Public policy success always is harder than you might think, if only because the causal relationships between a policy and an intended outcome are tough to confirm, and often because unintended consequences are common as well. At other times policy failures are hard to diagnose or predict. But policy failure rates arguably are fairly high, despite good intentions.
An examination of a recent program to increase broadband internet access adoption and quality might provide an example. “we find no positive effect on home broadband adoption from programs funded by the Broadband Technology Opportunity Program (‘BTOP’),” say economists George Ford, T. Randolph Beard and Michael Stern.
BTOP, which added about $4.7 billion to ongoing efforts to supply access to the estimated six percent of U.S. households without terrestrial network access to internet access at a minimum of 25 Mbps, seems to have had no effect.
“We find no effect of the BTOP programs on home broadband adoption,” the economists say. “The evaluation of BTOP and similar programs has been done before. As for BTOP generally, econometric analysis by Hauge and Prieger (2015) found that the effect of the BTOP “stimulus spending on broadband adoption may well be zero.”
Another study found the “program had no significant impact on broadband adoption rates.”
That is not to say success, measured as service adoption, is impossible. Comcast’s program for low-income customers seems to have added as many as eight million households. Generally speaking, lower prices tend to spur higher buying rates for any desired product. The issue is that many “non-buyers” of internet access have reasons for not buying that are not strongly affected by price reductions.
“Though using an admittedly crude calculation, Rosston and Wallsten (2019) estimate the own-price elasticity of demand for broadband (for low-income households) to be only about 0.10 to 0.13. A 10 percent reduction in price only increases subscriptions by about one percent,” the authors say. Other studies suggest similar low price elasticity.
“It does not appear that price is the primary reason for non-adoption,” they conclude. According to U.S. Census Department surveys, most people who do not buy internet access report they do so because they “do not need it.” Perhaps only half a percent of non-buyers say “price” is the reason they do not buy.
One might well draw the conclusion that the drive to make such access available is fully consistent with our presumed general positions on equity: everyone should be able to avail themselves of internet access. That is perhaps an obviously different goal from “everybody uses the internet,” which is a choice individuals make.
It is worth noting that individuals also vary in the means they use to satisfy that need. A significant percentage of consumers consciously choose to buy mobile access rather than fixed access, as their sole form of access.
And some people, especially some older people, might never decide they “need” the internet. That is a generational issue that fixed itself with time. There was a time when many older people believed they did not need linear video services. Many more might believe they do not need streaming video, either. Those demand profiles change over time.
The point is that public policy is a devilishly complicated endeavor. Even well-meaning policy goals may miss the mark. Ensuring that everyone has quality fixed network internet access seems a well-established and rational policy aim.
We might still find that some people do not wish to avail themselves of such services, even when price is not a barrier, especially when substitutes (mobile access) are available.
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