Demand-Side Programs to Stimulate Adoption of Broadband: What Works?
38 Pages Posted: 23 Jan 2012
Date Written: June 1, 2010
In February 2009, as part of the American Recovery and Reinvestment Act (the “stimulus” bill), Congress directed the Federal Communications Commission (FCC) to develop a plan that “seek[s] to ensure that all people of the United States have access to broadband capability.” The National Broadband Plan (FCC, 2010), released in March 2010, makes it clear that to make further inroads into the segments of the population that have not adopted broadband, attention must be paid to both the supply and demand sides of the market. While policy attention at the federal and state levels toward broadband has previously been directed mainly at the supply side in the US, a growing consensus argues that the demand side cannot be ignored. While definitive broadband mapping is still being planned and carried out in the US, data that we currently have suggests that broad-band is available to the large majority of households. There may yet be much work to do to push the broadband network into the remaining un-served areas of the country, and there is clearly a role for policy if extending availability to areas currently deemed un-profitable by the market is the goal.
However, attention should not remain exclusively on the supply side. Gillett, et al. (2006, p.11) state that, Once broadband is available to most of the country, differences in economic outcomes are likely to depend more on how broadband is used than on its basic availability. The implication for economic development professionals is that a portfolio of broadband-related policy interventions that is reasonably balanced (i.e., also pays attention to demand-side issues such as training) is more likely to lead to positive economic outcomes than a single-minded focus on availability. During the ongoing FCC proceedings for the development of the National Broadband Plan, Intel Corp. (2009) noted that “more than one hundred parties commented on the importance of adoption and demand-side programs in the National Broadband Plan.”
The latest survey from the Pew Internet & American Life Project indicates that only 4 percent of adults in the US report that they do not subscribe to broadband because of lack of availability Horrigan, 2009b, p.42).
Since that statement was made, infrastructure deployment has continued to increase, and opportunity for access now rapidly approaches ubiquity in the US. Consequently, the most cost-effective options to achieve the goals of the National Broadband Plan for con tinued gains in the level of adoption come from the demand side. As the cost of connect ing the last few pockets lacking broadband infrastructure in the US begins to rise steeply, stimulation of demand looks ever more efficient.
The US Congress has determined that stimulating demand for broadband is necessary, by requiring the FCC to create in the National Broadband Plan “a detailed strategy for achieving ... maximum utilization of broadband infrastructure and service by the public....”3 The first task for the policy community should then be to determine the most effective means to increase demand for broadband service, so that effective methods can be replicated and expanded. Given the stakes, the standards of evidence for the success of a policy should be set high. This leads to our major theme: the body of evidence regarding evaluation of demand-side efforts to encourage broadband adoption is exceedingly thin. A massive review of hundreds of digital literacy programs throughout the OECD countries puts it succinctly: “...it is striking how little evidence initiatives have gathered on the impact of the activities on the participants” (Hilding-Hamann, et al. 2009b, p.54). More specifically, Strover (2009, p.213) recently noted that “there is a lack of strong empirical data that would provide compelling evidence that economic and community development goals could be realized through programs that promote computer and Internet access.” We agree, and observe that evidence adhering to high econometric standards for causality is especially scant. In particular, researchers must be especially careful to recognize that coincidence of a factor and an outcome does not imply causality. This is sometimes called the Fallacy of False Cause - concluding that the simultaneous presence of two factors means that one caused the other, or, in a statistical sense, that correlation implies causality.
American Recovery and Reinvestment Act of 2009, sec. 6001(k)(2)(B). It is important to note that when we refer to the Fallacy of False Cause herein, we are not judging that the presumed causality is not present; rather, that evidence adequate to make such a conclusion has not been presented.
Our two main points, then, are that demand-side policies must take their place alongside supply-side policies if greatly expanded adoption of broadband is the policy goal; and that reliable evidence establishing the effectiveness of existing demand-side policies has been insufficient. The purpose of this paper is to examine carefully the evidence available on the effectiveness of demand-stimulus programs for broadband adoption. While we do not attempt to cover every initiative ever tried for demand stimulus - an impractical task at this point, given that some reviews have found nearly 500 demand initiatives - we have attempted to gather all formal evaluations of such programs. The rest of the paper is organized into three main sections. In section II, we discuss the general types of initiatives and programs designed to stimulate broadband demand. We organize our discussion of these programs around the barriers to broadband adoption that they tackle. In section III, we turn attention to evaluations of quantifiable results of such programs. After reviewing the evidence, we turn in section IV to a discussion of our overall findings on the types of programs that are most effective. We also give suggestions for best practice (or, at least, better practice) for future program evaluation to be performed as an important part of the National Broadband Plan. Section V concludes.
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