The Digital Divide - Growing?

In a recent paper published by Dr. Kevin A. Hassett & Dr. Robert J. Shapiro, entitled "Toward Universal Broadband: Flexible Broadband Pricing and the Digital Divide," the authors make a very strong case for flexible broadband pricing in order to slow, and eventually reverse,a now widening Digital Divide between the digital haves and the digital have-nots.

In the spring of 2009, 63% of American homes had some form of broadband connectivity. Most of these homes fell within urban, white, and upper income brackets. Of the 37% who did not have broadband connectivity, the majority fell within rural, black, or lower income brackets. Most of these have-nots lacked broadband connectivity because they simply could not afford it.

Ever Increasing Demand

Ten to fifteen years ago, the Internet Service Providers (ISP) could easily predict the bandwidth necessary to meet customer demands. One minute of the then mainly text-based Internet browsing consumed 2-200 KB of bandwidth, a fraction of what the average user consumes today.

Once online music (as in mp3 audio files) grew ubiquitous, the average minute of browsing consumed about 1,000 KB, or five times as much as high-end text browsing.

Add to the mix current phenomena such as YouTube and Hulu (along with Netflix online viewing) and the average minute consumes 9,000 KB or forty-five times the high-end text browser.

And we know that cutting edge developers have applications in mind (if not in the pineline) that will dwarf the video bandwidth requirements. I don't know what they are right now (online smell, perhaps--no, I'm not kidding) but I know they'll use more bandwidth.

Infrastructure

Needless to say, the current ISP infrastructure does not meet ubiquitous broadband access, much less one where each user happily consumes many megabits per minute.

Projections vary as to how much ISPs will have to invest in the not so distant future to meet demand, but one widely-cited report, EDUCAUSE--written by a higher-education technology group--predicts that providing "big broadband" to every home and business, with sufficient bandwidth to meet demand, would require an additional $100 Billion investment over the next three to five years.

Other estimates project a cost of $300 Billion over the next twenty years.

Pricing Issue

Seeing as 63% of households have broadband connections already, and also assuming that the cost of providing broadband connection to the remaining 37% will cost at least as much again (since many of these households are in remote rural locales), adding these 37% as paying subscribers (many of which are not subscribers for the excellent reason that they cannot afford it) will not cover the bill. Far from it.

Per Subscriber Pricing

Should ISPs (and FCC policy makers) decide on spreading the cost of shoring up the infrastructure evenly over the subscriber base, I believe that would spell a continued widening of the digital divide, since per subscriber pricing would then easily double, and if the lower brackets cannot afford $X, they are twice as sure to not afford $2X.

Usage-Based Pricing

The only thing that makes sense as far as pricing goes is a usage-based approach where you actually pay for what you use. Perhaps a flat, minimal administrative subscriber fee for all, with a maximum monthly bandwidth usage, with anything above such maximum limits charged per megabit, perhaps one cent per.

This may even lower the "entry-level" rates, and so allow the 37% currently off the "digital grid" to connect, and so achieve the President Obama promise of "true broadband to every community in America" sooner rather than later.

My 2 megabits worth.