The rural broadband debate has been in the news a lot lately. Yesterday, DSL Reports ran a story sharply criticizing a report released by the US Internet Industry Association (an ISP lobbyist firm). But as Ars pointed out, the report actually offers some facts revealing that broadband availability in the U.S. isn’t nearly as bad some have suggested.
79 % of homes with a phone line can now get DSL, and 96 % of homes with cable can get broadband. Considering just about every home has a phone line, and most people have cable, these numbers suggest the main reason for the lack of rural broadband users isn’t the lack of availability, but the lack of adoption. Of course, rural areas have slower speeds and higher prices than urban areas. This makes sense, because building out a network in low-density areas costs more per subscriber versus urban areas, where a single apartment complex can house hundreds of users.
Still, groups argue that massive government subsidies are needed to promote broadband deployment in rural areas. ConnectedNation (a Washington-based non-profit) released a report a couple weeks ago, “The Economic Impact of Stimulating Broadband Nationally”, which concluded that accelerating broadband could pump $134 billion into the U.S. economy.
According to the report, high-speed web access is massively beneficial to subscribers. The report, which obtained most of its data from surveys of broadband subscribers, found that the average broadband user reports savings of $217 a year “as a direct result of becoming healthier through obtaining healthcare information online.” On top of this, the average user reports driving 102 fewer miles per month on account of shopping online.
These figures strike me as quite unrealistic. No surprises there—economists find that when responding to surveys, consumers notoriously overestimate their true reservation price. To be sure, web access can reduce the frequency of trips to the doctor or the store. But annual savings of $217 in medical costs, and 102 fewer miles driven per month, are inconceivable to me—and I visit WebMD and shop online all the time.
If consumers value broadband so much, why are so few of them willing to pay the premium for living in rural areas? You’d think that if signing up for broadband lets people cut back on mileage, save time, and reduce medical bills, that even at $75 or $100 a month broadband should be a real bargain for consumers living in the countryside. Yet many rural residents still decide not to get broadband.
In reality, subscribers probably vastly overestimate the value of high-speed Internet access. Actions speak louder than words, and actual broadband statistics suggest that people living in the countryside value broadband a lot more when somebody else is paying for it.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.