Saturday, June 18, 2005

Broadband penetration: The World, The US, and Lafayette

CNNMoney carries a cautionary tale dealing with the debate over the United States' falling ranking in broadband penetration rate. Both the folks who are worried and the folks who dismiss the figures as misleading are missing the point in the arguments they make, I think. But the worriers have the stronger position. The story leads with:
Thomas Bleha believes the United States stands to lose big if it keeps slipping behind other countries in the percentage of citizens with high-speed Internet access...
An explanation of that slippage is attempted:

But while some experts said the United States will get stung if it keeps losing ground, other experts said the issues are more complex -- and this country much more competitive -- than the figures suggest.

"The major impediment to U.S. adoption is price, not lack of availability," said Charles Golvin, a senior telecom analyst at Forrester Research. "Broadband is widely available but, like many technologies, it appealed first to high-income people, and lower prices will make it more mainstream..."

"We have a problem in terms of competition," he [Haim Mendelson] said. "In most U.S. markets you have one major cable player and one major DSL player -- a duopoly. This just isn't as competitive as in South Korea and the Netherlands, which have many companies competing fiercely."

And, contra that explanation:

Most countries ranked above the U.S. in the OECD study are smaller with denser populations that are more easily networked.

"Population density affects both the cost of deploying cables and the availability of access," noted Stanford's Mendelson.

Some countries on the list have benefited from government initiatives. According to Fortune, the South Korean government has spent billions in recent years to create a high-speed backbone for school and government offices, and offered incentives for companies to broaden their residential networks...

I'm sure that the problem of broadband penetration is due in part to all these issues, though I'd lean strongly on the combination of lack of competition and a lack of any real national policy initiative to support it. It doesn't hurt that our telecoms and cablecos have had a notable lack of vision, focusing on this year's profit in all cases and not noticeably on the needs of the communities of which they are members. (Size and density arguments fail when you look at Canada, whose problem of density far outstrips ours but who has both done more to encourage competition and has an unabashed policy to support broadband penetration in its low density regions.) The article doesn't back off from the culpability of the incumbents and to clearly note how their economic self-interest might be tied into that:
Charles Ferguson, author of the study "The Broadband Problem," believes high-speed access has an inherent risk for these companies. "Both the telecom and cable industries are worried that broadband could eventually undermine them. Phone companies fear that people will move to (Internet phone service), and cable companies fear that digital video will threaten cable."
One thing that should be clear is that suppressing municipal competition will NOT improve the situation.

-----Ruminations Alert!, if you're not in the mood for a little pondering, stop here. The rest of this post is a bit of chewing the cud about what the real "broadband penetration issue" is and why it is actually important...a view that differs somewhat from the assumptions in the story above.-------

While the problem is real, I think both the worriers and those that dismiss the worries miss the real importance of the issue. The worriers tend to lean on national pride and infer that the US is less competitive because of the lack of broadband penetration. The dismissive side says that absolute numbers are bigger for the US and that, anyway, "we are so competitive." Both miss what I think is the central issue: that the communities and nations which are able to achieve the highest rates of penetration will, in the long run, end up shaping the culture of the next cycle of technical innovation and cultural products. It really isn't about today's competition—where both sides have good points. It is, instead, about shaping a future in which what you are good at and enjoy has global dominance. And in that realm, the worriers have a strong argument.

High rate of penetration is exactly what occurred with American movie and TV media, which was fueled by nearly universal penetration in the United States in the prosperous post WWII years. In those years our untouched industrial plant made the US consumer wealthy in relation to even other developed nations, and we all bought TVs and flocked to the movies. That large and dense population of users (almost all participated) meant that Americans quickly settled on a common set of ideas about what these media were about in the "modern" age. (Gidget and I Dream of Jeannie, for instance.) A huge percentage of and all the cheapest content was from the United States. Not everyone elsewhere liked it but whether they liked it or not, our early, large, dense network of media set the stage for and defined, even if only in reaction, the work they could do. It wasn't only Hollywood that benefited from this state of affairs. The potboiler Western movie led directly to Levi's becoming a huge international clothing manufacturer. All American products had a huge cachet. That cultural donimance of new media prolonged our economic dominance and the we are still coasting from the momentum of those years.

This is the phenomena that we really ought to be worried about: whoever establishes the largest, densest network of new media will shape the world to come in ways that will inevitably benefit its people, their tastes, and their sensibilities.

Frankly, neither American business nor the US government seems prepared to recognize the issue, much less do anything to build a new American dominance. But on a smaller scale Lafayette may well find itself in a postion to be the American city that shapes the culture of the new media for Americans. Our little local government does have a strategy for broadband penetration, one the national government would be wise to pursue: invest in infrastructure directly, offer advanced services, offer them cheaply, offer access to inexpensive hardware and inexpensive software, bring in free educational classes of varied kinds for varied interests, and work hard to provide an ISP with solid local content. Finally, make sure real competition exists. That is what is about to happen here. With any luck at all it will mean that Lafayette will be the largest, densest proving ground for new media in the United States.

And our tastes and sensibilities will be what the rest of the country has to confront when thye finally wander onto the stage we have set. That might not be at all a bad thing.

LUS would be wise to pusue its announced strategy of pushing broadband penetration hard.

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