of speed is not
a barrier to viable
while other aspects
of quality are.
broadband. Telecommuting, for example, could reduce resources society
consumes, such as those used for physically commuting. That is only beginning to happen.
In short, how business incorporates
digital communications technologies will have a much bigger effect on
our standard of living over the next 20
years than will whether we reach 70%
household broadband penetration in
six months or a year.
Quality of Service Beyond Speed.
Speed is but one element of broadband quality. Other factors like jitter,
latency, and lack of fluctuations in
quality also matter, but we know almost nothing about how consumers
value other attributes of quality. Perhaps lack of speed is not a barrier to
viable new applications while other
aspects of quality are.
between experiences, people,
and technology, showcasing
emerging innovations and industry
Focusing on the wrong metrics will do
more harm than good. If we care about
broadband adoption then we should
stop focusing on availability. It is a
much smaller problem. If we are worried about broadband quality, then we
should focus on the aspects of quality
businesses and consumers truly value,
not merely speed. If we are worried
about how broadband affects entrepreneurship and economic growth,
then we should focus on barriers businesses face in integrating connectivity into their production processes. If
we believe wireless connectivity is increasingly important, then we should
focus on developing metrics for wireless and spectrum.
band use has implications for the
direction of broadband innovation,
competition, and adoption.
If the trend toward wireless use and
mobility continues—and there is no
guarantee it will, given the rapid succession of changes in what we think is
important—then issues like spectrum
policy should move to the forefront
of all broadband policy issues. But we
have little detailed cross-country information spectrum policy.
Business Use. Popular broadband
metrics contain another misleading feature: they focus on residential
broadband. Yet, residential broadband connections are unlikely to
have large effects on net economic
activity (see Wallsten3). Residential
connections are used primarily for
personal communication, shopping,
and consuming news and entertainment. Much of business-to-consumer
e-commerce, for example, reflects a
shift in economic activity from “brick
and mortar” to online retail rather
than new economic activity. These activities largely represent transfers of
economic activity rather than net new
How digital communications technologies change business production
processes, however, is more likely to
determine whether these new technologies will have transformative economic effects. The direct economic
effects of business use dwarf residential use. According to the U.S. Census,
while business-to-consumer revenues
reached almost $300 billion in 2009,
they were an order of magnitude less
than business-to-business revenues of
about $3.1 trillion.
To be sure, productivity benefits
may ultimately flow from residential
1. rosston, g.l., savage, s., and waldman, d. household
demand for broadband Internet service. The B.E.
Journal of Economic Analysis and Policy 10, 1 (sept.
9, 2010); http://www.bepress.com/bejeap/vol10/iss1/
2. rosston, g.l. and wallsten, s. the path to universal
broadband: why we should grant low-income
subsidies and use experiments and auctions to
determine the specifics. The Economists’ Voice 8, 1
3. wallsten, s. the future of digital communications and
research. Federal Communications Law Journal 63, 1
(dec. 2010), 33–42.
4. why broadband service in the u.s. is so awful and one
step that could change it. Scientific American (oct. 2010).
Scott Wallsten ( email@example.com) was the
economics director for the FCC’s national broadband Plan.
he is currently Vice President for research and senior
Fellow at the technology Policy Institute and a senior
Fellow at the georgetown Center for business and Public