If you heard about the government stimulus package that plans to spend over 7 billion to get broadband in rural areas, don’t get too excited. This is the government we’re talking about afterall.
Here’s a few things we need to keep in mind.
- The current halt on afforable broadband service to rural areas is due to lack of interest for companies and for customers. Basically, it costs way too much money to get broadband way out to the boonies when not everyone wants to pay for it even if they did!
- Anytime the government hands out money, it has to jump so many hurdles and run through so much legislation that by the time they get around to it, we could probably have done it faster on our own with a big garage sale! Ok, ok… slight exaggeration. Anyway.
- There are a lot of big companies involved that will all be lobbying for their interests, and a lot of them are more concerned about their pockets than a few rural farmers waving their arms for a broadband bailout.
Here’s some of the things we dial-up users in the sticks have to look forward to:
So anyway… The FCC has been given until February to (get this!) define “broadband” so the government can properly dole out the funds. Yes February. As in next year. If you can’t guess, it’s going to take at least several years for this promised broadband to reach your rural little computer.
Why do we need to define broadband? Well because all these “high-speed” companies are giving customers such low-quality service that it’s hardly fast enough to be considered fast in today’s age. Check this out:
*Satellite services can drop your connection speed to that equivalent to dial-up as a penalty for using the service excessively.
*Wireless can become so overcrowded with users that it is actually slower and more unreliable than dial-up.
*Many “low-cost” DSL plans have connection speeds that are no more than 10 times faster than dial-up (keep in mind that advertised speeds are not guaranteed actual speeds).
You might as well just stay with dial-up at that rate! Oh and get this!
*Our fastest connection speeds here in the U.S. is much slower than the normal connection speed in other countries. So much for being an advanced country!
So now the FCC is asking some of these Internet services providers to help them decide how fast broadband should be (or how else to determine what makes broadband what it is–long story), and phone companies like AT&T are trying their hardest to keep the standards low. They want broadband to be defined as being able to achieve basic tasks (like web page loading) and not even including video streaming and gaming capabilites!
Guess what? That, my friends, is dial-up. And we already have that. Yes, this is going to take a while. Looks like I’m going to keep going to the library to get videos… But I’m ok with that. I never had my hopes up from day one anyway.
In recent posts, I have been discussing my opinion of the stimulus money being designated to the spread of broadband to “underserved” rural areas. I live in said area and I’m not jumping up and down for joy. It seems to me that it’s going to be more work and money and time than the government can handle. And I’m not convinced that installing broadband should be the government’s priority.
Regardless, one aspect that I haven’t delved into as thoroughly is the economics of pushing broadband to rural areas. Supporters of this broadband initiative says the financial outcomes will be well worth the money the government is spending and the profits will be enormous.
I recently came across a blog post by Shane Greenstein, a Professor at Kellogg School of Management, Northwestern University. This post and many others Greenstein wrote in his blog, Virulent Word of Mouse, are based on his experience is a professional researcher and economist.
I had the opportunity of discussing these posts and his work further in an interview with Prof. Greenstein. His interest in the economics in relation to broadband began three years ago, during “a project to update statistics about the diffusion of broadband and dial-up,” Greenstein said. “There is not a lot of data measuring the economic impact of broadband, so that allows for the survival of a wide range of passionately held beliefs,” including those have made extravagant claims about the profits gained from pushing broadband to rural areas.
Over about 18 months, Greenstein collected data and wrote a research paper with the help of colleague Prof. Ryan McDevitt, The Broadband Bonus: Accounting for Broadband Internet’s Impact on U.S. GDP. The study was presented to various organizations, including the National Bureau of Economic Research. Several of his blog posts I read included facts based on the data shared in this paper. Clearly, this guy knows what he’s talking about!
The post I referenced above is not opposing the stimulus plan, but advocating reason among the lofty claims of a supposed ‘economic transformation’ that will take place from getting broadband to rural areas. Greenstein basically explained a realistic summary of the benefits (and disadvantages) of this broadband initiative. Those who make up the rural population who do not have any access to conventional broadband access are so few (about 5 percent of the U.S. population) that the economic impact will be small.
In addition to detailing the feasible profits gained directly and indirectly from increased Internet services, Greenstein mentioned other factors negatively effecting the success of this initiative. The lack of broadband adoption (just because its available doesn’t mean everyone will want it), the costs of equipment and work needed, and the loss that some local businesses (including newspapers and post offices) will experience from their customers shopping online to save money are a few of the losses that must be considered when calculating the profit that can be had from spreading broadband.
Greenstein has not opposed to the stimulus bill since was first announced. “We were in the midst of the worse downturn since the great depression,” he explains. “ In principle, there was nothing else for the administration to do except something like a stimulus bill.” Greenstein didn’t really seem concerned with taking sides, but is interest to see how the push for broadband will turn out.
You can read Greenstein’s posts and others he linked to if you are more interested. I found these posts to be easy to understand, yet informative and supportive of previous opinions I have given on my own blog. Let me know what you think!
In the past few posts, I’ve been talking about this idea of it being the government’s responsibility to pay for the cost of getting broadband access to “unserved and underserved” rural areas. The initial simplified look at this logic seems to make sense, but if you look at the truth behind the broadband stimulus argument, you will see that some over-generalizations have been made. Wrapping up, here is my conclusion, and a summary of the false assumptions that have been made in the creation of this idea.
False Assumption #1: Many people (especially rural residents) don’t have Internet access.
True Statement: Many people don’t have affordable broadband Internet services in their homes. But most of them can get Internet access in one way or another. There are thousands of rural homes who use dial-up because that’s the most affordable option to them, and certain types of broadband is not available to them. Sure, dial-up has limited capabilities, but you can still read news and other educational resources, send and receive emails, and load the majority of webpages.
False Assumption #2: Since the Internet provides so many educational and business-related resources and outlets, providing broadband to more homes would increase education and business.
True Statement: That’s a nice thought, and maybe in a small degree that would be true. But business and education are not the primary uses for the Internet. Most people use the Internet for fun and personal interests. People with broadband have even more fun. With live audio/video streaming at a flawless rate, you can watch movies, play games, listen to the radio, chat live using webcams with friends and random strangers, and the list goes on.
Top 10 most popular websites—see what the majority of online users are doing.
Top 25 uses for the Internet—see this list for more ways to waste time on the Internet.
When you have Internet access, you use it. When you have faster Internet access, you use it more—but don’t expect everyone to start being any more productive, smarter, or richer. How is this a pressing issue for the government (to the tune of over 7 billion dollars), considering what the majority of us are doing online?
False Assumption #3:The increasing use of the Internet for education and business justifies the government to grant billions of dollars to help make it available to everyone.
True Statement: Lets assume that everyone did use the Internet productivity, and that making it more available would boost the economy. Is it really the government’s duty to expand our educational and business resources? Let’s not pretend that education and business aren’t already in place! We are a capitalistic society, we’re supposed to do that for ourselves! Even if this stimulus plan did a world of good—and maybe ten years from now we’ll see that benefit—the government does not have a responsibility to pay for our Internet services.
Where is the government getting all this money anyway? Considering we are deeply (that’s an understatement!) in debt to multiple countries and our accumulated government debt balance grows by gigantic leaps and bounds, I’m afraid to ask!
This “lack of broadband” issue does not present some terrible crisis—people are just tired of dial-up or don’t want to spend a bunch of money for satellite. We aren’t dying or being threatened here! We are still farming, educating, conducting business, and communicating—even if some of us are still using books or have to go to the library to check our email. We’ll find ways to connect to the Internet and develop new ways of spreading broadband to rural areas on our own. Please. Leave the government out of this!