The standard story told in the US media, by certain politicians and by consumer rights groups is that the US lags the rest of the world in broadband, with studies often placing the US well down the international rankings. This week there was a report from the INSEAD / the World Economic Forum which contradicted somewhat those glum findings and accords more closely with my own views on this topic.

The problem with many of these reports is that they focus on price and availability of high speeds without investigating the negative effects associated with heavy government intervention in the market. As an example, Japan is often cited as the beacon of international broadband, often closely followed by Korea, but in both of these countries the government has intervened in a heavy-handed fashion to achieve the results seen today. European countries often also score highly, often because of the competition introduced via local loop unbundling regulations - a less intrusive form of intervention than in Japan and Korea but nonetheless a much more aggressive form of regulation than that which applies in the US.

Another flaw is that it is assumed that faster speeds are always a good thing, and that diminishing returns never set in. The fact is that, beyond a certain point (currently around 10Mbit/s or so) extra bandwidth is just that - extra. There is almost no application in existence today which requires more than 20Mbit/s when in peak use, and so 100Mbit/s is a senseless benchmark. Getting more of the population to 5, then 10 and ultimately 20Mbit/s is a reasonable goal, but beating up on the US for the paucity of 100Mbit/s connections is an exercise in futility that could lead to bad investment decisions. Verizon’s FiOS infrastructure is certainly capable of delivering that kind of bandwidth, although AT&T’s U-Verse probably isn’t under the present architecture. But the point is that it doesn’t matter.

Another thing that’s rarely examined is the pricing side of the equation. Providers in Korea in particular have a very spotty financial history due to the suicidal price wars they’ve engaged in. But that competition has been spurred by the fact that they - like the US - have inter-modal competition between various infrastructures, not just regulation-based service-level competition on a common infrastructure. The latter gets quick results in terms of number of providers and price competition but it rarely foments real innovation because the underlying wholesale services everyone is using are the same. With a shift from bitstream to local loop unbundling products that changes somewhat, but competing infrastructures - especially ones built on fiber - are much more likely to provide real differentiation.

Hence the massive speed and price competition that’s been triggered in the US in areas where fiber has been rolled out by either AT&T or Verizon. In time this will reach more and more of the population and provide a further boost to both the speed and price sides of the equation.

The biggest issue for me is that these reports rely a lot on the question of timing. Where the US is today, other countries either were yesterday or will be tomorrow. We’re all heading down pretty much the same path, just at different speeds. The impatience that often accompanies the criticisms of US broadband deployments is misguided too. It usually leans on an argument about competitiveness and the ways in which broadband can transform the way we work by providing more opportunities for home working / teleworking and so on. But guess what? The measly 5Mbit/s so derided in these studies is just fine for most homeworkers and is available to almost everyone. The biggest barrier to adoption of home working is the cultural change involved, not the technology. Many companies and individual managers are still uncomfortable with the idea and suspect that a home worker is a less productive worker. That attitude needs to change more than we need more government intervention or sackcloth and ashes about the parlous state of the US broadband market, and it’s great that we finally have a study that seems to get that.

I attended Qwest’s analyst day today in New York. New CEO Ed Mueller and CFO John Richardson spoke, and were joined by fellow executives John Yost and Stephanie Comfort for Q&A at the end.

It was a brief meeting - just two hours of presentations - followed by individual one-one-ones by Ed and John for some of the attendees, including yours truly.

The company’s come a long way since I first started following it, digging its way out of massive debt and big losses and back to reasonably respectable, if not stellar, profitability, and roughly stable revenues. And the company is forecasting more of the same, with an outlook of either stable or slightly declining revenues in 2008, with slightly higher profits.

The most telling thing about the event is that Qwest is taking a markedly different tack from the other big US carriers, and possibly from most other carriers in the developed world. Telecoms has always been a growth business, which is part of what drives valuations of tech stocks, and Verizon and AT&T certainly appear to be chasing that goal. But Qwest appears, at least temporarily, to have abandoned that goal, or at least to have set it aside, in favour of a focus on margins and free cash flow.

A lot of the talk during the meeting was about partnerships, but with the main focus on two partnerships that don’t drive a lot of revenue for the company - DirecTV and Sprint. Qwest is building out a fibre to the node network in 23 markets, covering 1.5 million households, in 2008, at a cost of $300 million, but it has no plans to deliver TV services over those cables. Instead, it will focus on faster broadband speeds, which it hopes will deliver higher prices and therefore raise ARPU, providing it with a revenue lift, while relying on the DirecTV partnership for TV services. Since it only makes around a 15% commission on those DirecTV sales, compared with Verizon and AT&T’s full revenue recognition from their TV sales, this is a pretty different strategy, and unlike to change substantially, although Mueller is planning to explore services like video on demand to integrate DirecTV and Qwest capability.

On the wireless side, the company is planning to rethink its partnership with Sprint and form a new partnership (possibly with Sprint again but likely with someone else) which would provide deeper integration but also a portfolio for Qwest that would more closely mirror its competitors’. Mueller appears confident that he can get this, but given that Sprint has historically been much more aggressive about MVNO activities than the other major wireless carriers, and Verizon and AT&T have very little incentive to play ball, I’m not hopeful. It looks like Mueller may be a little naive in this respect.

For what growth Qwest is chasing, it’s going to rely on that boost in broadband ARPU, more bundling to reduce churn in access lines, and better business revenues, from gaining share and starting to see results from the Networx contract. This doesn’t seem too unreasonable, although other than adding 250 salespeople it wasn’t obvious what was really going to change. Mueller appears to believe that the investments made by his predecessor are just now becoming aligned in such a way as to provide a platform for growth, but all the execution still lies ahead, and this may be another area where his optimism is ahead of reality. All that remains to be seen, however. I wish them luck, at any rate.