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App-Rising.com covers the development and adoption of broadband applications, the deployment of and need for broadband networks, and the demands placed on policy to adapt to the revolutionary opportunities made possible by the Internet.

App-Rising.com is written by Geoff Daily, a DC-based technology journalist, broadband activist, marketing consultant, and Internet entrepreneur.

App-Rising.com is supported in part by AT&T;, however all views and opinions expressed herein are solely my own.

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February 6, 2008 8:48 AM

The Missing Link for Broadband: Demand

When talking about the need for broadband the focus is almost always on supply, or how do you get more capacity to more people.

Only recently has the drumbeat started to pay more attention to demand, or getting people to subscribe to and use broadband.

In general, I see the demand side of the broadband equation to be as if not more important than supply as you can build all the capacity you want but if no one's using it then what's the point?

But there's a problem as this renewed focus on adoption is being vocalized in large part by broadband providers, who many will claim aren't interested in societal change through broadband so much as bolstering their bottom line by adding new subscribers.

And any concerted effort to increase take-rates might seem like the government trying to get more people to buy cell phones or drink more milk, which can then lead to higher revenue and bigger profits for already well-off multi-billion dollar corporations.

But that's only looking at the situation on the surface. Let's dive a bit deeper.

First off there's the basic rule of thumb about networks: the more nodes (or users) the more powerful the network becomes. So the more people subscribed to broadband at home the more potential ecommerce customers, the more sellers, the more content creators, and the more content watchers there are. So greater demand equals a greater Internet.

Secondly there's the basic reality that if we're setting out to revolutionize society through broadband that we ultimately need everyone on the network. Making government resources available online doesn't do a whole lot of good if most people can't access those resources. And if our goal is to get everything online, then we also need to get everyone online in order to take advantage of that.

The third major point I wanted to make is that the more demand for broadband the bigger the carrot on the stick to spur deployment.

If you talk to Verizon about FiOS, they'll admit they're cherry picking, or deploying first into neighborhoods with demographics that suggest more homes that are willing and able to subscribe to broadband. That's just basic business sense.

But what would happen if everyone was demanding broadband? Not half of homes, but all homes, clamoring for broadband? Imagine the impact that would have on deployment.

Network operators could focus less on reaching the highest value customers and more on delivering service to as many customers as possible.

A radical increase in demand for broadband could also have a profound impact on competition as new entrants would feel emboldened to break into more new markets as there'd be a bigger pie of customers for them to try and claim a slice of.

The math is pretty simple: if 50% adoption can support two or three providers, then 100% adoption could create a marketplace where four or five providers can realize take-rates large enough to justify deployment.

So it seems obvious to me that one of the biggest steps we can take as a country into our broadband future is to do more to spur demand for broadband and, in doing so, create additional demand for higher speeds.

And as demand increases, supply will undoubtedly race to catch up. Or, if it fails to, then consumers and communities will be inspired to start exploring other options to get the connectivity they need.

Spurring demand for broadband isn't about lining the pockets of broadband providers; it's about recognizing the value greater participation in and understanding of the Internet has in furthering the goals broadband advocates like myself have been espousing.

In the end will the multibillion dollar corporations get richer? Yes, but they don't have nearly as much to gain as the country as a whole does by focusing much more attention on spurring demand for bandwidth alongside supply.


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Comments (3)

Didn't see your email address, so am using this to be in touch. Your posting on 'demand', provokes me to let you know of my 1st-mile Institute and initiatives, in New Mexico. Initiated just over a year ago, the 1st-Mile advocates for a demand-side economic approach to 'open' broadband. I believe you will find the web site of interest, and may want to browse some of the resources links. There is also a 1st-mile email list, that has more current information, some of which will soon be updated on the site. If of interest, please be in touch.
Richard Lowenberg

Posted by Richard Lowenberg on February 6, 2008 12:28 PM

This discussion about building demand seems specious, at best. Ask anyone if $10 a month for broadband would sign them up, and it's a done deal. This issue is about reasonable wholesale pricing for Internet access. It ain't going to happen, so long as control/gatekeeper responsibility lies with the incumbents. They intend to create a distribution medium out of our Internet. That doesn't happen if the broadband infrastructure, by definition, is decentralized.

Posted by Tom Poe on February 6, 2008 12:38 PM

This was a prescient summary of the deliberations of the Illinois Broadband Deployment Council's "Demand" Committee this morning. The country as a whole has a greater interest in promoting effective broadband use for economic development and quality of life purposes than any particular provider does in simply generating additional customers. There are economic benefits to the nation from an "Internet Savvy" population of residents, businesses, health care providers, educators, workforce developers, etc. that dwarf the economic values of sales and profits to any particular provider. This is where the Obamaism orientation to "national interests" might find some practical application in the months to come running up to the November election. I think you made a good and useful contribution to what I hope will become an important national discussion on the development and use of a critical national infrastructure for the forseeable future.

Posted by Don Samuelson on February 6, 2008 2:24 PM

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