Search Results for: incentives

The Information Technology & Innovation Foundation released a report [ pdf, 330KB] last week called Policies to Increase Broadband Adoption at Home. That policy paper follows a study [ pdf, 600KB] conducted by Janice Hauge of the University of North Texas and James Prieger of Pepperdine University that examined Demand-Side Programs to Stimulate Adoption of Broadband: What Works?

The impetus for these reports was a statistic that should ring a familiar tone for us in Canada: between 92 to 94 percent of U.S. households can subscribe to broadband but only approximately 65 percent subscribe. Why?

We have asked that question a number of times over the past year or more in respect of Canadian broadband adoption and most recently, we raised the issue in our October report [ pdf, 944KB], Lagging or Leading. The ITIF report suggests that there are a variety of reasons why people choose not to subscribe to broadband. The three factors cited in the ITIF report are:

• affordability (e.g., of the service or a PC),
• usability (e.g., lack of digital literacy skills, physical handicaps), and
• lack of relevance or perceived value (e.g., consider Internet a waste of time).

The report finds variability in the relative importance of these factors based on the type of individual. For example, among higher income, older Americans a lack of interest may be a more important factor than the cost; for lower-income, younger households, cost may be more of a deterrent.

If the United States is to achieve near universal broadband adoption—on the order of telephone adoption rates—at least in the near to moderate term, the federal government will have to develop and implement policies designed to spur broadband adoption.

The North Texas / Pepperdine study examined the evidence available on the degree to which demand-side programs have fulfilled their purpose of stimulating broadband adoption.

On the spectrum from national to local programs:

• Nationally funded programs with inadequate oversight can lead to waste, fraud, and abuse.
• Local programs have more complete knowledge of the barriers to adoption in the community.
• Local efforts can better ensure that programs are utilized by the intended recipients.
• Local efforts may have limited capability to collect and evaluate data.
• National efforts may have more capability to collect and evaluate data.

We need to ensure that our national broadband strategies provide incentives for continued investment in advanced infrastructure, a topic to be picked up further at another time.

But, we also need to emphasize the demand component of broadband adoption. Both of these reports reports are worthwhile reading – adding to the knowledge base as Canada continues to develop our national digital strategy.

My electric utility came to the house on Wednesday and installed my new smart meter. Earlier this year, we installed the Peaksaver thermostat.

The idea behind the smart electric meter is to enable the utility to charge differential prices based on the time-of-day or day-of-week when we consume power.

The Peaksaver thermostat not only enables some very cool programming and remote internet access, but also permits the utility to kill the air conditioner for a brief period (hopefully not noticeable) during the hottest, most power intensive days of the summer.

I wonder if the concepts behind these capabilities might find application by a creative ISP.

For example, internet services don’t really have a monthly capacity constraint; monthly download caps are a convenient measure of total consumption for proportionate allocation of resources, but the pipes are really provisioned for peak load. For real-time applications, like voice calls and streaming content, ISPs need to make sure there is sufficient capacity to handle everyone’s aggregate requirements. Less sensitive applications can be delayed slightly without any impact.

Outside of the peak, it doesn’t matter as much if an individual user is consuming a little or a lot; the network capacity is sitting available.

It seems to me that an ISP might want to create a service offering that provides user incentives to shift loads out of the peak – for example, offering software utilities to make sure those routine software updates are scheduled to downloaded during slower network loads, and perhaps exempting such behaviour from contributing to the download caps.

What about another product that permits interruptible service? Rather than degrade all bandwidth intensive traffic, would some consumers be interested in a service that cuts certain bandwidth intensive applications at peak times – like killing the air conditioner on peak electrical days.

Of course, these kinds of network based developments require network operators to have the flexibility to deploy and use technologies like DPI interfacing to various billing and management systems – and to advise customers on what is going on.

Would such services help preserve flat rate internet for some users, while providing effective economic internet traffic management?

Xchange is reporting that the FCC is surveying citizens to find out why people with access to broadband still aren’t signing up.

Sound familiar?

At a session at Supercomm, the FCC spoke about low adoption rates as a key hurdle, rather than access.

The FCC is developing a national broadband plan that aims to expand broadband reach to all U.S. residents but policymakers still have to figure out why some people resist subscribing to broadband.

As we wrote last week, in our recent report, we made the same observation and two of our recommendations dealt with this issue.

• Shift more attention to adoption issues (including adoption of next-generation services) and encourage socio-economic research focused on better understanding the obstacles to, and inhibitors of, broadband adoption
• Consider programmes to improve digital literacy and the use of incentives (tax-based or otherwise) to target and overcome any barriers to broadband adoption

Which side of the border will act first on demand-side programmes to overcome barriers to broadband adoption?

The release of our report [ pdf, 944KB] was greeted by the popular media with an interesting reception.

We have provided a Canadian interpretation of the body of studies regarding broadband services. Many folks, despite evidence to the contrary, seem averse to any consideration that studies issued by reputable foreign institutions could contain errors.

Some criticisms of our report seem to reflect naivete, ignorance of econometrics or a lack of real world experience. I was struck especially by comments that ridicule the role of satellite in completing the job of providing universal access to broadband in our country – together with most nations. If Australia’s NBN can’t reach more than 90% of its population with wireline facilities, despite plans to spend more than $40B over the next 8 years, exactly what policy will do better in Canada?

