- General, Slider, Technology

Are you in the race for faster internet speeds?

34 million Americans don’t have access to high-speed internet service.
A federal court ruled in June that broadband is considered a utility that can be regulated by the FCC.
Fixed broadband download speeds have improved 42 percent in the U.S. over the last year.
It’s easy to take fast internet speed for granted and leaves us wondering how we ever survived without it. Unfortunately, there are many Americans who don’t have easy access to the web, let alone at high speeds.

The upside is there’s still plenty of room for the industry to grow, which may be beneficial for investors. Let’s look at what’s happening in the industry today.

Millions of Americans can’t access high-speed internet

The Federal Communications Commission (FCC) released a 2016 Broadband Progress Report earlier this year that revealed there are 34 million Americans who lack access to high speed internet service, defined as 25 Mbps download/3 Mbps upload or greater. That’s equivalent to 10 percent of Americans who are located in rural areas, on tribal lands or in U.S. territories.[1]

While 34 million Americans is certainly a large number, it’s an improvement from the previous year, when 55 million Americans didn’t have access to high speed internet. Unfortunately, about 47 percent of U.S. students today still don’t have access to the FCC’s short-term goal of 100 Mbps per 1,000 students in schools, however. This accessibility gap puts many students at a disadvantage as assignments and studying are assigned with the assumption that students have internet access at home.[2]

So what’s being done about the gaps in the market? Competition continues between Internet Service Providers (ISPs) to provide faster speeds to more customers and the government is also trying to step in.

Net neutrality is making headway

Net neutrality, also known as open internet, is a principle backed by the government, many tech companies, startups and consumers that would require ISPs to provide all lawful content to consumers without blocking or throttling.

Net neutrality would prevent ISPs from creating fast lanes and slow lanes for one source of content over another. For example, without net neutrality an ISP could push its own video content to consumers at super fast speeds and restrict Netflix or Youtube content to stream at a snail’s pace.[3]

Without net neutrality, ISPs could control how fast or slow content is delivered to customers based on the source. Source: BitsNBytes

The Obama Administration passed the Open Internet Act passed in early 2015 which re-classified broadband providers as common carriers. Since common carriers fall under government supervision, it wasn’t a surprise that the U.S. Telecom Association and ISPs such as AT&T filed a lawsuit against the FCC shortly thereafter to try and block the regulatory changes.[4]

The U.S. Court of Appeals’ District of Columbia Circuit rejected the telco industry’s claims this June. Now high-speed internet service on both fixed and mobile networks is defined as a utility, making it as essential and no longer allowing a luxury service exempt from government supervision.

Opponents including AT&T plan to appeal the ruling. Meanwhile, politicians are actively trying to cut the FCC’s funding by $69 million and prohibit the agency from enforcing net neutrality rules until all legal challenges and appeals are resolved. [5]

Just how fast is the internet in the U.S.?

A recent study released by Ookla reports sizeable improvements in both fixed broadband and mobile internet speeds in the U.S. Here are some notable stats from their August 3rd Speedtest Market Report.[6]

Average fixed broadband download speeds surpassed 50 Mbps for the first time in 1H 2016, an improvement of 42 percent since July 2015.
Upload speeds for fixed broadband improved 51 percent over the last year, reaching 18.88 Mbps.
The fastest ISP for download speeds was Comcast’s XFINITY at 125.53 Mbps. Cox Communications came in a close second at 117.85 Mbps
Verizon Fios was the fastest ISP for upload speeds at 97.71 Mbps. Spectrum ranked in second place at a much slower 23.37 Mbps.
Mobile download speeds increased to an average 19.27 Mbps, an increase of more than 30 percent since last year.
Verizon Wireless, AT&T, T-Mobile and Sprint are competing aggressively for the fastest download speeds and pricing to grow their subscriber base.
The fastest U.S. Mobile carriers were Verizon Wireless and T-Mobile with download speeds above 21 Mbps and T-Mobile for upload speeds over 11 Mbps.

While these improvements may appear impressive, the U.S. still lags behind on an international benchmark. The U.S ranks the 20th country in fixed broadband speeds and 42nd in mobile internet performance.

The top 10 countries for average internet connection speed in Q1 2016 according to Statisa were South Korea, Norway, Sweden, Hong Kong, Switzerland, Latvia, Japan, the Netherlands, Czech Republic and Finland.[7]