Broadband Adoption: Translating the Digital Divide Literature into Effective Government Policies and Actions

20 Pages Posted: 6 Feb 2017 Last revised: 15 Feb 2017

See all articles by Stanford L. Levin

Stanford L. Levin

Southern Illinois University Edwardsville

Stephen R. Schmidt

TELUS Communications, Inc.

Graham Scott

Independent

Date Written: September 7, 2016

Abstract

North America, many countries in Europe, and some countries in East Asia with advanced telecommunications networks have benefited from substantial investment aimed at increasing broadband availability for residences and businesses. In some countries, such as the U. S. and Canada, this investment has taken place as a result of market forces, with little attention from government, while in other countries government involvement has been relatively greater (whether in the form of directed private investment or direct public ownership).

As a result of these differing approaches, broadband is widely available in many countries. For example, in Canada (2014) 99% of households have access to broadband speeds of 1.5 Mbps or faster, 96% of households have service with at least a 5 Mbps download speed, 81% have access at 30 Mbps or faster, and 71% have access at 100 Mbps. In the U.S, 96% of Americans had access to fixed broadband speeds of 3 Mbps/768 kbp and 83% of Americans have access to fixed broadband speeds of 25 Mbps/3 Mbps in 2013.

While much press attention is focused on companies that may be able to provide 100 Mbps download speeds, or even 1 Gbps, such very high speeds at this time, and for the next few years, are not actually required even for the most demanding services such as watching high-definition video. This is evidenced by the fact that residential customers often do not subscribe to the fastest broadband speed available. Specialized users, such as medical facilities, can usually obtain extra-fast broadband if it is required.

What has been mostly missing from the policy discussion and from actual policy is a major focus on achieving the adoption of broadband, as opposed to the availability of broadband networks. The number of households, for example, that actually subscribe to broadband is typically lower than the number of households that have access to broadband. In Canada, for example, while 99% of households have access to broadband, only 82% actually subscribe. A similar material gap between availability and adoption is evident in the U.S.

This paper accordingly asks two principal questions:

(1) What are the reasons why adoption of broadband lags behind availability in countries with advanced communications networks?

(2) What policies or actions are likely to increase adoption?

Given the importance of broadband in increasing economic efficiency, as well as providing communication opportunities and entertainment for individuals, and because broadband is often widely available at speeds that exceed those required by households and businesses, encouraging adoption of broadband should be a key policy objective. To this end, it is imperative to understand the impediments to broadband use so that effective policies can be designed and implemented.

Studies have confirmed that it is not the price of broadband itself that is a significant deterrent to adoption. This result is even more striking because most studies do not distinguish between the cost of broadband access and the cost of equipment, such as a computer, that is required to use broadband. Other factors are, in fact, much more important. These include age, income, education, labor market skills, and employment status, among others. Also, people often say that they lack the requisite skills to use a computer or otherwise access broadband.

Effective policies to encourage broadband adoption, then, must be directed to reducing the actual barriers that prevent people from using broadband. There are actions that policy makers can take, but they are not the often-identified simple measures such as cutting the price of broadband access. Effective policies will typically be more complex and difficult to implement, but there are some examples of the sort of policies that can be expected to work.

Actions that have a prospect of increasing broadband adoption include:

• Government programs can provide people with the skills to access and use broadband and can demonstrate the value of being connected to a digital economy.

• Governments themselves can be leaders by moving information and services on line and encouraging people to use them.

• The use of computers in education also spurs households to be connected. To get the full benefit of broadband networks, it is not just a question of playing games or watching videos on line.

• Broadband can also be more deeply embedded in the economy to drive efficiencies and to achieve broader societal goals like reduced carbon output through telecommuting for work and through online shopping.

There are also less obvious policies that will boost adoption. For example, facilities-based competition, also referred to as platform competition, for broadband service has been shown to increase adoption, probably as a result of strong competition among or between facilities-based providers. In addition, macro-economic policies are important because full employment and increasing productivity will boost incomes and improve labor market skills, spurring broadband adoption. Programs that help households acquire computers and the skills to use them can also increase broadband adoption.

Keywords: Broadband, Broadband availability, Broadband Adoption, Digital Divide, Universal Service

JEL Classification: L96

Suggested Citation

Levin, Stanford L. and Schmidt, Stephen R. and Scott, Graham, Broadband Adoption: Translating the Digital Divide Literature into Effective Government Policies and Actions (September 7, 2016). Available at SSRN: https://ssrn.com/abstract=2911391 or http://dx.doi.org/10.2139/ssrn.2911391

Stanford L. Levin

Southern Illinois University Edwardsville ( email )

PMB 110
9648 Olive
St.Louis, MO 63132
United States

Stephen R. Schmidt (Contact Author)

TELUS Communications, Inc. ( email )

215 Slater Street
Ottawa, Ontario K1H 5W5
Canada

Graham Scott

Independent ( email )

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