15 Comments

Summary:

As the FCC promotes the National Broadband Plan, it appears convinced that making 100 Mbps speeds available to 100 million households within 10 years will have a positive impact on economic development. But is there too much emphasis on speed as a predicator of economic success?

meterthumb

As the FCC promotes the National Broadband Plan, it appears it’s convinced making 100 Mbps Internet access speed available to 100 million households within 10 years will bring transformative change to the U.S. One of the expected outcomes is a positive impact on economic development. But will it? More importantly, is there too much emphasis on the ability of speed to drive economic success?

A recent survey of economic development professionals and others who deal with local economic issues by the International Economic Development Council (IEDC) reveals that not only do over 55 percent believe we need more than 100 Mbps to impact economic outcomes, they feel we need these speeds within three years. Survey respondents view the FCC 10-year goal of 4 Mbps download speed to rural areas less favorably: 41 percent believe it is “too little speed over too much time,”  and another 31 percent feel this should only be a stepping stone to faster speeds. The data reveals a disconnect between what policymakers hope broadband (as they define it) can achieve in economic development, and what communities can realistically expect broadband to achieve.

Broadband champions in government rightly recognize that broadband can significantly impact a number of key economic outcomes, such as business growth, productivity and a well-trained workforce. However, DC agencies have made speed the tail that wags the dog. Unless and until policymakers come to grips with the realities in the communities, we can expect to have broadband’s potential stifled by policies that lead to bad legislation, wasted money and countless frustrated constituents.

Bursting the bubble of exaggerated expectation

In 2007, IEDC and I teamed up to survey professionals who know best how to tackle the more intractable economic development problems. We consistently find that a few of the most ardently advocated broadband benefits are, in reality, low on the list of economic outcomes. We also find that broadband technologies are not equal in their ability to achieve certain economic outcomes.

Three of the most popular economic benefits of broadband cited frequently are

  1. keeping businesses in town;
  2. making local businesses more competitive; and
  3. attracting new companies to an area.

Of the seven outcomes presented to survey participants, these three garnered the greatest amount of support in this year’s survey.

However, digging deeper into the data reveals that the particular broadband technology you use makes a big difference in the outcomes communities should expect. About 55 percent of respondents believe fiber will directly impact communities’ ability to lure businesses, 42 percent say it will directly help retain businesses, and 40 percent feel it will enable local companies to compete more effectively.

Wireless, on the other hand, is only seen as directly impacting these outcomes by 37 percent, 24 percent and 29 percent of respondents respectively. Although fewer overall believe broadband can directly impact outcomes such as revitalizing depressed business communities and implementing more effective worker training programs, more believe fiber networks will have an impact than wireless.

The survey numbers for all seven categories of economic outcomes subsequently argue for wired broadband as most crucial for economic development. Yet, messages from D.C. policymakers (advocated loudly by telecom companies) are proclaiming mobile (wireless) broadband to be the technology that leads us to the broadband promise land.

It would be an error to use these figures to declare fiber to be the only solution or the best solution for every community. A whole slew of local factors, from budgets and political considerations to the ability of local businesses to do well with highspeed fixed wireless, can make wireless a logical course. But it’s important to point out the fallacy of declaring wireless or wired to be the only choice everywhere.

What’s our true need for speed?

Fewer than 9 percent of respondents expect broadband speeds of 4Mbps to be adequate by 2013 to achieve any of the outcomes listed in Figure 3. Even the FCC’s goal of 100 Mbps looks weak when 55  – 60 percent of respondents believe communities will need more. Thirty-four percent alone say communities need at least 1-gigabit networks if they want broadband to be a sufficient inducement to draw in new business.

It’s also interesting to see how much speed respondents believe is necessary to achieve personal economic development outcomes, such as improving low-income individuals’ ability to create wealth, become entrepreneurs or run profitable home-based businesses. More than 60 percent expect individuals will need over 100 Mbps, and need it seven years ahead of the FCC’s goal (Figure 4).

Policymakers paint a picture of various achievements for broadband in telemedicine, education and particularly, economic development. Yet they saddle that picture with speed goals incompatible with the expectations created. Imagine if President Kennedy had said “Within 10 years we will send a man to the moon and return him safely to the earth, but our goal is to fly at 200 miles an hour” (a speed already slower than commercial jets at that time).

Blair Levin, chief architect of the national broadband plan and advocate for the 4 Mbps goal, states in a recent interview, “I’ll be happy to debate this with anybody anytime anywhere if they answer three questions: What should the speed be? What will it cost? And how will we pay for it?”

