Information Technology and Innovation Foundation

Accelerating technological change is placing a new premium on people’s abilities to navigate the digital landscape.

As the “Internet of things” ushers in powerful new applications in health care, education, government service delivery, and commerce, Americans are asked to share personal data with service providers in ways unforeseen a decade ago. They also have to muster the technical know-how to make Internet-connected devices function.

Yet nearly one-third of Americans are not ready to meet the twin challenges of trust and skills in a society in which digital applications are extending to more corners of our lives. Based on a 2013 national survey of Americans, this report finds that:

• 29% of adult Americans have low levels of digital readiness, as measured by respondents’ understanding of terms about the Internet and self-reported confidence in using computers or finding information online.
• Digital readiness is a bigger problem than the digital divide. Some 18% of Americans lack “advanced Internet access,” that is, either broadband at home or a smartphone; 15% are not Internet users at all. Put differently, 70 million Americans are not “digitally ready” for robust online use, nearly twice the number (36 million) of people with no online access.
• Lack of digital readiness afflicts one in five Americans who have advanced online access. Although non-Internet users necessarily lack digital readiness, 18% of people who have broadband or a smartphone register low levels of digital readiness. These Americans -- possessing the tools but deficient in skills -- exhibit far lower levels of Internet use.

The report also makes policy recommendations for improving Americans’ level of digital readiness. The proposals aim at building the capacity to help Americans use digital applications that will increasingly shape how governments serve citizens. Specifically:

• Governments should make complementary investments in digital readiness as they roll out new applications.
• Investments in digital readiness should build on existing programs that promote digital inclusion, such as those funded by the Commerce Department’s Broadband Technology Opportunity Program, as well as other public-private initiatives.
• The philanthropic sector should direct investments to digital readiness for all segments of the community, as well as invest in measurement of how digital readiness impacts outcomes.
• Cities should create “community tech champions” as advocates for digital readiness. Such champions would highlight the need for promoting digital skills for new “Internet of things” applications that the public and private sectors develop.
• Libraries, who are already the primary curator on programs to encourage digital readiness in many communities, should embrace and expand that role.

[At the Federal Communications Commission in 2009-10, Horrigan led development of the broadband adoption and usage portion of the National Broadband Plan]

Below we correct a number of key misunderstandings that continue to persist about proposed network neutrality rules despite Federal Communications Commission Chairman Tom Wheeler’s clarifications.

• Internet “Throttling” -- There is no reason to think that broadband ISPs have any interest in actively slowing Internet traffic, and even less reason to think such a practice would be allowed under the proposed rules. “Pay-to-play” would not be allowed -- no one would have to pay a fee in order to get their content or service to consumers. What would be allowed is “pay-to-improve” -- under these proposed rules, Internet services would only be allowed to get better, not worse.
• Prioritized Content -- Many reports indicate that ISPs will require payment for access to their “fast-lanes” and any type of traffic that gets stuck in the “slow-lane” will suffer. This is inaccurate. The vast majority of Internet traffic will not have a need to be prioritized and will continue to enjoy the current “best efforts” Internet.
• Favoring some traffic means shunting other traffic to the slow lane. The past and present Internet treats all packets the same. Advocates of net neutrality stress, correctly, that differentiated Type of Service, a piece of information within each packet that could enable the network to know what type of application the packet is for, has not been a major element, in practice, of carriage agreements among network operators.
• Consumer Harm. Again, if ISPs were found to be abusing these rules to hurt consumers, the rules would be very clearly designed to give the FCC authority to step in and stop any business practice that would actually hurt consumers or competition.
• Squash Innovation -- The types of prioritization arrangements that would pass muster under a “commercially reasonable” test would be overwhelmingly welfare maximizing, potentially unlocking totally new services.
• The complaint process will be arduous --The Commission would probably want to handle complaints internally. Furthermore, with sharp glare of the media spotlight and millions of consumers concerned about these issues, legitimate grievances will surface very quickly and demand swift resolution.
• Better to go back to Title II -- Rather than accept innovation in the core network, opponents of the rule would like to ban it, returning broadband to Title II classification. Title II classification would necessitate an abandonment of inter-modal competition and force providers into an arcane rate setting process inevitably reducing investment in our networks and the potential for innovative new broadband technologies. Moreover, Title II would likely be worse at protecting consumers from anti-competitive practices than the proposed rule.

[Commentary] Opponents of the Comcast/Time Warner Cable merger have scrambled to show that companies with larger market shares will hurt consumers, proposing theories built around flawed assumptions.

One metric that they have stumbled upon is data from the American Consumer Satisfaction Index, which gives Comcast, Time Warner Cable, and other television and Internet service providers low scores as compared to other industries.

First, the ACSI data actually shows that providing reliable, high-quality Internet and television services across a national network is much more difficult than taking a hamburger order or shipping products bought online. Where a lot can go wrong, much of it beyond the control of the provider, it’s tough to keep customers happy.

Second, greater size does not equal poorer service. Even though the British marketplace contains more competitors, UK television and Internet providers get scores just as low in comparison to other British industries and US TV and Internet providers. The similarity in the US and UK scores is striking, and the fact that UK ISP scores are similar, even with type of wholesale ‘open access’ regime cable critics long for, is a key point. What drags down scores for both Internet and TV providers are scores for call centers and web-pages.

Finally, ACSI data shows that broadband and TV providers are steadily improving. Ratings for the pay-tv industry as a whole grew 3 percentage points from 2012 to 2013 (ratings from 2012 for Internet providers were not available). Constraining Comcast and Time Warner Cable from utilizing economies of scale to lower costs for consumers will not magically make automated call centers more fun to navigate.