The many paradoxes of broadband

Abstract

There is much dismay and even despair over the slow pace at which broadband is advancing in the United States. This slow pace is often claimed to be fatally retarding the recovery of the entire IT industry. As a result there are increasing calls for government action, through regulation or even through outright subsidies. A careful examination shows that broadband is full of puzzles and paradoxes, which suggests caution before taking any drastic action. As one simple example, the basic meaning of broadband is almost universally misunderstood, since by the official definition, we all have broadband courtesy of the postal system. Also, broadband penetration, while generally regarded as disappointingly slow, is actually extremely fast by most standards, faster than cell phone diffusion at a comparable stage. Furthermore, many of the policies proposed for advancing broadband are likely to have perverse effects. There are many opportunities for narrowband services that are not being exploited, some of which might speed up broadband adoption. There are interesting dynamics to the financial and technological scenes that suggest broadband access may arrive sooner than generally expected. It may also arrive through unexpected channels. On the other hand, fiber-to-the-home, widely regarded as the Holy Grail of residential broadband, might never become widespread. In any case, there is likely to be considerable turmoil in the telecom industry over the next few years. Robust growth in demand is likely to be combined with a restructuring of the industry.