Of all the missed opportunities of the New Economy, none is more disappointing
than the slow adoption rate of broadband Internet connections in the home.
Missing out on broadband means missing out on the power of the Internet.
High-speed, always-on connections do more than reduce the infamous waiting
associated with surfing the World Wide Web. Widespread broadband in the
home unlocks some of the greatest potential of the Internet as a communications
and productivity tool. The economic impact of ubiquitous broadband is
estimated to be in the hundreds of billions of dollars, and the cultural
impact can be just as great: Broadband can fulfill the Internet's promise
to transform the way we work, learn, and live.
So far the debate over broadband policy has focused on availability of
broadband services. But the statistics suggest that the real problem is
low demand for those services: Seven out of 10 American homes have access
to at least one kind of broadband service, such as cable or DSL, but only
20 percent of those actually subscribe. The rest simply don't believe
the cost is justified by the Internet uses currently available to broadband
subscribers. To accelerate the adoption of broadband, therefore, we should
also work to increase the usefulness of high-speed Internet connections.
Of course, stimulating demand is not as easy as it sounds. Developing
applications and services for broadband requires heavy capital investment
aimed at a customer base that is currently quite small. Moreover, the
usefulness of many broadband applications, such as videoconferencing,
depends heavily on who else in the user's universe also has the connection -- having
it is useless if nobody else has it. (The same problem applied to the
early adoption of fax machines.) Finally, many of the most useful applications
will require "fat" broadband connections, with higher data speeds
than are now available in a typical cable or DSL connection.
This creates a chicken-or-egg dilemma, and while the market will lead
the deployment of broadband service, there is plenty that government can
do to resolve the impasse. An omnibus broadband demand agenda would focus
on several key goals.
Encourage Internet usage generally. More than 40 percent of Americans
still have no Internet connection at all; many of these non-users feel
the Internet is either unsafe or not very useful. Both these problems
should be aggressively attacked by governments at all levels.
With respect to safety, Congress should pass appropriate legislation
to protect the privacy of Internet users. With a baseline set of protections
and a chance to "opt out" of uses of their personal data that
they don't like, people will feel much more confident about using the
Internet. Congress should also encourage the development of tools that
empower users to protect themselves, such as the Platform for Privacy
Preferences Project, or P3P, which allows users to create customized privacy
settings in their browser software. So does the Internet Content Rating
Association, or ICRA, which allows users to block web sites with sexual,
racist, or violent content.
Perhaps most important, Congress should pass legislation requiring the
labeling of unsolicited commercial e-mail, or spam. The increasing flood
of spam into email in-boxes, particularly spam promoting illegal schemes
or sexually explicit content, has been a major impediment to increased
Internet usage. Labeling requirements would let users send unwanted spam
straight to the trash folder.
Governments at all levels can also work to make the Internet more useful
in a number of ways. First, more government transactions should be brought
online. There are numerous efficiencies to be gained from automating government
services -- from voting to renewing hunting licenses -- while simultaneously
making the online environment more useful to citizens. States should follow
the lead of the federal government in developing legislation promoting
more online government services, such as that proposed by Sen. Joe Lieberman
(D-Conn.) and Rep. Jim Turner (D-Texas). Governments can also help ensure
that users directly benefit from the economic savings of Internet usage
by discouraging middleman protectionism. For example, a number of states
have passed laws that effectively prohibit online sales of products ranging
from cars to caskets to contact lenses, even though buying online can
mean considerable savings for consumers. Most of these laws are designed
to protect the politically connected offline retailers (such as wine stores
or auto dealers) at the expense of online consumers, and should be eliminated.
Encourage digital content. Music, movies, books, television programs,
video games, and other content are widely expected to be the "killer
app" for broadband -- the main reason users will want the service.
Many content providers are reluctant to distribute their products online,
however, for fear of piracy (think Napster and its clones) or of alienating
their traditional retail and promotion channels (the brick-and-mortar
stores selling records, books, and videos). Ongoing fights over royalty
payments by Internet radio stations and "digital rights management"
to protect content from piracy are slowing the deployment of the content
most likely to stimulate broadband demand.
But government can act to break this logjam. Congress should appropriate
funds to the Corporation for Public Broadcasting for a "pump priming"
project that would lead the way for distribution of PBS programming over
the Internet as well as over the air -- a comprehensive webcasting system.
Congress should also encourage digital distribution of education content
by funding online museums, including a national online science museum,
and by making curriculum materials more readily available online. At the
same time, Congress ought to establish a National Digital Lending Library
that purchases licensed digital copies of books and periodicals and lends
them out one at a time to citizens with digital library cards issued by
local libraries. These electronic books would contain digital rights management
tools to prevent unauthorized duplication -- one borrower at a time -- and
ensure an on-time "return" to the library by becoming unreadable
on the due date, unless properly renewed.
Encourage transformative applications. The greatest benefits of
broadband connections in the home will come from transforming the way
we work, learn, and live. Telecommuting, for example, can boost both productivity
and quality of life by taking workers out of rush-hour traffic. Distance
learning initiatives can bring the nation's best teachers into the home
and facilitate the lifelong learning and skills training necessary for
workers to prosper in the New Economy. Most important, telemedicine can
enable our aging population to live independently at home under the constant
care and supervision of trained health personnel.
These new applications are being held back by laws and programs designed
for the last century. Tax laws encourage businesses to buy equipment for
their offices but penalize them for equipping their workers' homes for
telecommuting. Rules requiring students to spend a certain number of hours
"in seat" to qualify for financial aid promote classroom presence
over online learning. The Medicare payment structure encourages long-term
care at nursing homes and other facilities because no payments are made
for services rendered in the home. These rules need to be revised to account
for new technology and what eventually will become an entirely new way
of doing things.
By taking these steps to stimulate demand for broadband connections in
the home, policymakers at all levels can tip the cost-benefit factor for
consumers in favor of broadband adoption and help telecommunications companies
recoup their investments in bandwidth capacity. Once the broadband ball
is rolling, the next wave of the New Economy will not be far behind.
