Giganomics Consulting Inc.

The Berkman Center for Internet & Society at Harvard University released the final version of its report Next Generation Connectivity, A review of broadband Internet transitions and policy from around the world.  The final version incorporates some updates and revisions and as a result, Canada moved up the rankings from 22^nd to 19^th out of 30 countries.

Canada’s ranking according to the Berkman Center’s report gives the impression that broadband service is relatively poor in this country.  However, closer examination of key indicators shows that Canada’s results are not substantially behind many of those in the top tier. 

Canada’s broadband penetration is within a few percentage points of the top three countries, particularly when household penetration rather than per capita measures are used. 

Canada’s broadband service delivered download speeds that are within 1.5 Mbps of the fastest countries (after Japan and South Korea), as measured by Akamai’s “State of the Internet”, as noted in the previous observation. 

Canada’s broadband service prices, at least for cable modem services, compare favourably with those in highly-ranked countries such as Denmark and the Netherlands, as shown in the following chart taken from a recent submission by the Canadian cable companies.

As was noted in an observation posted after the draft report was released, the Berkman Center’s rankings were based on penetration (service adoption), speeds and prices.  The final version fixed some aspects that were problematic in the draft report but the vast majority of the indicators remain unchanged for Canada. 

First, more data on prices was incorporated from a new source – Point Topic that included more recent price information from mid-2009 and, in Canada’s case, prices for services with speeds greater than 35 Mbps that had not been used for the rankings in the draft report.

Second, it abandoned the practice of assigning a last place score for any indicator for which there was no data available. 

Taken together, these changes had the greatest impact on Canada’s ranking on relative price of broadband service, which improved from 25^th to 19^th. 

However, Canada’s ranking on price remains biased downwards because the Berkman Center continued to rely heavily on OECD data, which has flaws as previously discussed. In addition, it excluded pricing information from all but the top four service providers.  In response to an earlier critique posted here, the Berkman Center stated at footnote 57 that it only looks at the top four providers and in doing so it excluded Vidéotron. 

The rationale for taking data for the top four might be justified in countries where there is a legacy of a single national provider (often formerly government-owned) and competitors that rely on national access to that provider’s infrastructure and/or are affiliates of incumbent providers in other countries.  However, in Canada, the market is mainly served by regional providers facing different market conditions that can affect the price and services offered.  These are not “smaller, more marginal providers, who might be small providers in uncompetitive remote markets or who are not well known to customers” as stated in the Berkman Center report.

Including only the top four providers in Canada excludes more than 30% of the market based on subscriber numbers. In fact, recent reports of subscriber numbers suggest that Vidéotron has edged out TELUS for fourth place.  Interestingly, the Berkman Center appeared to have calculated the price of broadband based on the top five providers as noted at footnotes 58 and 226 and found that the prices for Canada decreased as a result.  If these results had been incorporated into the analysis, it is likely that Canada’s ranking would have improved further.

The other notable change was the addition of an indicator for average download speed achieved based on Akamai’s “State of the Internet”.  However, this data was blended with the same data from the draft that used the flawed OECD data on advertised speeds and Speedtest.net’s data on user-generated speeds (see discussion here).  Interestingly, adding the one indicator from Akamai improved Canada’s ranking from 20^th to 17^th on service speed.  Even more significantly, this was based on Akamai’s “State of the Internet” report from the fourth quarter of 2008 when Canada ranked 13^th among OECD countries.  The most recent report indicated Canada ranked 10^th.