George Ford

America has spent billions trying to close the Digital Divide, but adoption disparities along many dimensions persist. The COVID pandemic has rekindled the strong interest in broadband adoption, with many in Congress now proposing to spend billions more to shrink the adoption gap. As might be expected, the Phoenix Center’s economic analysis prescribes that money should be spent where it is most effective (per dollar) at increasing adoption.

COVID-19 has forced the residents of many nations to shelter-in-place, either by choice or by mandate. As a result, Internet use has skyrocketed, putting stress on both fixed and mobile broadband networks. An early look at the performance of broadband networks with respect to download speeds. Using weekly speed data for fixed and mobile networks for months preceding and following March 2020, Ford finds sizable reductions in speed for several countries, but also some increases in speed.

Explaining non-adoption for Internet service has led to a debate about whether non-adopters place a low value on Internet use or whether the price of connectivity is too high. Survey evidence consistently points to a lack of interest as more important than price, but a new report by the National Digital Inclusion Alliance claims that recent survey evidence points to price as the dominant cause. The conclusion is impermissible.

Recently a new study seeking to rebut the Federal Communications Commission’s conclusion on investment was made public. The author of the study is Christopher Hooton, Chief Economist of the Internet Association (a proponent of Title II regulation) and a scholar at George Washington University’s Institute of Public Policy. This new paper is not Hooton’s first attempt at an empirical analysis of investment and Net Neutrality, the first being an unskilled effort in 2017. In that work, Hooton fabricated large portions of his data and failed to understand what sort of investments he was studying

In 2018, the Federal Communications Commission’s Restoring Internet Freedom Order reversed its 2015 decision to apply common carrier regulation to broadband Internet access services under Title II of the Communications Act of 1934. Empirical evidence indicating negative investment effects of the regulation played a key role in this reversal, though the quantification of these investment effects were a matter of substantial controversy. This article surveys the studies cited in the recent decision and the FCC’s scrutiny of them.

Broadband availability data is collected from broadband providers at the census block level, which is the smallest geographic unit used by the Census Bureau for data tabulation. In collecting and reporting these data, it is assumed that if a single home in a census block has access to broadband (however defined), then every home in the census block has broadband.

USTelecom recently released an update to its US broadband industry capital spending series. In this update, USTelecom reported that sector investment rose $1.5 billion (or 2%) between 2016 and 2017—a reversal of a two-year decline following the 2015 Open Internet Order.

Free Press Policy Director Matt Wood told Congress that “Comcast’s total capital spending for the two years following the 2015 [net neutrality] vote increased by 26 percent." In contrast to claims, Comcast’s investment data provide, if anything, evidence that reclassification has been detrimental to capital spending. 

In this bulletin, I aim to quantify the relationship between higher broadband speeds (10 Mbps versus 25 Mbps) and the growth rates in important economic outcomes in U.S. counties including jobs, personal income, and labor earnings. Doing so exposes the potential for severe selection bias in studies of broadband’s economic impact, which is addressed in this study using Coarsened Exact Matching. Once balanced, the data reveal no economic payoff from the 15 Mbps speed difference between the years 2013 and 2015.

[Commentary] This version of the Bytes Chat discusses the wisdom of restrictions against municipal broadband with three economists who are following the issue closely.

Kyle Wilson: It’s worth remembering that unlike schools, installing a municipal network creates a new stream of revenue, even though it may not be enough to break even.