Are Broadband Cost and Benefit Out of Alignment?

"Better broadband" is no less a "desirable thing" than better roads, bridges, elecrical grids and resource management programs that actually could work. So with decarbonization, elimination of disease, clean drinking water and sanitation, social equity or quality education. We always have multiple problems to solve.

But opportunity costs always exist. More of one thing means less of the others. Occasionally, it might be helpful to evaluate our priorities. We desire many positive outcomes, but our resources lag our ambitions. So cost and beneift always are legitimate questions.

Virtually all government programs to close the digital divide are touted as important because--it is is argued--broadband leads to economic growth. In fact, careful reports only use the word correlation, not “causation” when discussing broadband and economic growth. 

Often, even correlation cannot be shown, as is the case with much “foreign aid.” Still, correlation often does exist, and for obvious reasons. Some regions and industries are fast growing. It should come as no surprise that areas such as Silicon Valley show both high growth and high broadband availability. 

But it never is clear which holds: high growth leads to wealth; and wealth leads to excess spending power; which leads to demand for quality broadband, good restaurants and other outcomes associated with areas of high income. 

To use a phrase, perhaps high economic growth, high wealth, high educational levels, some industries and lots of younger people lead to quality broadband demand and supply, rather than broadband causing those outcomes. 

Will quality broadband really boost economic growth in sparsely settled rural areas far from urban centers, already losing residents and already suffering from low economic growth? 

To be sure, there is virtual agreement that universal broadband is a good thing, as universal telephone service, universal mobile service, electricity, education or medical care are  considered good things. 

But there still is no actual evidence--possible correlation, but not causal proof--that broadband access--or better quality broadband access--actually does “cause” economic development. 

Nor, for that matter, are many government reports actually clear about the differences between supply and demand issues; consumer choices and supplier business choices; or the ways people actually use the internet as it relates to potential economic benefit.

Reports often confuse “people who choose not to buy a product” with “inability to buy.” The former is a matter of consumer choice; the latter a supply chain issue. It is one thing to say “few people buy gigabit internet access.”

But that does not mean they “cannot buy.” They may choose to buy a different product, such as access at 200 Mbps. 

And while the internet can be used to conduct homework or conduct work,  it mostly gets used to “watch TV,” or engage in social media. 

Few--if any--really believe watching TV or engaging with non-business social media has a positive impact on economic growth in a direct sense, important though it is as a driver of income for influencers, advertisers, writers, directors, actors, studios, streaming services and TV networks. 

Beyond all that, improving broadband involves opportunity costs: other uses for that capital that are not undertaken because we spend the money on broadband. In a broad sense, all public policy choices involve such trade offs: things we cannot do because we chose to do something else.

Quality broadband is a good thing, don’t get me wrong. But it might not have nearly the economic upside people often wish to believe.