The rural-urban divide on broadband adoption and pricing: Fact or fiction?

[Commentary] Much has been made in social, economic and policy commentary about a broadband divide between rural and urban communities, and the implications this divide may have on the abilities of both individuals and communities to prosper in a digital society. Variations in broadband adoption rates between rural and urban communities have served as the basis for calls to politicians and regulators to “do something” to redress the balance. In particular, many have pushed for policymakers to address discrepancies in consumer prices between the two camps. Surely, the argument goes, if everyone paid the same price, then adoption would equalize, and the divide would be closed? If only it was that easy.

The bottom line is that broadband adoption is complicated, and that price is only one of its many determinants. When regulators are facing a problem where the root causes are ill-defined (or perhaps the problem is even non-existent and simply a statistics-mirage), a high degree of regulatory humility becomes important. In the case of rural broadband adoption, the best strategy is likely for lawmakers to focus on lowering the barriers to entry for private broadband providers, and let them explore the markets and related challenges.

[Bronwyn Howell is general manager for the New Zealand Institute for the Study of Competition and Regulation]