The first is a trick question. The goal isn’t about speed, it’s about getting to the moon and back at whatever speed it takes to get the job done. With broadband technology, this benchmark is fluid among communities and constituent groups and their respective needs.

The answer to the second question is: one hellava a lot, especially if you want to do the job right. The answer to the third question is, we can pay for these networks if fewer people had a backward worldview on this issue. Chattanooga, Tenn., Santa Monica, Calif., and Wilson, N.C. are three communities that have already found ways — without broadband stimulus dollars — to build gigabit networks.

The greatest barrier to getting the broadband to impact economic outcomes are those who view the solution as coming from exclusively from DC facilitated primarily by incumbents. This subsequently leads to the fixation on speed. One survey respondent summed up the situation. “..most people (even the younger ones) do not know the difference between a bit and a byte, so speed over the wire becomes something more like a shell game when vendors are promoting their particular network. Encourage local development.”

Fifty-one percent of those professionals surveyed believe that the business models best able to get the job done are ones in which communities are the driving force and they have ownership in part or in whole of the infrastructure. The biggest need businesses and individuals have is for government policy to facilitate community-focused solutions.

Craig Settles is a broadband industry analyst, co-director of Communities United for Broadband and was named one of Huffington Post’s 16 Tech Titans on Twitter (@cjsettles).

You’re subscribed! If you like, you can update your settings

  1. i always have mixed feelings about this. as much as i like really fast internet I also believe internet connection are more expensive than they should be.

    more investment in infrastructure also often means higher prices.

    so i want see the internet get a bit faster but also a lot cheaper. i would certainly be willing to sacrifice some speed for lower cost.

  2. Craig Settles, its time to start using your grey matter in that noggin of yours. Not *once* in your post here today did you use the word “upload”. Clearly you are looking at this and the FCC is too from that of “download” (consumption), i.e.:

    > 10-year goal of 4 Mbps download speed

    How amazingly boring. Have you ever thought about upload bandwidth? Craig Settles oh guru that you are, have you been reading GigaOm about cloud computing? Have you ever thought of how great it would be if we could UPLOAD, say, virtual machines (on the order of several gigabytes) that we produce on our ever powerful laptops and desktops into, say, Amazon EC2 (machine images)? VMware images? Imagine how much more experimentation could take place by people working in their local offices and using super computing multi-core machines like a Mac Pro desktop tower and then to be able to take a VMWare virtual machine image and shove it up into the cloud and run it on a cloud-based production system? How could you not have thought about this? How could you not have mentioned the substantial asymmetry we have today in broadband (up/down bandwidth). I don’t get it, are you not paying attention to your fellow GigaOm authors and the things they write about?

    1. @Eddie, with all due respect to Craig’s point of view, the requirement for U.S. policymakers to acknowledge the need for symmetrical broadband has been an ongoing issue in this national debate.

      FYI, a so-called “expert” that is advising the FCC commented previously on GigaOm that he was sure there was “no demand” for symmetrical broadband in America.

      The apparent lack of informed awareness, about the existing global broadband benchmark set by the recognized market leaders (South Korea, Singapore, etc), seems to be at the root of the problem. The U.S. reality is indeed grim.

      Case in point: I use TWC Roadrunner service in Austin, Texas. Their technical support team says their benchmark is approx 7Mbps downlink and a 384Kbps uplink. Compared to the leading ISPs in the Global Networked Economy, this service offering is truly handicapped.

      IMHA, America must take action to reach “broadband parity” with the global leaders ASAP. We need realistic short-term goals. I want to see symmetrical 7Mbps service on the horizon, before I can take any 100Mbps objective seriously.

    2. Hmm, I guess I’ve given one more example of why us guru-types must never assume what’s obvious to us is obvious to all. In my writings on this particular topic, the speeds I present are symmetrical unless otherwise stated.

  3. While personally I’d love to have a 100 Mbps download speed, I doubt very much that it would contribute significantly to economic growth for most of the U.S. It may help places like Silicon Valley, the creators and beneficiaries of new apps, but for most of America, it will simply mean faster porn and other similarly economically useful downloads.

  4. Are there any studies that prove higher broadband speeds actually lead to improved economic productivity? We always talk about needing to catch up to countries like South Korea, but – admittedly, just anecdotally – I don’t see a lot of world-beating technology businesses coming out of South Korea. (Although a lot start there, many of them see to stay there.) BTW, I’m _certainly_ not suggesting that higher broadband speeds are useless or not worth encouraging – just asking if there’s any evidence of positive economic outcomes. Can anyone help?