Is satellite a perfect substitute for terrestrial solutions? No. But, it is unrealistic to expect any other technology to be able to serve the minority of Canadians who live in areas with low household density. Would armchair critics prefer to have rural Canadians wait indefinitely for fibre to the farm, rather than improve their accessibility through next generation satellite?

The current federal broadband program recognizes this reality:

The Broadband Program will be technology neutral, accepting a variety of wireline and wireless technology solutions, such as fibre, digital subscriber line (DSL), cable and wireless networks (ground based and satellite).

Canadian ISPs aren’t done; there is an ongoing need for more investment, to continue to compete to attract more customers and increase the service levels to those already on-line. Facilities-based competition isn’t just the domain of cable companies and telcos; there are hundreds of entrepreneurs with regional and national networks, competing with all forms of infrastructure.

The report indicates that service providers are already investing about $8B-$10B per year on their networks and there is no indication that this is coming to an end. That is a lot of money – about $50 per month per Canadian household in capital expenditures.

Broadband adoption has two components: supply and demand. Among the recommendations in our report were two suggestions to support each of these factors.

On the supply side, we have recommended that the government should continue to encourage private sector investment in infrastructure:

• Continue policies focused on fostering facilities-based competition
• Build on the past success of private sector investment by removing current policy and regulatory uncertainty regarding investments in next-generation networks

And on the demand side, an area generally overlooked by policy makers, we suggested that research is needed:

• Shift more attention to adoption issues (including adoption of next-generation services) and encourage socio-economic research focused on better understanding the obstacles to, and inhibitors of, broadband adoption
• Consider programmes to improve digital literacy and the use of incentives (tax-based or otherwise) to target and overcome any barriers to broadband adoption

Supporting programmes to increase demand and overcome barriers to broadband adoption are a competitively neutral approach to get more Canadians on-line.

What do you think we need to do to improve Canada’s broadband adoption rates.

For months now, I have been writing about the disturbing lack of context in respect of some reports examining the state of Canada’s telecommunications industry, especially those that have cited various OECD studies released over the past few months.

As I wrote in June, it has become increasingly clear that the OECD’s analysis is flawed.

The failure by so many to analyse the data appears to confirm what President Barack Obama said recently in a newspaper interview:

I am concerned that if the direction of the news is all blogosphere, all opinions, with no serious fact-checking, no serious attempts to put stories in context, that what you will end up getting is people shouting at each other across the void but not a lot of mutual understanding.

Countless statistics and rankings have been developed regarding the state of broadband networks in countries around the world. Yet, the sum total of all this work may have clouded the issues and caused confusion among policymakers and other stakeholders.

Canada is no exception. While some paint a picture of crisis, others argue that Canada has enviable broadband infrastructure and is well-positioned for the future, despite facing unique geographic challenges.

One matter that is uncontested is that the stakes are high. Countries around the world see information and communication technologies (ICTs) like broadband as key to their economic futures. In Canada, as in other countries, these issues are important to the economic present as well. Canadian telcos, cablecos and wireless providers invest between $8B and $10B each year in advanced communications infrastructure. These investments support $54B in revenues and provide jobs to more than 140 thousand Canadians.

ICT policy sets an enabling foundation for Canada’s participation in a global knowledge-based economy.

A group representing Canada’s largest internet service providers commissioned my firm to study the issue. Today, we are releasing our report [pdf, 944KB] that seeks to clarify the facts, dispel myths and provide the analysis needed to constructively move the issues forward and facilitate a more informed debate.

The report concludes that Canadians benefit from a robust, diversified broadband infrastructure. All Canadians who want to subscribe and pay for broadband can obtain service. We have 100% availability when you consider all the technology choices available. The vast majority of Canadians benefit from a world-leading level of choice in access to broadband technologies, using twisted pair, coaxial cable, wireless (fixed and mobile) and satellite.

Moreover, Canadians have access to some of the most affordable services, while also benefiting from some of the world’s fastest connection speeds for both wireline and wireless broadband services.

In terms of adoption, Canada continues to lead all G-8 countries in adoption of internet services, and ranks in the top ten for most international comparisons on broadband penetration and speeds, contradicting last week’s student project from the Said School of Business at Oxford.

With almost 70% of Canadian households already subscribing, there remains a significant opportunity to expand broadband adoption even further.

The report recommends:

• As we go through the process of developing a national ICT strategy, recognize the true state of Canada’s ICT infrastructure
• Continue policies focused on fostering facilities-based competition
• Build on the past success of private sector investment by removing current policy and regulatory uncertainty regarding investments in next-generation networks
• Shift more attention to adoption issues (including adoption of next-generation services) and encourage socio-economic research focused on better understanding the obstacles to, and inhibitors of, broadband adoption
• Consider programmes to improve digital literacy and the use of incentives (tax-based or otherwise) to target and overcome any barriers to broadband adoption

You may download the complete report here [ pdf, 944KB]. It provides the context to enable a better understanding and discussion of the issues for expanding broadband in Canada.