Policy strategies for broadband: penetration vs quality

Thanks for your comments on my previous post, Elie. Some reactions follow.

First, let’s dispel any notion that getting us out of the broadband dark ages in Canada has one simple fix. You seem to suggest we need to choose between government investment in fiber and tougher ISP regulations. What we need is a combination of strategies that includes both public and private investment in infrastructure, especially but not exclusively in fiber.

We also need to re-regulate the Internet access market to prevent the broadband ISPs from engaging in undue preference and other discriminatory practices, smuggled in under the guise of network management practices. The ISPs will continue to fight off any such re-regulation if it favors network neutrality. (They’ve also recently invested in a consulting study that questions the claims Canada is a broadband laggard – from a list that includes the OECD, the ITIF, the ITU, Akamai and the Cisco BQS study. The author claims (p.87) that “these examples [of data from certain countries] demonstrate the dramatic differences that can occur when service speeds are measured using different methodologies.” That’s exactly the point. They all reach the same overall conclusion anyway: Canada is a broadband laggard, QED.)

Not that I’m proposing our government persecute the ISPs. On the contrary, among the tools we should be exploring are direct and indirect public subsidies like tax credits – in addition to the model implemented in the current Connecting Rural Canadians program, whereby up to 50% of capital costs will be covered by Ottawa. In addition to private investment, public spending and re-regulation, we need a lot more thinking, talking, educating, researching, strategizing and airing of big ideas in public forums. We need commitment, dreams, ambitious goals and hard work. What we don’t need any more is complacency (that’s the real problem with the laggard study cited above: the “we’re all right, Jack” syndrome). There is one other item to add to the list: network ownership. A national digital strategy will never work in Canada unless and until we’re prepared to start talking about ownership vesting with players other than the five incumbents – like municipal governments.

“Is there any significant concern about penetration anymore? Is widespread connectivity a dead issue in North America?”

Yes to the former, no to the latter. Although I suggested in class the other day that penetration should no longer be the focus of broadband policy, there’s a flip side. Many people (including me) believe access to fast, affordable broadband must soon replace basic voice telephony as part of universal service policy, and there’s a long way to go on that score. On Thursday of last week, the FCC held another of its field meetings, this one in San Diego, and the big headline out of that session was what the panelists said about universality: the national broadband plan needs to focus on “the least, the last and the lost.” See the related story at BroadbandCensus.com.

As for connectivity being a “dead issue” in North America, try telling that to the FCC. Their National Broadband Strategy is to be tabled before Congress on February 17, 2010. Check out the buzz at their dedicated broadband.gov site.

Back in Canada, the recently released CRTC monitoring report indicates that in 2008, 74% of Canadian households subscribed to Internet service. But that figure is deceiving, because only 69% of households subscribed to high-speed service (defined by the Commission as a minimum of 128 Kbps); for broadband, which is defined as 1.5 Mbps or higher, the population total drops to 52% of all households; and finally, the proportion of households connected at 5 Mbps or higher was a mere 41% (p.213). These data suggest penetration remains a major policy issue (although aiming for 100% penetration is economically and politically unrealistic).

“What social value lies in improved broadband quality? How would that justify government spending in improving our BQS?”

Big questions, no easy answers. The FCC’s National Broadband Strategy has stirred up a passionate debate about the many positive externalities which next-gen broadband networks are likely to generate – although part of that debate casts some doubts on just how far broadband can go in stimulating job creation. The Information Technology and Innovation Foundation (ITIF) produces a steady stream of excellent research on these issues. In their March 2009 report entitled The Need for Speed: The Importance of Next-Generation Broadband Networks, the ITIF focusses on your question about the balance between penetration and quality. Here’s the gist from the opening passage:

“The true potential of this next-generation broadband network lies in the transformative new functionalities it enables. These functionalities – including faster file transfers, streaming data such as video, and real-time collaboration tools – will support a broad range of Web-based applications delivering tremendous benefits to consumers, educational institutions, businesses, society, and the economy.

“Notwithstanding the importance of boosting broadband speeds, policymakers in the United States have largely focused to date on reducing the “digital divide” by increasing broadband availability to and adoption by most households and businesses. While ensuring that all Americans have access to the Internet and the capability to use it is a must, supporting the deployment of faster next-generation broadband networks will also be critical to applications and services that will play important roles in improving quality of life and boosting economic growth” [my emphasis].

A quick thought about justifying government spending in improving our BQS. I don’t see a compelling rationale coming from a policy framework for broadband alone. In Canada, it’s going to have to come from the larger national digital strategy the CRTC called for in its June new media decision.

“And finally, what sorts of measures have been used to justify government spending in this area in other countries, especially those ranking higher in broadband quality?”

Sounds like we just found you an essay topic!

2 thoughts on “Policy strategies for broadband: penetration vs quality

  1. Barri’s question: Is the CRTC’s digital media process inclusive of broadband, or will they separate it out as the FCC has done?

    The CRTC has conducted 2 separate proceedings related to the Internet. One was about content – their proceeding on new media broadcasting. They held another set of hearings on ISP traffic management practices, dubbed by some the Net Neutrality proceeding. The former was held under the Broadcasting Act and the decision was issued on June 4. The ISP proceeding takes place under the Telecommunications Act, and is therefore way more long-winded. Unfortunately, the new media proceeding steered well clear of Canada’s broadband problems.

    On the other hand, the FCC isn’t simply reacting to the status quo, papering over the ever-widening cracks in the old telco business models (which the CRTC may be doing – jury’s still out). The FCC’s National Broadband Strategy, due before Congress on February 17, was mandated under the American Recovery and Reinvestment Act of 2009 (which gave birth to several Recovery Act Broadband Initiatives). Moreover, the FCC is treating broadband as a precious national resource, just as it should. One blogger (Stacey Higginbotham on GigaOM) recently noted that “the FCC is embarking not on a National Broadband Plan, but a National Communications Plan.” Same idea as the national digital strategy the CRTC called for in its new media decision. Ottawa, please take note.

  2. …and I say you’re well on the road to a book proposal to fill a vital information gap in Canada. Most of us will do a good round or two of fist-shaking @ the cable/BDU/ISP cartel, and leave it at that. One Q — is the CRTC’s digital media process inclusive of broadband, or will they separate it out as the FCC has done? One can only hope…

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