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Summary:

It can be hard to figure out the real economic benefits of broadband, which stops some politicians from ever investing in it. But if you define your scope and plan for additional programs to boost the effectiveness of a broadband investment, you’ll see results.

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Too many national discussions about broadband’s impact on economic development get caught up in wonky mumble jumble and blue-sky numbers. Meanwhile, at the community level, many a discussion regresses to “why should my tax dollars help teenagers surf YouTube?” No wonder U.S. broadband speeds languish behind Iceland and Slovenia.

Policymakers (many well-intentioned), government agencies, and elected officials, as well as big telecos’ lobbyists conning their way into more government subsidies for empty broadband promises, seem to fall into two camps hindering progress.

Bold weavers versus assumptive forecasters

One camp is the bold weavers, those who spout numbers and stats that seem woven from whole cloth, indicating broadband’s responsible for “x” million new jobs or “y” billion dollars. It is difficult, if not impossible, to draw clear lines between these types of grandiose statements and local economic realities to create good policy.

The other camp, assumptive forecasters, touts economic outcomes that seem reasonable, but whose validity is based on assumptions and anecdotal evidence. Case in point, it is accepted gospel that one big value broadband brings to underserved individuals is it enables them to look for jobs. This assumption is based on observations such as, “you can’t even apply for a job at McDonalds without going on the Internet,” but never addresses how to prep workers for jobs they might find online.

The bold weavers muddy the water with numbers while contributing to some local officials’ and stakeholders’ paralysis as they hesitate to move broadband plans forward until they see numbers that make sense. The assumptive forecasters can motivate individuals and local businesses to take action, but pointing to the wrong or the least valuable economic outcomes raises expectations now that produce disappointments later.

Want to understand broadband’s economic impact? Ask a pro

A better way to jumpstart a real national broadband discussion is to involve more people who best understand how to create economic development assets. I recently conducted a survey in partnership with the International Economic Development Council (IEDC) about what economic development professionals think about broadband. In August IEDC sent an e-mail message with a link to the survey to 7,000 people, and 365 senior managers and staff in economic development departments or agencies completed it.

Because it’s difficult to show a dollar-for-dollar correlation between technology and economic development, communities need other benchmarks and perspectives for assigning economic value. The survey tries to assess those.

Survey respondents critiqued outcomes including how broadband helped attract new businesses to an area, made local companies more competitive, and improved individuals’ ability to earn income. For each outcome, respondents indicated whether wireless and fiber networks had a direct or indirect impact on the outcome, and what minimum data speeds are needed by 2014 to produce these outcomes. These professionals also assessed if and how individuals can use broadband to increase their economic wellbeing.

Reading economic developers’ take on the economic impact of different broadband technologies and speeds gives communities a more accurate basis for decision making than they might get from policymakers defining broadband as 4 Mbps. Most communities don’t look at that as being a real benefit when attracting business to an area for example.

Getting experts involved also helps separate some of the hype from the reality of broadband and economic development. The often-repeated mantra – the Magic Broadband Bullet Theory – that broadband’s big economic value is helping people find jobs, results in national policies and multi-million dollar programs to bring low-income people online. But once they have access, then what?

What’s the value of spending $1 billion dollars a year for the FCC’s $10/month Lifeline program (once it’s reformed to support broadband access) if after five or ten years we’ve done very little to pull people out of poverty? Forty-seven percent of economic developers indicate that money spent for broadband could produce a greater return by helping individuals improve job and professional skills. Another 25 percent see transitioning people from dying industries to 21st century job skills as the broadband potential we should be cultivating. Nearly one in five at 17 percent say using broadband to help people get a better education is the greater value of broadband for personal economic development.

What happens when thousands of Lifeline recipients go online inspired by the rhetoric that they can more easily get a job, only to learn they are not prepared to effectively compete for the jobs they find? Or the broadband infrastructure in their communities is so bad that recipients can’t capitalize on Web-based training and professional development.

Communities across the U.S. want to be the next Chattanooga, Tenn. or Bristol, Va. or Lafayette, La. by bringing a gigabit network to town (by the way, a majority of those surveyed did not select a gigabit as the minimum speed needed). However, to emulate those success stories communities need to understand exactly how broadband impacts local economies. Throwing broadband at a problem isn’t going to change deeper problems. It’s a lever for change, not a magic wand.

Get the abstract and full survey report, “Moving the Needle Forward on Broadband & Economic Development.” See how to connect the dots between the technology and economic outcomes.

Craig Settles is a consultant who helps organizations develop broadband strategies, host of radio talk show Gigabit Nation and a broadband industry analyst. Follow him on Twitter (@cjsettles) or via his blog.

 

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  1. I think the main reason for investing in a fit for purpose infrastructure is to save money. I saved £211 yesterday in half an hour searching for the best value washing machine.
    Governments can save money when citizens can use eGovernment online.
    Health authorities can save vast amounts of money with remote monitoring and consultations not requiring physical examinations.
    Education can be available to all, at any time, and be much cheaper to deliver online.
    Quality of life? How can you measure that in monetary terms? Keeping in touch with distant friends and relatives is priceless.

  2. markleiser.phd.law Sunday, October 28, 2012

    Reblogged this on #Hashtag – Thoughts on Law, Technology, the Internet, and Social Media and commented:
    Getting beyond the magic broadband bullet theory
    Too many national discussions about broadband’s impact on economic development get caught up in wonky mumble jumble and blue-sky numbers. Meanwhile, at the community level, many a discussion regresses to “why should my tax dollars help teenagers surf YouTube?” No wonder U.S. broadband speeds languish behind Iceland and Slovenia.

    Policymakers (many well-intentioned), government agencies, and elected officials, as well as big telecos’ lobbyists conning their way into more government subsidies for empty broadband promises, seem to fall into two camps hindering progress.

  3. So what you’re saying is that there still is no real proof – and that this survey is a collection of opinions and conjecture. I guess that’s a good thing – but still has to be taken with the proverbial grain of salt.

    You points are well said – clearly it’s about what you DO with the bandwidth, not the bandwidth itself.

    Preparing normal people for on-line jobs is our goal and hopefully others – as well. There’s plenty of programmer training on-line plays. But where’s the training for “non-programming jobs?”

    Here’s a start: http://www.youtube.com/playlist?list=PL8095E64ED4F65A88

  4. Well, there are two ways to look at the survey. 1) It doesn’t present quantifiable proof, which is what people lose a lot of time debating about when they’re trying to make a decision whether or not to move forward. However, the technology as applied to the task of economic development is too new a practice. There is work being done to put metrics in place, but its time consuming and we won’t have results on a national scale for a while.

    2) At the community level, there are ways to target needs and predict to some extent certain economic outcomes. The broadband project team can then go on to say “if we achieve these goals, there will be some quantitative or qualitative value that makes the investment worthwhile. In this context, my survey gives communities a framework for creating an “if, then” set of exercises that is likely more applicable and more accurate for them than any research (or guestimating) that’s been done on a national scale.

  5. Lifeline, like many programs, isn’t supposed to lift people out of poverty. It’s to provide a valuable service to people who can’t afford what most people take for granted. There is nothing wrong with making low-income lives somewhat more bearable.

  6. Hi Craig!
    Good article and thanks for continuing the good work!
    Hopefully our paths will cross soon.
    Ken Demlow
    NewCom Technologies

  7. What about indirect benefits of new technologies that work better with broadband? e.g. if broadband powers internet TV, or smart fridges/door locks, then there would be more jobs in these areas. It’s like saying, if we’re still stuck in 2G or if touchscreen tech didn’t exist, there would be no jobs for all involved in modern smartphones.

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