At the Senate hearing on broadband adoption yesterday, Senator Marco Rubio asked three essential questions. However, he could have asked two additional questions.
After listening to testimony to the effect that broadband adoption stands at 70% in the US, Senator Rubio first asked how he could explain to his constituents why they should care about broadband adoption. The answer from the panel was twofold. First, a good deal of the homework in schools effectively requires students to have access to the Internet in order to be competitive. And second, a huge number of the Fortune 500 companies require applications for good jobs to be submitted online.
Next, Senator Rubio asked, if 70% adoption is not adequate, what percentage should the government realistically be trying to promote. On this point, it’s important to distinguish availability from adoption. The panel showed that broadband, including wireless broadband, is available in 98% of the US, effectively universal availability. So the issue is that despite its availability, some consumers appear to be unable or unwilling to adopt its use. The answer from the panel appeared to be that 80% adoption is probably a realistic goal. Viewed in that light, there is a ten-percent gap between adoption and a reasonable target goal, not the crisis that broadband adoption in the US is often made out to be.
Finally, Senator Rubio pointed out that most people who are on the go need wireless broadband, while most of the government’s efforts seem to be focused on wired broadband, and he asked the panel what should be done about that. The panel strongly agreed with Senator Rubio on this point. They pointed out that Tier One of the E-Rate program, which has gotten the lion’s share of the funding, simply connects schools to high speed Internet. Tier Two is what is needed to distribute Internet access throughout all the classrooms, typically wirelessly, but Tier II has in many cases been neglected.
These were all great questions, but there were two more that should have been asked, and they both come from an essential fact about broadband that simply wasn’t addressed at the hearing but should have been. People don’t buy broadband. They buy broadband bundled with something else.
In the case of wireless broadband, users typically buy it bundled with voice minutes. The voice service may cost more than the data service, so wireless broadband is the tail being wagged by the voice service dog. This business model is not set in stone, and certainly is not mandated by any technology barriers to handling calls over the data network. In fact, voice calls require very little data transmission compared to other services. So a fourth question would be, would it promote wireless broadband accessibility and adoption to evolve the wireless business model to integrate voice and data on wireless networks.
In the case of wired broadband, users also typically buy it bundled with another service, typically cable television. Here again, broadband is the tail not the dog, since cable television service typically costs more than the associated broadband connection. Importantly, access to both the cable television and broadband service typically comes through devices owned and controlled by the cable operator. Like the wireless business model, the wired business model is not set in stone or technologically mandated. Per our prior post on this subject, the FCC CableCard rules for set top boxes have failed. Instead, software-defined security would allow customers to use the set top boxes they choose and access whatever services they choose. So a fifth question would be, would it promote broadband accessibility and adoption to evolve the wired broadband business model to an open market for set top boxes.