Buying universal broadband

Our coverage and analysis of President Obama’s plans to stimulate broadband are generating a lot of discussion from readers — and not surprisingly. As has been said many times, broadband is a little like a utility and a little like market-driven consumer entertainment, and these neither-fish-nor-fowl characteristics make it difficult to determine exactly how to treat it.

How important is universal broadband in 2009? According to UBS, the country’s top seven telcos as a group have made broadband available to more than 83% of their customers, and the top cable providers offer broadband to 95% of their base. Between the two of them, at most about 16 million U.S. homes are unable to get broadband, UBS said. According to some reports, the Obama administration may be prepared to spend up to $10 billion (the current House bill lists $6 billion) to reach those 16 million homes (in addition to other plans).

So in rough numbers, the federal government could spend between $500 and $1000 per home to achieve universal broadband, albeit at sub-megabit speeds (that’s a whole other can of worms).

But once broadband is made available to those folks, will they choose to buy it? As I have pointed out, according to a recent study, the so-called “digital divide” created by the limitations of private infrastructure appears to be smaller than the divide created by consumer choice. That is, more than a quarter of Americans don’t use the Internet at all, at any speed. Of those, only 12% said it’s because they don’t have access. The largest chunk — 33% — said they are just not interested.

At the same time, increasing broadband availability could fuel entrepreneurism and help small businesses grow. In short, it could help bolster the economy in countless unseen ways at essentially every level. I remember hearing the head of a small rural telco tell me about bringing fiber to farmers who wanted it linked to security cameras so they could watch their pig pens. Some people don’t know what they want until it’s available — or until they see what others are doing with it. How much should we spend in order to learn the answers to these questions?