Although all of the details of the economic stimulus package have yet to surface, it seems likely to target billions of dollars of government spending towards increasing deployment of broadband infrastructure. Ubiquitous broadband is a worthy goal. But making broadband services available does not necessarily mean that consumers will subscribe. There is a difference between encouraging broadband infrastructure deployment and encouraging broadband subscription rates – and policies should not ignore this difference.
First, it is important to note that, despite the reflexive proclivity of some to try to characterize United States broadband policy as a failure, much progress regarding deployment continues to be made. Last week, the FCC released its semi-annual report on High-Speed Services for Internet Access (the full report is available here) detailing the broadband deployment figures through December 31, 2007. Despite the extensive time lag in compiling and reporting the data, the FCC report makes clear that broadband availability and consumer adoption rates continue to increase. In 2007, high-speed lines connecting homes and businesses to the Internet increased by 46% from 82.8 million lines to 121.2 million lines. The report found that over 99% of the U.S. population lives in a zip code that has access to a high-speed connection through a number of competing technologies, including high-speed mobile wireless, satellite, ADSL, and cable modem service. 98% of the population lives in a zip code with two or more broadband providers.
Would even greater broadband availability in unserved areas actually encourage some consumers presently without broadband service to sign up? Sure, to some extent -- but deployment is only one part of the broadband equation. In a newly-released memo entitled "Obama's Online Opportunities II," John Horrigan, Associate Director for Research at the Pew Internet & American Life Project, considered the effectiveness of an economic stimulus package on increasing the actual pool of broadband subscribers. Based on his survey data, only about one-third of the U.S. adult population has failed to adopt broadband at home due to pricing or availability issues. According to Horrigan, "[p]roviding incentives to build broadband infrastructure directly addresses the availability problem and could be of particular help to Americans living in rural areas." However, the other two-thirds of adults cited issues related to the usability and relevancy of broadband to justify their decision not to subscribe. Truly, the generational gap plays a significant role and, as Horrigan pointed out, "it would take time to undertake the training and support needed to turn [older users] into competent online users." Horrigan suggests these take-up issues seem better suited for private sector solutions, such as making services easier to use or revising marketing efforts to better target these individuals.
If the ultimate goal of the nation's broadband policy is to increase broadband usage rates, this will not be accomplished in the most economically efficient or practically effective manner by focusing only on increasing spending on broadband infrastructure, and certainly not by directing scarce public funds to areas other than those unserved. In connection with government efforts to stimulate broadband investment, policymakers should narrowly target public funds to unserved areas. As for adoption, one possible suggestion is to expand the Lifeline and Link-up programs in order to subsidize home broadband access for those who meet well-defined low income means criteria.
In any event, as various stimulus proposals are considered, it is important to keep in mind the significant progress that already has been achieved as a result of private sector investment and a generally deregulatory environment. (More on any regulatory conditions in the stimulus bill later.) And, it is important to keep in mind as well that a significant number of consumers are just not interested in subscribing to high-speed Internet access at this time even though broadband is available to them. An economic stimulus package directed at increasing broadband availability, or even at pricing, will do nothing to change their minds.
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