Why Governments Can't Provide Broadband

By Richard Martin

The new ITU report on global Internet access, World Telecommunication/ICT Development Report 2010, is one of those laudable but toothless documents that sets out an ambitious goal for world progress, exhorts governments to commit resources to achieving that goal, and then attests, through its own futility, to the impossibility of doing so.

The ITU wants governments to ensure that half the worlds population (3.4 billion out of the total 6.8 billion people on Earth at last count) has access to broadband Internet service by 2015. This at a time when nearly three-quarters of the population has no Internet access of any kind, a figure that rises to 90 percent in the developing world.

For some perspective, the U.N. Human Development Report said in 2006 that half the worlds population faces water-supply problems: 1.1 billion people have inadequate access to clean, safe water, period, while another 2.6 billion lack basic sanitation.

Among the concrete steps the ITU recommends governments take are licensing mobile broadband operators, ensuring that broadband infrastructure is accessible to all citizens, and continuing to commit resources to connecting educational institutions to the Internet. And, ah yes, setting clear policy targets and monitoring progress.

In other words, keep doing what youre doing now. At this rate, half the world will have broadband Internet access in 25 years, not five.

In fact, the ITU report, as many such non-governmental organization (NGO) efforts do, inadvertently highlights the fact that most governments today are incapable of accomplishing public-infrastructure tasks like ensuring a majority of their citizens have high-speed Internet access. Consider the countries that have achieved the highest rates of broadband penetration, according to the OECD: they tend to be small, affluent Western European nations with social-democratic governments and high taxes, like the Netherlands, Denmark, and Switzerland the exception being South Korea, a small Asian nation which has an intensely communications-driven economy and a high proportion of leading information technology companies. And even those high-broadband countries have less than 50-percent penetration: the Netherlands has 38 broadband subscribers for every 100 inhabitants (the penetration rate quickly goes above one-half if you assume that for every subscriber more than one person has access).

Or consider the U.S., which ranks a dismal 15th in the OECD rankings. Two months ago the federal government released a National Broadband Plan that calls for near-ubiquitous access in the next few years, while laying out the obstacles that will almost certainly prevent that from happening. The NBP (which some overseas wags have dubbed Not Bloody Possible) comes on top of $7.2 billion in broadband stimulus funding, passed as part of the American Recovery & Reinvestment Act in February 2009, that aims to create jobs and promote economic growth by providing high-speed Internet access, at reasonable prices, for all Americans.

So far, that seven billion has led to charges of overbuilding (the duplication of existing networks that were built and paid for by rival operators), without a noticeable spike in broadband penetration rates. Admittedly, its too soon to really judge the broadband stimulus; but its telling that, in fact, rural ISPs have achieved remarkable growth rates in broadband subscriptions without federal dollars.

According to research consultancy comScore Inc., broadband penetration in rural markets, defined as areas of 10,000 or fewer people, hit 81 percent in the fourth quarter of 2009, marking a jump of 13 percentage points in a single year. Thats attributable to market forces more attractive service offerings, better technology, and shifts in customer attitudes not to government initiatives.

To truly achieve the goal of universal broadband, said Michael Brunner, head of the National Telecommunications Cooperative Association, a trade group for rural providers, the FCC plan must accurately account for all of the costs associated with providing high-quality, affordable broadband to rural and remote areas throughout the country. Put simply, the plan fails to do this right now.”

One sector where the free market is spreading connections to the global communications grid is mobile and wireless, where remarkable penetration rates are being achieved, again without government support and subsidies. Wireless cellular networks now cover nearly 90 percent of the world population, a figure that should hit 100 percent by 2015. By any measure that is an extraordinary accomplishment. By comparison, it took television some six decades, dating from the televised Joe Louis-Billy Conn prizefight in 1946, to achieve 90-percent-plus coverage of the world population.

The ITU believes that by 2015, more than half of the world’s population will be using a mobile telephone, wrote Sami Al Basheer Al Morshid, director of the ITU’s Telecommunication Development Bureau, in the preface to the report.

Using a mobile phone, however, does not equate to having broadband Internet access. Despite the best intentions of governments and policymakers, only the market can accomplish that.