Yahoo BB) announced in mid-July that it is increasing the number of Yahoo! BB public-access WiFi hotspots to 5,000 by March 2005, making it the largest hotspot network in Japan.  J-COM is undertaking a similar initiative.  The U.S. can regain the edge by developing VoIP applications built around SIP (the Session Initiation Protocol), such as conferencing.  It would also be nice to see more operators (wireline, wireless and cable) rely on SIP to provision VoIP - such a move is all about flexibility and cost efficiencies.