Everyone knows at this point about Congress’s decision to defibrillate the economy (at least for the short term) by making billions of dollars available for broadband deployment through the much-vaunted Stimulus legislation. But in passing the Stimulus legislation, Congress also perceived a need for long-term broadband planning, and thus required the FCC to create (by February 17, 2010) a National Broadband Plan that seeks to ensure that every American has access to broadband capability. As part of the process for creating that Plan, the FCC has been holding workshops with various interested parties to seek data and ideas.
On July 26, I attended the webcast of one of those workshops. From its title (“Economic Growth, Job Creation, and Private Investment”), I expected the workshop’s participants to repeat what has been the conventional wisdom about broadband, i.e., that expansion of broadband is core to economic growth and job creation.
I was in for a surprise.
While two of the six speakers did stick to the CW, the others offered a far more analytical – and far less positive – view. The four were academics (economists) whose message was that, at best, there are not enough good data to make a strong connection between broadband and economic growth, and at worst, that there isn’t even a particularly strong connection between the two.
You can find links to a recording of the entire workshop, as well as the individual presentations, here. Here’s a big picture summary:
James Prieger (Pepperdine University School of Public Policy) stated that it is difficult to measure the economic impact of broadband. Still, he asserted that there are certainly contexts in which adding broadband would not make a significant positive impact. For example, user entities whose staff lack the training to maximize use of broadband, or whose management/production style are not likely to lead to maximized broadband use. He cited schools in particular as a prime example of this. As to employment, he noted the mixed results of broadband implementation: workers may become more productive and work can be more easily out-sourced, which can lead to reduction in the number of necessary employees in a company.
Chris Forman offered complex analyses showing that the relationship between broadband use and growth in personal income is strongest in areas with the highest income, skills, education and IT production – in other words, a “rich get richer” scenario not necessarily consistent with the concept of broadband-as-panacea. He stated that there appears to be little impact outside of urban areas, and that there is little evidence of growth in employment as a result of broadband.
Ryan McDevitt (Northwestern University) noted that pure economic growth can’t be determined solely from calculation of increases in revenue and/or available services attributable to broadband. Rather, opportunity costs and reduction of revenue from dial-up services must also be considered. McDevitt also asserted that implementation of broadband in rural areas is particularly expensive, when compared with the associated benefits over use of dial-up services.
Brent Goldfarb (University of Maryland, Robert H. Smith School of Business) focused on the uses to which broadband is currently put. He noted that the largest current consumption of broadband is for P2P file sharing, much of which is illegal (not to mention potentially harmful to the recording industry).
In contrast to this salvo of academic realism, Ralph Everett (Joint Center for Political and Economic Studies) relied on the standard statistics for the assertion that broadband has a huge positive impact on the economy and employment. And the presentation by venture capitalist Tom Wheeler (Core Capital Partners, LLC) involved no statistics at all, but rather was a gut-level emotional plea for greater broadband development, based largely on analogies to the social and economic impact of the trans-continental railroads. Hmmmmm……
It will be interesting to see what the FCC does with this. We still believe that they will go with the idea that increased broadband growth is necessary or good for economic growth. Everybody seems to be saying it, including the President, the Congress, and the FCC Chairman. That must make it true, right?
To be sure, the received truth does have an appealing credibility, supported by studies that, for whatever reason, were largely MIA at the workshop. But the workshop’s presentations should still give everyone involved in the process cause for reflection.
The FCC’s staff must have known that the majority of presenters would present contrarian – or, at least, not entirely upbeat – approaches. Which leads us to wonder: did the staff line up this group of contrarians in an effort to create some appearance of balance on the issue? Or perhaps the workshop’s organizers were affirmatively trying to attune the public to the notion that, as the government flings billions of dollars out the door at broadband development, it could use much more information – so please recommend to Congress that that information be obtained through the Census or other means.
Stay tuned for more developments in this evolving drama.