    1. Rob, your question points to one of the problems with DC’s fixation with speed. We subsequently lead off many discussions about broadband by comparing the US with other countries’ speed. Speed for speed’s sake and/or an “arms” race with other countries miss the point.

      For example, in a recent needs analysis I did for Benicia, CA, I asked businesses 1) what computing/business operations tasks do you want to do now, and 2) what do you want to be able to do in 3 – 5 years. Concurrently, the city told me they want to draw businesses of a certain type to the area, and one of the commercial real estate people explained from his experience what kind of speeds companies are looking for when shopping for a new location.

      In all three cases, the focus is on what do “x” constituency/stakeholder groups want to achieve that will in turn impact economic outcomes. Then we have to figure out what speeds are going to facilitate reaching the stated objectives in the short and the long term. Some communities may be able to reach their specific objectives with 5 Mbps. Others may be able to reach them with 10 Mbps over the next year and then upgrade to 100 Mbps within 3 years.

      What matters is not giving communities the fastest speeds on the planet, but giving them the right technology to hit those economic milestones that matter most to each communities.

      1. What about on an even more basic level. I mean, if you look at countries with fast Internet access, is there any evidence that it’s helped them? Internet access obviously boosts efficiency. But does that boost scale along with the speed? And is that advantage absolute or relative? The stuff you’re talking about – attracting business to an area – is all relative. (You have to have better access than other areas, which could mean anything.) All I read about is how we’re falling behind, but what does that mean? Are there _any_ studies on this?

    2. I don’t address “the need to catch up” question because (as with speeds) I think the focus on this misses the bigger point, which is that a heavy focus on speeds and speed comparisons with other countries take us away from discussing “how do we meet the need to improve business productivity, competitiveness, etc.”

      There is definitely a lack of significant empirical research out there on this stuff, which is what makes from econ dev folks crazy because they have lots of anecdotal evidence that there is a relationship. This is why I’ll look at a community and ask “if 80% of your businesses wanting to do cloud computing and run video conferencing applications in order for them to open new markets, then what capacity do you need a network to have to achieve that goal?

      You have to ignore all of those stories about the US failing to catch up with the rest of the world (not an easy thing to do), and look at your specific community to ask “if we want to achieve “b” or “d” economic outcome, can broadband help? And if so, at what speed and what type of broadband will help?”

      I conducted the research in part to create a general picture of where broadband can impact economic development, and partly to get an idea of what kinds of speeds may be adequate to enable communities to reach important goals.

      1. Craig, next time you perform a study of the U.S. market, I suggest you reach out to SMBs that create multimedia content — and regularly upload files to Web hosting sites. Then, ask them how effectively they can compete with their global competitors.

        My point: you’ll quickly discover that uplink speed matters to those who already experience the current constraints of the laggard U.S. broadband access benchmark.

  5. I’m excited to see the rural areas manage and upgrade these cutting edge 100M+ networks when they come out. It also makes sense that everyone would want something that appears to be necessary and for the lowest possible cost. It is too bad this “need” will encourage poorly thought out ideas and execution to match.

  6. +1 UPLOAD. Download is uninspiring, but well functional these days. Upload is what stops us from really doing more. Give me 6mb/s up/down before toying with in 100mb/s down.

  7. Christopher Mitchell Monday, October 18, 2010

    Craig is right that 4Mbps is pathetic as a goal for anything after 2010. However, we also need to pay greater attention to reliability and other metrics that are crucial for a productive broadband experience.

    As for the discussion about upload speeds, I know that Craig knows how crucial it is we radically improve the pathetic upload speeds most have. I’m glad to see so many commenters making it a key issue. It would be nice if even a few in the Obama Administration recognized that when making policy.

  8. Digital Society » Blog Archive » Top 5 Tech Policy Issues of 2011 Friday, January 7, 2011

    [...] between Craig Settles and NBP Director Blair Levin.  You can read their back and forth at GigaOm: Part 1, Part 2, Part 3, Part 4, Part [...]

  9. The State of the Union, the Economy and Broadband: Broadband News and Analysis « Tuesday, January 25, 2011

    [...] We must demand more in setting our nation’s broadband goals; broadband speeds for rural America of 4 Mbps as a 10-year goal (so long for so little) threaten to abandon these communities to a ghetto of unfulfilled potential. Even 100 Mbps will soon be scoffed at as inadequate for a world-leading country. [...]

Comments have been disabled for this post