May 2009

The Role of Communication Infrastructure Investment in Economic Recovery

The recent economic downturn has led policy makers in OECD countries to consider fiscal policies to help return their economies to growth. Most of these plans involve large government expenditures to support demand for goods and services while simultaneously increasing the longer-term productive capacity of the economy. Investments in network infrastructures such as electricity, gas, water, transportation and communications are key elements of most packages due to their immediate impacts on demand and employment as well as their strong potential to expand future supply. Broadband infrastructure, in particular, can be a good target for economic stimulus spending because many projects can be initiated relatively quickly, are labor-intensive, can minimize economic leakages, and may promise stronger marginal impacts on supply and productivity than investing in established networks such as electricity, gas, water and transportation. The strongly pro-cyclical nature of communication network investment also means that skilled labor and equipment may be left idle and planned projects shelved until the economy improves. This labor and equipment could be quickly shifted to government-sponsored projects. At the same time, governments must ensure that interventions do not interfere with properly functioning markets or displace private investment. This paper argues that policy makers need to evaluate the costs and benefits of any public investment in telecommunication infrastructure and select projects which can deliver both strong immediate aggregate demand effects, such as through the employment created by rolling out the networks, and strong longerterm aggregate supply-side effects, which can improve the productive capacity of the entire economy as an improved foundation for commerce and communication.

Internet Heroes and Villains

[Commentary] If the history of Internet policy were a movie, it would feature the public tied to the tracks before an onrushing train of corporate lobbyists. The villain, however, is not just the powerful phone and cable companies these lobbyists represent, but the politicians who tightened the knots and then stood smugly by as our interests were crushed. So how do we change this unhappy ending to one where the power of the Internet remains in the hands of the people who use it? One politician at a time. Our policymakers have a civic duty to keep the Internet free and open. Internet freedom is essential to our economic recovery, national competitiveness, public health and civic engagement. Special interests should not be allowed to set Internet policy. Congress and the FCC must protect the Internet's democratic nature. And people who care about their online freedom must let their elected officials know about it.

Cable: let us experiment with metered Internet

Given cable's long history of exorbitant rate increases and atrocious customer service (it's routinely ranked one of the very worst industries in the US), it's hard to blame people for being skeptical about cable's moves to start capping broadband access—especially when costs are dropping and revenues are rising. But National Cable & Telecommunications Association CEO Kyle McSlarrow says cable isn't out to price-gouge its way to massive profit margins. Instead, the industry seeks to provide Internet access in a way "that's best for the consumer." And everyone who has already decided that it's "flat rate pricing or bust!" needs to pipe down, adopt the scientific method, and wait until all the data is in.

Google 'falling behind Twitter'

Google's co-founder, Larry Page, admits that the company has been losing out to Twitter in the race to meet web user's demand for real-time information. Instead, the search engine's chairman and chief executive, Eric Schmidt, hinted that it could become a partner of the micro-blogging site. Twitter has come from nowhere to become the third most visited social networking site in the US in just three years by allowing its users to broadcast their thoughts, actions and news instantly. Google's search engine, in contrast, can take hours or even days to update. While this is usually not a problem as accuracy of results is more important than speed of updating, as the Internet community comes to demand ever faster information Twitter has left Google in its wake.

26 percent admit to texting while driving

A survey just released by mobile application vendor Vlingo says 26 percent of mobile phone users questioned admit to DWT, or driving while texting. The highest number of offenders are in Tennessee, with 42 percent of people saying they text behind the wheel, while Arizona drivers came in lowest at 18.8 percent. Driving while texting is now fully banned in seven states as well as Washington (DC) and partially banned in a select few other states.

ACLU sues over blocked web sites

The American Civil Liberties Union and its Tennessee branch sued two Tennessee school districts in federal court May 19, claiming that the districts are unconstitutionally blocking students from accessing online information about lesbian, gay, bisexual, and transgender (LGBT) issues.

Chicago 'Hoy' Ends Home Delivery

Tribune Co-owned, Chicago Spanish-language daily Hoy told the small number of people who get the free paper delivered that it is ending home delivery with its May 28 edition. After June 1, a flyer inserted in home-delivered copies said, the paper will be available in more stores and news boxes in "high-traffic" areas. The paper will continue to be free. The flyer and a separate press release did not say whether the press run of the paper is being increased. The Los Angeles edition of Hoy recently switched to weekly publication from daily.

Social Media More Hype Than Reality

Social media has reached critical mass, with 83% of the Internet population now using it - and more than half doing so on a regular basis - according to new research being released today by Knowledge Networks. But for all the media industry's hype and buzz surrounding social networks, microblogs, and other social networking platforms, the genre has failed to become much of a marketing medium, and in the opinion of the Knowledge Networks' analysts, likely never will. The report, "How People Use Social Media," finds that social media is having a profound impact on the way people connect with each other, but that it's not becoming a very meaningful way for people to connect with brands, or advertising promoting brands. Among other things, the study finds that less than 5% of social media users regularly turn to these social networks for "guidance on purchase decisions" in any of nine product and/or service categories (see table below), and that only 16% of social media users say they are more likely to buy from companies that advertise on social sites.

Opening A Pandora's Boxee

By shifting programming from television to the Web, TV networks are on a "slippery slope" that puts the combined $300 billion market valuation of the industry at risk, warns a new report. Analyst Laura Martin of Soleil Securities points to the implosion of the music and newspaper businesses as cautionary examples of what happens when media companies "unbundle" content (selling individual songs via iTunes instead of albums) or give it away free online. The same destructive trends are now threatening to undo the business models of CBS, NBC Universal, Disney/ABC, Fox and other TV networks through their own online TV initiatives such as the NBC-News Corp.-backed Hulu and CBS' TV.com. Martin argues that by offering single episodes of shows such as "The Office" or "The Simpsons" on-demand online -- separate from cable, satellite or other pay TV packages -- they are letting consumers watch the hits without funding other programming.

Broadband Deployment's "Best-in-Breed"

With the potential to jumpstart the massive investment needed to build America's information infrastructure for the next century, the $7.2 billion for broadband contained in the American Recovery and Reinvestment Act merits great attention. On Thursday, May 7th, the Benton Foundation highlighted innovative deployment and sustainable use projects already at work to bridge the broadband divides between rich and poor, urban and rural. The event featured presentations from experts in the field of broadband, and included question and answer sessions.