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Copyright © 2002, MCB UP Limited
How essential is broadband?
How essential is broadband?
Concern has been expressed by a wide variety of interest groups that unless those residing in rural and remote areas have access to high-speed broadband networks they will lose out in terms of the benefits from online services such as education, health and government services. These concerns have led to calls for universal service obligations (USO) to be extended to include access to broadband. Aside from the rural lobby, high-tech advocacy groups in the US have also jumped on this bandwagon and called for a kind of Marshall Plan for the popular adoption of broadband to lift the stricken US technology industry out of recession.
But how strong is the case for extending USO to broadband? So far, take up of broadband has been disappointing. Only South Korea has embraced the technology in a big way – it is estimated that, taking cable modems into account, about 54 per cent of South Korean households have a broadband connection. In North America, where cable modems are bigger than DSL, the percentage of households with broadband connections has reached 25 per cent in Canada and 12 per cent in the USA. But growth in South-east Asia and North America is slackening and Western Europe is finally catching up.
Sceptics of extending USO to broadband argue that it is difficult to make a convincing case that, at present, broadband provides access to any "essential" education, public health, or public safety offering. Broadband is currently subscribed to by only a relatively small minority of residential customers and we are a long way from the point at which a substantial majority of residential customers become subscribers. Indeed, we should question the value of broadband to residential customers. Residential consumers are not subscribing to broadband access because they do not see the need for the service. That's because the majority of people still use the Internet primarily for e-mail, instant-messaging, and ordering items from online retailers.
Despite the well-documented problems with roll-out, for the majority of residential users there is still insufficient reason to justify the cost of upgrading to broadband. Of course as costs come down and more attractive content and services are added, then the value-for-money equation may make increasing sense. But even in South Korea, there are indications that broadband penetration will level off at 60 per cent.
If, as seems likely, policy makers agree that the case for extending USO to broadband for residential customers is not compelling, they may adopt a different strategy. There is a still a strong case in terms of social and economic benefits for providing improved online public services throughout the country. For instance, the development of national high-speed networks connecting hospitals, general practitioners, laboratories and pharmacies would bring enormous benefits. And, importantly, it is projects such as this that will drive the expansion of broadband into rural areas as government departments and telecommunication operators cooperate with each other.