Broadband Payback Not Just About Subscriber Revenues

Publication Date: 
January 6, 2011
Author(s): 
Joan Engebretson

For years, telephone and cable companies have claimed there is little demand for better networks because they cannot identify a single "killer app" that needs 100Mbps or 1Gbps. Recently, I've heard from kindred spirits saying that the "killer app" is the network itself.

This is a smart response.

Imagine someone demanding we dismantle the Interstates unless we can identify a single use that makes them worthy. The proposition is absurd. There are thousands of ways the Interstates are used. Some -- like ensuring the military can move about the country quickly -- are quite important whereas others are important only to a few people (as when my family goes on vacation).

We are all better off because we have such a robust transportation system. Our markets are more efficient and we have greater freedom of movement. We all also bear the cost (whether it be through taxes, pollution, or other impacts … and yes, we bear that cost unevenly). Roads have been essential infrastructure for centuries -- few argue they should only be built where those along the path can pay for the full cost of doing so.

Access to the Internet is rapidly becoming as important as the roads have long been. Whether for economic development, education, health, or quality of life, a lack of fast, reliable, and affordable access to the Internet diminishes all.

For years, rural cooperatives have built telecommunications networks in rural areas where no private company would dare invest. Joan Engebretson explains why "Broadband Payback is not Just About Subscriber Revenues.".

Antique Phone

The upshot is that in doing a cost/ benefit analysis on telecom infrastructure investment, it’s important to take into account not only the direct revenues that the infrastructure generates but also the dollars that flow into a community as a result of the investment.

Imagine trying to sell a home today that only had party line phone service and think about the impact that would have on the value of the home. Now apply that logic to broadband. With two-thirds of U.S. households accustomed to having broadband connectivity, I’m already hearing that homes in areas with inadequate broadband coverage are becoming more difficult to sell. And that situation is only going to get worse as young people who never knew a world without broadband begin to buy homes.

The value of expanding communications (through increased access to the Internet) lies not the communication itself but in everything that communication allows. And that is a big universe.

Community networks are often demonized by massive cable and telephone companies for "failing" when they do not create profits in the first 3 years. But it hard to imagine a worse way of measuring success. The goal of the network is to increase economic development, ensure a higher quality of life, and generally produce a variety of indirect benefits that are extremely difficult to measure -- if anyone were even to try (most do not).

Few demand that local governments turn a profit on the roads they manage within 3 years of building them. It makes no more sense to make such a demand of community networks.

Antique phone photo used under creative commons license, courtesy of Sreenath H B.

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