Federal Communications Commission DA 12-1334 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) International Comparison Requirements Pursuant ) IB Docket No. 10-171 to the Broadband Data Improvement Act ) GN Docket 11-121 ) International Broadband Data Report ) THIRD REPORT Adopted: August 13, 2012 Released: August 21, 2012 By the Chief, International Bureau: I. INTRODUCTION 1. This is the Commission’s third annual International Broadband Data Report (IBDR or Report). The IBDR is required by the Broadband Data Improvement Act (BDIA) and provides comparative international information on broadband services.1 Through the presentation of this data, we have the opportunity to evaluate the United States’ rates of broadband adoption, speeds, and prices in comparison to the international community. International data can serve as useful benchmarks for progress in fixed and mobile broadband accessibility. 2. In the past year, both fixed and mobile broadband providers have made significant progress in their efforts to expand broadband networks and improve service quality. As noted in the Eighth 706 Report released today, the market is responding to the needs of Americans for increased broadband capabilities.2 In 2011, U.S. investment in wired and wireless network infrastructure rose 24%.3 Some recent trends show that providers are offering higher speeds, more data under their usage limits, and more advanced technology in both fixed and mobile broadband. For example, cable operators have increased their deployment of DOCSIS 3.0-based data networks, which are capable of providing 100 megabits per second or faster (Mbps) speeds. In the last three years, the percentage of households passed by DOCSIS 3.0 broadband infrastructure has risen from 20% to 82%.4 Advances in broadband technology and initiatives to promote greater deployment and adoption of broadband services have led to broadband- enabled innovation in other fields such as health care, education, and energy efficiency. Consumers all over the world are using applications and services created by U.S. companies, including social networks, search engines, and e-commerce. Although the OECD (Organization for Economic Co-operation and Development) has not updated its cable modem coverage data since 2008, it ranked the United States first 1 See 47 U.S.C. § 1303(b). In this report we use the term “broadband” synonymously with “advanced telecommunications capability.” See generally Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications of 1996, as Amended by the Broadband Data Improvement Act, GN Docket No. 11-121, Eighth Broadband Progress Report, FCC 12-90 (2012) (Eighth 706 Report). 2 Eighth 706 Report, at ¶ 6. 3 TELECOMMUNICATIONS INDUSTRY ASSOCIATION, TIA’S 2012 ICT MARKET REVIEW AND FORECAST 1-3 (2012). 4 NCTA, Industry Data, http://www.ncta.com/Statistics.aspx. Federal Communications Commission DA 12-1334 out of 28 countries in cable modem coverage, and we have no reason to think that this ranking has changed.5 3. Wireless providers are deploying new, faster, and more spectrally-efficient technologies for mobile broadband, known as 4G LTE.6 American consumers have been quick to adopt 4G LTE technology, securing the United States’ position as the world leader in LTE adoption. In the 15thAnnual Mobile Wireless Competition Report, the Commission observed that there were no commercial LTE launches in the United States as of August 2010.7 By the end of 2011 though, U.S. LTE subscribers numbered 5.6 million, accounting for 64% of the roughly 9 million LTE subscribers worldwide.8 Deloitte predicts that U.S. investment in 4G networks during 2012-2016 could be $25-$53 billion.9 Aggressive LTE network build-out by U.S. providers has been a driving force in customer take-up and we anticipate that this trend will continue. Analysts anticipate that globally, LTE subscribership will reach at least 400 million by 2016.10 We will continue to follow global LTE trends for future IBDRs. 4. With this progress, the United States has regained its role as a global leader in and around mobile broadband. More than 80% of smartphones sold globally run on U.S. operating systems, up from less than 25% three years ago.11 As the first adopters of 4G LTE, the U.S. is the global test bed for wireless technology and services. In 2011, venture investment in Internet start-ups reached its highest 5 OECD Broadband statistics, Table 3e, Availability of cable modem services (up to 2008), available at http://www.oecd.org/sti/broadbandandtelecom/44435586.xls. To compile this ranking, the data that the OECD uses for the United States is current as of the end of 2007. For other countries, the data is current as of as early as 2003 (Korea) and as late as 2008 (United Kingdom). 