Two Perspectives on NBP Video

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1. What do you think is the best policy approach to getting the most broadband to the most Americans, and why? Explain.

Two approaches to distribution of funds allocated for broadband development have been described in the discussion. According to Blair Levin if such funds come from the Federal Government, then they should cover a portion of each bill issued to low income and high cost groups, as well as to Institutions by broadband providers that guarantee benchmark performance. At the same time, Craig Settles argues that the above mentioned funds should be given to communities. In their turn, communities are supposed to assess targeted group needs in this technology, find additional funds, estimate outcomes, and come up with bids to providers for needed types of broadband. Although the second approach seems to be more effective, it cannot be applied to Federal Government’s broadband subsidizing, because it does not assume a strict formulation of requirements imposed by the Federal Government. Therefore, subsidizing in this case can result in much bureaucracy. Thus, to get the most broadband to the most Americans, the Federal Government should subsidize the broadband development using the first approach. Since the second approach is more effective than the first one, each community should be allowed to have its own broadband and to aggregate the demand on it.

2. How significant is the role of media in advancing policy in the area of telecommunications? Why? Explain, support your answer.

A performance of the devices used in the area of telecommunications is continually improving. It can be explained by Moore's law ("What is Moore’s Law – A Word Definition From the Webopedia Computer Dictionary"). Producers of software are catching up on this progress. So, the hardware in this area becomes obsolete rather fast. Thus, there is a trade off between saving costs in the short run by establishing low benchmarks for equipment performance and additional expenditures related to equipment upgrading in the long run. There were solutions far from to be perfect for this trade off in the past. For instance, during Clinton’s administration, the decision was made to get schools connected to the Internet. In this case, the saving cost decision resulted in small usage of this connection in the long run. According to Blair Levin who is the author of the National Broadband Plan discussions of any policy in the area of telecommunications conducted in the media do not shape the policy. Instead, they are meant to reevaluate solutions made regarding above mentioned trade off.

3. “We are selling very fast, but we don’t know where we are.” Do some quick research. Where are we in terms of broadband availability? How does that compare to subscribership? What impressions do you have about this information regarding what should be the national focus for broadband advancement right now?

The following characterizes the current state of the broadband availability in our country. The cheapest broadband in the USA has 1 Mbps connection speed, and it is worth $ 35 per month. While the one in Denmark and Canada is cheaper and twice faster. You can have broadband for $ 20 a month in Hong Kong, Taiwan, and Sweden. As for top speeds, in our country one can have 50 Mbps for $ 145 per month. There are nations that have 200 Mbps “for less than $60 a month”. As for subscribership, a decade ago, the USA had the largest percentage of broadband subscribers in the world. Nowadays, using this percentage, Organization of Economic Cooperation and Development puts the USA on the 15th place in the world, while “another key organization, International Telecommunications Union, ranks the United States 16th”. NBP sets the following benchmarks for broadband availability. By the year 2020, each American is supposed to be able to use the broadband with “4 Mbps download and 1 Mbps upload speeds”, while 100 million families are to have “100 Mbps download, 50 Mbps upload connection” (Losey 2010).

Having in mind implications of Moore’s law, I would suggest spliting the problem in two parts by putting national focus more on the first benchmark right now. The second benchmark assumes higher performance of the devises. In a few years, such devises are going to be much cheaper.

4. Does speed matter (of service)? How would policy in this area impact the market for devices and equipment? Explain and support your answer.

According to Moore’s law, a performance of devices and equipment is constantly improving, while their price assuming the fixed performance is decreasing with time. Data presented in the answer to the previous question suggest that the current state of technology is close to providing the benchmark performance. Thus, before the year 2020, we should expect low demand on new equipment and devices.

