Comments on economics, mystery fiction, drama, and art.

Wednesday, May 28, 2014

Broadband Download Speeds and Costs

Much has been written lately about the speed and cost of broadband in the US relative to other countries.  An article in the New York Times allows us to look at a snapshot of these two factors for a group of 21 mostly higher-income countries.  Figure 1 shows the relative speeds and costs, by country.  To get this, I divided each country's speed (cost) by the (unweighted) average of the download speed (download cost).

(Click to enlarge.)

Compared to this group of countries, the US has a relatively slow download speed (16.9 thousand megabits per second, compared to a group average of 27.4, and a relatively high download cost of $0.53 per megabit per second (group average, $0.46).  The US cost is not that far from the group average (15% higher), but the download speed is substantially (38%) slower.

If we look at the relationship between download speed and download cost, we get this:

(Click to enlarge.)

On average, download costs fall as download speeds rise (the correlation coefficient is -0.397, significantly different from zero at the 1% level).  Interestingly, the US lies almost perfectly on the regression line--on average, the U.S. has a download cost that we would "predict" from its download speed.  [I should note that the relationship is strongly affected by four outliers--two extremely high-cost, low-speed (Greece and Turkey) and two very low cost, high-speed (The Netherlands and South Korea) countries.  Excluding those four countries, the correlation coefficient falls to -0.288, still significant, and the US has a higher cost than "predicted."]

I have no big point here, just some interesting data.


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