6 See, e.g., Press Release, Verizon Wireless 4G LTE Network Will Be Available to More then 2/3 of U.S. Population Starting April 19, Verizon Wireless (Apr. 17, 2012), http://news.verizonwireless.com/news/2012/04/pr2012-04- 16c.html. 7 Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993; Annual Report and Analysis of Competitive Market Conditions With Respect to Mobile Wireless, Including Commercial Mobile Services, WT Docket No. 10-133, Fifteenth Report, 26 FCC Rcd 9664, 9706, n. 115 (2011), available at .http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-11-103A1.pdf. 8 US Remains at Forefront of LTE Service Adoption, TeleGeography (Mar. 15, 2012), available at http://www.telegeography.com/products/commsupdate/articles/2012/03/15/us-remains-at-forefront-of-lte-service- adoption/ (finding that the United States leads the world in 4G adoption). 9 Deloitte, The impact of 4G technology on commercial interaction, economic growth, and U.S. competitiveness (Aug. 2011), available at http://www.deloitte.com/assets/Dcom- UnitedStates/Local%20Assets/Documents/TMT_us_tmt/us_tmt_impactof4g_081911.pdf (noting that analysts predict investment in 4G wireless networks could amount to between $25 and $53 billion over the next four years, creating as much as $150 billion in GDP growth and up to 770,000 new jobs). 10 Wireless Subscribers by Region, Telegeography Research, available at http://www.telegeography.com/products/globalcomms/world-and-regional-totals/wireless-subscribers-by- region/index.html (predicting 400 million LTE subscribers worldwide by 2016); Global 4G LTE Usage Expected to Skyrocket, PC Magazine (July 25, 2012), available at http://www.pcmag.com/article2/0,2817,2407612,00.asp (noting that Parks Associates predicts 560 million LTE subscribers worldwide by 2016); LTE Connections To Hit 90 Million By Year’s End, 1 Billion By 2017, Techcrunch (May 17, 2012), available at http://techcrunch.com/2012/05/17/report-lte-connections-to-hit-90-million-by-years-end-1-billion-by-2017/. 11 Android, Apple Own 80% of Global Smartphone Market: Microsoft’s Share, 2.2%, PC World (May 24, 2012), available at http://www.pcworld.com/article/256155/android_apple_own_80_of_global_smartphone_market_microsofts_share_ 22.html. 2 Federal Communications Commission DA 12-1334 levels since 2001.12 The apps economy, a $20 billion industry that barely existed five years ago, has created nearly 500,000 jobs.13 5. The Commission has also adopted a number of major initiatives in the last year to help increase adoption rates by bringing down major barriers to adoption and utilization – access and affordability. Last year, the Commission released the USF/ICC Transformation Order, which establishes the Connect America Fund and transforms the existing high-cost universal service program in order to speed delivery of broadband to all Americans.14 For the millions of Americans who do not have access to fixed broadband, implementation of this Order will mean access to the benefits of broadband, such as long-distance learning options, health information technology, and economic opportunities. For other Americans, access to broadband is limited by affordability, a lack of digital literacy, and a perception about the Internet’s usefulness to them.15 Earlier this year, the Commission also released a modernized Lifeline Order, adopting reforms to the Lifeline program, including the Broadband Pilot Program, which uses $25 million to increase broadband adoption among low-income Americans.16 Connect2Compete, which was developed with the cooperation of the private industry last year, also aims to connect low- income families to low-cost computers, digital literacy training, and low-cost Internet service by targeting students eligible for free school lunch.17 6. The roll-out of DOCSIS 3.0 and LTE, the Commission’s recent reforms targeting broadband availability and adoption, and other developments noted above should have a significant impact on overall broadband speeds and penetration over time, but many of these developments are just beginning to have an impact. For example, the Commission is just beginning the process of awarding Connect 12 Press Release, Venture Capital Investments Experience Double-Digit Increases in Dollars and Deal Volume in Q2 2012, PricewaterhouseCoopers LLP and the National Venture Capital Association (July 20, 2012) available at http://www.pwc.com/us/en/press-releases/2012/2012-q2-moneytree.jhtml. 13 Mandel, Dr. Michael, Where the Jobs Are: The App Economy, TechNet (Feb. 7, 2012), available at http://www.technet.org/wp-content/uploads/2012/02/TechNet-App-Economy-Jobs-Study.pdf. 14 Connect America Fund; A National Broadband Plan for Our Future; Establishing Just and Reasonable Rates for Local Exchange Carriers; High-Cost Universal Service Support; Developing an Unified Intercarrier Compensation Regime; Federal-State Joint Board on Universal Service; Lifeline and Link-Up; Universal Service Reform— Mobility Fund, WC Docket Nos. 10-90, 07-135, 05-337, 03-109, GN Docket No. 09-51, CC Docket Nos. 01-92, 96- 45, WT Docket No.