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Public Policy Institute of California

The Journey of a Million Miles Begins With Basic Broadband Research

in Broadband Data/Expert Opinion by

Editor’s Note: The following guest commentary appears by special invitation of Broadband Census News. Neither BroadbandCensus.com nor BroadbandBreakfast.com endorse the views in the commentary. We invite officials, experts and individuals interested in the state of broadband to offer commentaries of their own. To offer a commentary, please e-mail commentary@broadbandcensus.com. Not all commentaries may be published.

PHILADELPHIA, Penn., February 3, 2010 – Investment in broadband infrastructure, most believe, is essential to our nation’s future economic health.

In an information economy, the race is to the swift: those who can quickly access more, better information will innovate, communicate, and transact at a far greater rate than those who cannot. That’s how the argument goes. As our nation prepares to invest billions in broadband infrastructure, it appears that “We the People” have accepted that argument.

One nagging question remains: is the argument valid? Absent corroborating data, it’s just a plausible hypothesis…and many such arguments have been disastrously wrong. History is littered with them: the South Sea Bubble, Tulipomania, the Laffer Curve, and last but not least, the Internet Bubble of the 1990’s.

Looking to history is one way to test for the accuracy of the argument. However, we lack a valid comparison for broadband connectivity. As technological innovations go, the Internet and the World Wide Web are unprecedented.

Trains, planes, and the telegraph machine were all astonishing, transformational technologies. The Internet, however, is more on the level of the taming of fire for human use or the invention of the wheel.

Thus, when an academic study comes along that appears to find a correlation between broadband access and positive outcomes – even one that carries with it many caveats, people pay attention. Such was the case with a study authored by Jed Kolko of the Public Policy Institute of California, published on January 12, 2010.

The study, entitled “Does Broadband Boost Local Broadband Development?,” used traditional economic research methods to examine the relationship between broadband availability and economic growth in parts of California. The next day, Kolko and research consultant Davin Reed presented the results to about fifty people at the New America Foundation’s headquarters in Washington.

On the dais were Kolko, Joanne Hovis, President of CTCnet and president-elect of NATOA; Sascha Meinrath, Director of NAF’s Open Technology Initiative; and Benjamin Lennett, Policy Analyst at NAF.

Video of the full meeting is available on YouTube.

The presentation lasted a little over two hours, and included an overview of the study, a headline-level description of its results, and a lively discussion with the clearly well-informed audience.

A quick summary follows:

  • The official headline is that in some areas of California, there is a strong, positive correlation between broadband access and employment growth—particularly in areas with a strong technology sector and low population density.
  • There are many caveats, about which Kolko was forthcoming. With this kind of research it is quite impossible to rule out all sources of error without constructing a study that has no relevance to the real world. By describing the limitations of the research, Kolko did what any responsible researcher would do. This does not imply, however, that the audience expressed much interest in them. There appeared to be a rush to generalize from a few locations in California to the world at large, which leads us to the next point
  • The unofficial headline, far more salient than Kolko’s study and far more urgently felt among the audience, was hunger for data about the impact of broadband on the economic health of communities, as well as what some call “externalities.” “Externalities” are things that really matter, such as safe housing, good health, and a living wage. They are central to the quality of life, but are often intangible—in other words, they are “external” to economists’ ability to measure them.
  • As some noted, it would behoove the U.S. to relinquish its need to see itself as superior and instead look to other countries that have led in broadband investment, the opening of access and the encouragement of adoption.
  • Simultaneously, there was little awareness among this group of the research that has been done in fields outside of economics, and public policy. For instance, there was no awareness of the research showing that for certain chronic behavioral syndromes, such as compulsive gambling, smoking, and overeating, Internet-mediated treatment is highly effective and may be more appealing to patients who feel uncomfortable publicly disclosing the nature of their problems.

This last discussion was, if anything, the clearest piece of evidence pointing to the need for something Paul Budde, one of the architects of Australia’s ambitious Internet program, terms “trans-sectoral” thinking.

This is thinking across the boundaries long held in tightly bound organizational silos and not permitted to ‘fraternize’ Budde believes that the greatest gains from connectivity will come when people learn to venture beyond their narrow silos of expertise and begin to share, with mutual curiosity and respect, the ways their discipline would approach a problem, how it would ensure that the remedy was appropriate and measure outcomes.

For the first time in history, we have the machinery that could make that possible. When this comes to fruition, the ‘real’ world and the world online will enjoy that rare state of being greater than the sum or their parts. And we will be the beneficiaries.

Study: Broadband Providers Target Areas of Expected Economic Growth

in Broadband Data/Broadband's Impact by

WASHINGTON, January 15, 2010 – Authors of a new study focus on California in their efforts to determine whether broadband boosts local economic development and found it’s tough to determine because broadband providers target areas where they expect high economic growth anyway.

Researchers at the Public Policy Institute of California took a look at the expansion of broadband Internet service providers and reviewed the increase of jobs and wages to see if broadband affected employment. It became clear through research that the highest speeds are often in the most densely populated areas.

The researchers were able to determine that “broadband providers are explicitly targeting areas where they expect higher economic growth: Later employment growth does not predict earlier broadband growth. The evidence also indicates that population growth is not the main driver.”

However, the report “Does Broadband Boost Local Economic Development” does not dismiss the funding of broadband expansion. While there may not be a direct impact on jobs, it found that broadband does improve citizens’ overall quality of life and empowers them with overall better access to information.

To put together the study, researchers looked at maps dated Aug. 10, 2009, which show large rural and mountainous areas in the state without broadband access.

The fastest service, which is more than 100 mbps, is available in parts of the Sacramento metropolitan area. Service at speeds of 10 to 100 mbps is available throughout much of urban southern California, as well as Bakersfield and Napa and Solano counties. Speeds of 5 to 10 mbps are offered in most of the Bay Area, including Silicon Valley. These differences demonstrate that even among places with broadband availability, speeds can vary considerably. Much of the state appears to have no service at speeds of at least 500 kbps, which meets the definition of unserved or underserved.

The state has its own internal mapping initiative and broadband expansion programs that predate the recent American Recovery and Reinvestment Act. The original broadband expansion program was the Teleconnect Fund, which was established in 1996 to help get Internet access to schools, libraries and non-profits.

In 2006, the California Public Utilities Commission created the California Emerging Technology Fund and the California Advanced Services Fund. AT&T and Verizon as a provision of their merger requests with SBC and MCI, respectively, funded the programs via a $60 million contribution.

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