Experts Say ‘Demand-Side’ Policies Needed to Close the Broadband Gap

Published April 1, 2008

Current broadband policy is directed too much toward infrastructure development at the expense of demand-side initiatives that prove better at closing the gap in broadband adoption between the general population and certain demographics, particularly low-income households and seniors. That was the consensus that emerged among panelists in a session on broadband metrics at the 2008 State of the Net Conference in Washington in late January.

The session, “Measuring Broadband: What Metrics Really Matter?” used the controversial broadband penetration statistics issued regularly by the Organization for Economic Cooperation and Development (OECD) as a starting point.

U.S. Rated Low

OECD places the United States 15th in the world in per-capita broadband penetration, with 22.1 lines per hundred users. (See “U.S. Broad Adoption Rank Triggers Debate,” IT&T News, July 2007.) According to OECD, Denmark leads the word with a penetration of 34.3 per hundred.

Over the past few years, the U.S. rank has been steadily falling. Meanwhile, OECD consistently reports U.S. users pay more on a per-megabit basis for service than their foreign counterparts.

The accuracy of the numbers has been routinely challenged because they rely on data provided by governments and don’t measure broadband penetration among businesses or the effect of wireless. Nonetheless, all sides of the debate use OECD statistics to promote their policy agendas.

Media Coverage Skewed

The January conference panel’s OECD representative, Taylor Reynolds, a communications analyst and economist with the agency, admitted concerns about the U.S. media reporting the ranking without presenting a number of other OECD metrics that reflect positively on the U.S. performance.

Those include the areas in the United States where broadband service is available and, most pointedly, that broadband use here is not capped. The average bit cap among OECD nations is 10 gigabytes, after which additional charges kick in. Ten gigabytes is about one season of half-hour TV episodes downloaded from a service such as iTunes, Reynolds noted.

The panel also included George Ford, co-founder and chief economist with the Phoenix Center for Advanced Legal and Economic Policies; Link Hoewing, assistant vice president for issues management and technology policy for Verizon; and John Horrigan, associate director of the Pew Internet and American Life Project. The session was moderated by Robert Atkinson, president of the Information Technology & Innovation Foundation.

Sound Measurements Needed

The group did not so much debate the accuracy of the OECD numbers as stress the importance of careful measurement of the so-called digital divide and emphasize the difference between gaps in infrastructure and gaps in use.

“What’s really the benchmark?” asked Horrigan, whose organization also measures broadband growth and use in the United States. “What if broadband was universally available? It would still take time to get people on.”

Ford agreed. “Why aren’t people signing up?” He noted there are plenty of subsidies and grants for extension of broadband infrastructure, but little investment in “demand-side” policies that educate groups who may feel disconnected from the information revolution. In particular, Ford said, low-income households, minorities, and senior citizens need to be persuaded that there is real value for them in broadband.

Pew’s research shows 54 percent of U.S. households have broadband at home, Horrigan said, and 75 percent have wireline broadband facilities passing their homes. Yet many still see the Internet as “a risky place,” he said, and others do not see the content or applications as particularly relevant to their lifestyle.

Horrigan could not say for sure how many of the 25 percent of the households that do not have access to wireline broadband may be using broadband with a wireless device.

Market Approaches Viable

Hoewing said his company’s FiOS fiber-to-the-home (FTTH) service passes 9 million homes, and he noted the most recent FTTH Council report, from October of last year, showed 2 million homes are connected to the Internet via fiber. Overall, he said, U.S. broadband growth has been strong, going from 3.2 million connections in 2000 to 53 million in 2007.

The panel largely agreed delivering FTTH broadband to rural areas remains a major challenge, and it endorsed a number of state programs, such as ConnectKentucky, that attempt to drill down geographically to determine specific rural areas where there is no broadband and develop constructive ways, usually in partnership with the industry, to address lack of service.

Most of these state efforts attempt to keep subsidies to a minimum and instead spark private investment. For example, a program may not attempt a citywide FTTH network, but instead provide a tax break to a company willing to install fiber to a factory or business campus. That, in turn, may spark greater investment as more employers use broadband and the experience spreads to local residents, who as a result create greater market demand.

Steven Titch ([email protected]) is telecom policy analyst for the Reason Foundation.

For more information …

OECD portal for international broadband statistics:,3343,en_2649_37441_38690102_1_1_1_37441,00.html