NCTA Weighs in on Broadband Adoption in Rural America

By Peter Bernstein April 11, 2014

It is always intriguing to look at data, and for those readers in the U.S. in particular, you might wish to download the latest study from NTCA – The Rural Broadband Association, by economist Rick Schadelbauer in the paper titled “Conquering the Challenges of Broadband Adoption.” In the report, which provides details on how the U.S. stacks up in terms of broadband adoption to other countries and documents the difference in rates between rural and urban America (a major part of the so-called digital divide), Schadelbauer highlights that three in 10 U.S. adults do not use the Internet at home – and getting them online will be considerably more challenging than connecting the first seven.

He also makes a compelling argument as to the economic value of making the effort to close the adoption gap, even in the face of cost and what I would call Luddite views on technology in general.  As one of the more interesting charts from the report shows, as contained in the FCC’s “Eight Broadband Progress Report,” August 2012, the urban vs. non-urban gap based on speeds remains a policy challenge.

Source: FCC, “Eighth Broadband Progress Report,” August 2012

Without going into the details, the report also cites Pew Research Center survey work as to why even when there is access to broadband adoption rates can be stubbornly lower than might be expected. Readers will also be interested in the supporting data supplied regarding what could be viewed as the magnifier impact of getting those hard to adopt people online. Spoiler alert, given the growth of online transactions, the benefits of for job creation is hard to reach areas, and the impact universal broadband could have in the areas of distance learning and telemedicine, the impact as the report argues would more than justify the cost.

The only area where Schadelbauer lost me a bit was in his contention that smartphones are not a suitable replacement for landline broadband services, albeit with a caveat.  He states:

While users can access the Internet, there are significant limitations that keep smartphones from being the equivalent to a wired broadband connection.

First, 3G and even 4G smartphones cannot consistently approach the connection speeds available via a dedicated home broadband connection. Second, manipulating large documents and forms on a smartphone is considerably more challenging than on a PC. Carriers often place data caps on their users, penalizing those who download significant quantities of data.

Smartphones do, however, have a role to play in encouraging broadband adopters to become part of the digital age. For some, smartphone Internet access is a first taste of what may be available online. As such, it can serve as a gateway, and can encourage users to seek out a more powerful home broadband connection.

There appears to be a mixing of apples and oranges here. This is not about device capabilities or form factors; it is about consumer choices as to the perceived value of the things they rely on and decisions they must make as to how to spend discretionary dollars for communications, Internet and entertainment.  With full appreciation for the fact that NCTA represents the operators of rural communications franchises, where they may also be the Internet, cable and wireless service provider in their franchise area, they certainly have an interest in advocating people’s preferred connections from a purely financial perspective be via fixed connections.

The facts of the matter as several other reports indicate—especially when it comes to Millennials, but increasingly everyone else—is that for voice communications the landline connection is being dropped, and the data plan issue is being addressed via Wi-Fi proliferation. 

At the end of the day, the universal broadband access argument should not be about wired versus wireless used smartphones as a straw man, but rather should be about setting some minimum standards as to what constitutes basic service, i.e. speeds and feeds. It should be about what it is going to take for policy-makers and the industry to do—through some combination of subsidies, public-private partnerships and leveraging the value of technology breakthroughs in the areas of small cell deployments and inexpensive wireless backhaul which will enable high-speed broadband services even in typically hard to reach places—to not only provide universal broadband access but also make it affordable so adoption in universal as well.    

Schadelbauer has provided interesting insights as to where we are. He even praises the efforts over the past several years by the FCC through various initiatives to boost broadband access and adoption, including the broadband adoption pilot program financed in part by Lifeline program funds. However, there remain the fundamental issues surrounding the role of regulation as the world goes VoIP and mobile, the challenges presented by the overturning of the Open Internet (aka Net Neutrality) regime which could lead to higher data prices, and several other key considerations that impact access, pricing and obviously adoption. And, all of these add up to a bigger question, given the importance everyone agrees universal broadband access and use could have on the U.S. economy, and that is whether having universal access to basic broadband at affordable rates is an option or a right. 

The original mandate of the FCC back in 1934 was to extend basic service to everyone at affordable rates and it has taken 80 years to get there but in effect that is a mission accomplished.  It is now time to redefine what “basic services” constitutes in a broadband world.  Once that is agreed upon, adoption is sure to follow. 

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