5. From public interest perspective, whose ”goals” identified in this video do you agree with most, and why? Explain.

Craig Settles formulated the following goal. Assuming that our mission is to use broadband as an economic engine, our national goal is to have economic development as a driver. According to Blair Levin, national goal should be a creation of ubiquitous, diverse, constantly improving ecosystem of networks, applications, devices, and people who can use it. From the public interest perspective, I prefer the first goal to the second one. Because in pursuing the second goal we do not differentiate gainers from losers within a targeted group; while the first goal assumes that the money allocated for the targeted group produces a positive outcome. This outcome is distributed among gainers. Since it is positive, gainers receive more than losers lose. Losers in this case are those who do not really need broadband. Since they are going to lose anyway, they should not be compensated.

6. How does Blair describe the rural/rural divide?

The high cost of equipment makes providing broadband in rural areas with low population densities to be inefficient. The size of the subsidy creates incentives for providers to do business in areas with not very small population densities. But, areas with few people per square kilometer are not going to get broadband at all.

7. Four up and one down. Is wireless (4G) competition with wireline broadband? Is wireless in the public interest for low income customers? Why or why not? Explain.

Modeling performed by Blair Levin’s team indicates that the increase in wireline broadband downloading speed from 4 Mbps to 6 Mbps doubles the cost of the plan implementation. It is explained by the fact that wireless (4G) competes with the first type of wireline broadband and does not compete with the second one. Besides, the digital divide among low income customers connected to wireline broad band is more significant than the one among low-income customers connected to wireless broadband. This means that wireless that we are having now, competes with the current wireline broadband. Thus, removing wireless broadband is not in the public interest of low income customers due to the digital divide among them and the fact that this would make wireline one less affordable. Moreover, (4G) wireless broadband is going to be in the public interest of the low income customers due to the fact that it is going to drive down the cost of wireline one with 4Mbps uploading speed and 1 Mbps downloading speed.

8. What are the benefits of the community-based, community-driven model Craig Settles supports? Is that a feasible approach? For what kind of communities do you think this would be most beneficial?

Broadband created according to this model is going to be most effective. Because, it is designed to satisfy specific community’s needs. Besides, this model creates incentives for providers to improve performance of the service. Since this model does not have simple universal benchmarks regarding quality of the service, the routine decision making on the part of the Federal Government is difficult to facilitate. Therefore, this approach is feasible only without participation of the Federal Government. Since it is much simpler for rural communities to identify their needs in broadband than for other types of communities, this model would be most beneficial for them.

9. "If you want the speed, you have to come up with the money". Market/industry, or the government subsidy. Is it appropriate to continue embracing network-effects-based policy, or is it appropriate to embrace the notion that "better than what you have is good enough for now.” Explain your answer, and how economic development is impacted.

Due to implications of Moore’s law embracing the notion of "better than you have is good enough for now" will result in quick obsolescence of the broadband. On the other hand, network-effects-based policy assumes a great amount of analysis on the part of those who is giving a subsidy. The Federal Government has a subsidy to almost each community in the USA. Therefore, its embracing of this policy will result in much bureaucracy that will entail hindering of broadband development. Since broadband is critical infrastructure ("National Broadband Plan – Chapter 1: Introduction"), this would imply hindering of the economic development ("What is economic development? definition and meaning"). The best option for the government is to establish cost driven benchmarks for a broadband performance. As for market/industry subsidy, Google’s example suggests that giving subsidy to only few communities does not entail much risk during decision making. Therefore, in this case network-effects-based policy can be embraced. This policy assumes monthly payments of communities to providers of needed types of broadband. Thus, it has all features of the economic development ("Community Economic Development").

10. How important is speed if you are trying to determine whether a market is “competitive” and thus realizing all benefits of a competitive market? Explain.

There is the demand from business and individuals on a high speed connection to broadband, but it is not satisfied due to a high cost of the equipment. Very often all providers are offering the same speed. Due to competitive forces of the market, the speed of the Internet connection offered by the market increases during upgrades that are happening from time to time. The current transition to wireless (4G) broadband is an example of such an upgrade.

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