With every passing month, the United States falls further behind the global leaders in broadband Internet access thanks to a combination of market and policy failures. Our markets lack the competition to bring lower prices, higher speeds, and universal access. Our policies lack the imagination and potency to create real change. Meanwhile, Americans pay more money for less service than a dozen other nations. A third of U.S households are still stuck with dial-up, and another third lack Internet access of any kind. Our broadband problem is becoming a crisis.

Yet major telecommunications legislation now moving through Congress lacks a comprehensive vision for how to bring multiple competitive broadband providers to each market offering truly high-capacity connections at affordable prices. Cable and telephone companies hold a cozy duopoly over broadband services with a 98 percent share of the residential market. Not only have we failed to craft policies to bring competitive pressure, we are poised to strip away the nondiscrimination rules that keep network owners from engaging in anti-competitive activity in the Internet content market. Scrapping so-called Network Neutrality rules will not bring us better broadband. But it will guarantee noncompetitive broadband markets for a generation.

To make matters worse, the Federal Communications Commission seems content to ignore the broadband problem and pretend we are moving forward. While the FCC is crowing about an uptick in 1 megabit per second (Mbps) DSL connections, Japanese consumers are paying the same price for 100 Mbps. How long can we afford to be 100 times slower than the rest of the world?

In April, Federal Communications Commission Chairman Kevin Martin published an op-ed in the Financial Times claiming that the United States is "closing in on President George W. Bush's goal of providing broadband access to every US household." But Martin failed to mention that President Bush's stated goal was universal and affordable broadband access by 2007. The United States is nowhere near reaching this target, and the biannual reports generated by the FCC twice a year to monitor progress in the broadband market obfuscate more than they enlighten.

This report by Free Press, Consumers Union and the Consumer Federation of America comes one year after our first report on the state of the U.S. high-speed Internet market. Broadband Reality Check II updates our previous publication and details new empirical research in this area. Among its key findings:

The United States is falling behind the rest of the world in broadband penetration.
- The United States remains 16th in the world in broadband penetration, according to the International Telecommunications Union, and places 21st in the U.N. rankings of "digital opportunity."
- Fourteen other OECD nations saw higher overall net growth in broadband adoption than the United States from 2001 to 2005.
- The United States has the fourth-highest level of students who have never used a computer among OECD nations, exceeded only by Turkey, Slovakia and Mexico.
- Population density is not a significant determinant of broadband penetration. The most important factors explaining the digital divide among nations are household income and poverty.
- Other countries' broadband successes can be largely attributed to their successful implementation and use of non-discriminatory, open access policy.

The United States trails the rest of the world in broadband speed and price.
- Consumers in other countries enjoy broadband connections that are far faster and cheaper. U.S. consumers pay nearly twice as much as the Japanese for connections that are 20 times as slow.
- U.S. prices show no real signs of dropping. Cable modem prices are holding constant or rising, and DSL customers on average are getting less bandwidth per dollar than they did just a year ago.
- Increased capacity abroad has made available "triple-play" services -- fast broadband bundled with TV and