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Study Calls for U.S. Programs to Address Broadband Demand

The U.S. government should consider paying broadband providers for signing up subscribers in poor areas in an effort to increase demand for broadband, a new study from a tech-focused think tank recommended.

The government should create several programs to address demand for broadband, in addition to spending billions of dollars on deployment, the Information Technology and Innovation Foundation (ITIF) said in the study, released Thursday. More than 90 percent of U.S. households have broadband available, but less than 65 percent subscribe, the ITIF said.

Broadband creates significant benefits for both subscribers and the economy at large, and universal adoption is "critical to the future of our economy and our nation," said Robert Atkinson, president of ITIF. The think tank recommended several types of programs addressing broadband demand, with those programs focused on attacking several reasons why people don't subscribe to broadband.

The paper was released as two U.S. government agencies prepare to give out US$7.2 billion in broadband grants and loans, and the U.S. Federal Communications Commission is in the middle of drafting a national broadband plan.

The study identified three major reasons why people don't buy broadband: the cost of the service and of a computer; usability issues, including a lack of digital literacy; and a perceived lack of the need for broadband.

The ITIF recommends that the U.S. government run a competition for broadband providers to sign up subscribers in low-income areas. The winner of the competition in each low-income community would get $250 per subscriber, and this one-time contest could raise broadband subscriber numbers by 5 percent and cost $970 million, Atkinson said.

The payments would give broadband providers incentives to try new marketing tactics, including free computers with a broadband contract and lower prices for subscribers who use a limited amount of bandwidth a month, Atkinson said.

In addition, the FCC should allow funds from its Lifeline and E-Rate programs to go to broadband services, ITIF said. E-Rate is a program that's helped schools and libraries in low-income areas get broadband connections, and Lifeline provides discounts of up to $10 a month for traditional telephone service.

The U.S. government should fund digital literacy programs like those used in some states, and it should encourage broadband providers to experiment with lower-cost pricing, the paper recommended.

Some people have questioned the need for government programs to stimulate broadband demand. Last week, at a forum in California, some speakers suggested broadband adoption would continue to rise in the U.S. without significant help from the government. Connecting to broadband will eventually be like electricity, easy and inexpensive, said Google cofounder Sergey Brin.

But Atkinson and James Prieger, a professor of public policy at Pepperdine University, said government intervention is needed. There was a large government program to connect rural users to the electrical grid, noted Prieger, co-author of another study on broadband demand.

The U.S. needs a comprehensive approach to stimulate demand, Prieger said. Programs targeting only one demand problem generally don't seem to work as well as comprehensive programs, he said, but there's a general lack of research on the effectiveness of the state, local and private programs out there, he said.

More economic analysis research on broadband demand programs is needed, he said. "We really don't find extensive analysis of these programs," he said.

Atkinson agreed that more research is needed, but he suggested that there have been significant studies that suggest the benefits of broadband. "The vast majority of Washington decision-making is done in the absence of cost/benefit analysis," he joked.

John Horrigan, research director for the FCC's Broadband Task Force, called the two studies "comprehensive and important work."

But cost/benefit analysis of broadband adoption needs to measure the impact of broadband to individuals, he said. About three-quarters of all large U.S. companies now require job applications to be delivered online, creating a disadvantage for those without broadband, he said.

"The cost of digital exclusion is growing," he added.

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