A long time reader wrote me a note that is worth sharing.
Normally, I use a smaller font size for quotations, but to ease your reading, I’ll keep the size normal:
Have followed with interest your comments on the need to analyze the demand side for broadband before reaching any conclusions about penetration rates.
I agree.
However, we might learn something in this regard from our long experience with narrow band penetration rates. Generally, narrow band i.e. old fashioned local exchange voice service, has been almost universally available, due to cross-subsidies, and penetration rates have been very high (over 90%) in most parts of Canada. (I am leaving aside the more recent replacement of wireline service by wireless).
But there are exceptions. In many communities North of 60, penetration rates for traditional narrow band voice service have been much lower, often in the 60-80% range. From a national policy perspective, some might conclude that our telecom policy “failed” these communities. But, there is another point of view.
The low penetration rates, in spite of massive subsidies, are only a “failure” if one assumes that residents of such communities ought to exhibit demand and consumption patterns that mirror those of the urban south.
Clearly, this reflects a projection of our urban technophile values on all others and an assumption that those who do not adopt such values are wrong or have been left behind. In fact, the residents of many such Northern communities have made an entirely rational economic calculation of cost and value and determined that, for them, telephone service is not worthwhile. If there is any “failure”, it is that of urban policy makers who assume that their own demand and consumption patterns are right for everyone.
We must, of course, recognize, that broadband offers a different (i.e. much wider) suite of capabilities to end users. Nevertheless, in developing a broadband strategy, we should not fall into the trap of assuming that only one set of consumption patterns is right for all.
There will almost certainly be some user groups, including some in urban Canada, who will decline to adopt broadband in spite of any subsidies. Our many years of experience with narrow band subsidy programs has already demonstrated this.
A few years ago, I remarked that it seems patronizing to assume that all rural and remote users require a subsidy for broadband. In our recent report, we observed that some big ticket items like housing are often less expensive in rural areas. We need to understand inhibitors on the demand side – price is only one factor.
Your comments are invited.
