End the broadband panic meme

[Commentary] I am growing very tired of this meme: Another reporter writes about how the US is falling behind international rivals in the supply of broadband. There are serious issues to debate, but this standard meme takes attention away from them. The latest version of this article came from the New York Times. It had the title “US Struggling to Keep Pace in Broadband Service,” and it brought out the usual concern that all US growth will fall behind if the US does not have the fastest broadband in the world.

Why is this tiring? Let me count the ways.

First, while it is irritating to have slow service at home, US productivity does not depend much on that. Household broadband is less important for economic growth than the broadband to business. And what really matters for productivity? Speed to business.

Second, as for household speeds, many people simply don’t want them and do not want to pay for them.

Third, if we study demand, can we all acknowledge that demand is very skewed in the US? 10% of the users account for far more than 50% of the data to households, and 20% of the users get most systems to more than 80% of the data use. And it is growing at levels from median to highest part of the skew, so there is good reason to think demand for data is growing for all major users. Will there be capacity to handle those intensive users of data? The answer is unclear. That hints at an open question that is worth debating. Not everyone pays the same price because flat rate pricing has been so common across the US. The top 10% of users pay very low prices per megabit. Even if total expenditure per month for the biggest users is twice as expensive in the US in comparison to other countries, it is still pretty cheap.

[Greenstein is the Kellogg Chair of Information Technology, and a member of the Management and Strategy Department at the Kellogg School of Management, Northwestern University]

[Dec 31]