What if a 1% increase in broadband penetration equaled 300,000 jobs?

Often I take Robert X. Cringely‘s columns with a grain-of-salt, but this one entitled, “Game Over: The U.S. is unlikely to ever regain its broadband leadership” really hit me since I make my living on Internet-centric management consulting and view broadband as the key enabler of business going forward. Cringely’s article is an important one to read if you care about US competitiveness in the future.

Back in the mid-1990’s I had an ISDN line with a whopping 128kbps access for $69 per month. Incredibly fast at the time, I even considered their bonded option for 256kbps (well over $100 per month) but I wanted to stay married. Today I have 8mbps per second downstream and 768kbps upstream for essentially the same price.

I have friends in San Francisco with 10mbps symmetrical (both upload and download) for under $100 a month. Others using Verizon’s fiber (FIOS) and getting 15mbps down, 2mbps up for $50 per month.

But Cringely talks about the 100mbps speeds in Japan, others have complained about them being ahead of us too and the OECD’s April, 2007 report (which showed the US at 25th in global broadband penetration and speed) is open to debate. So is it important for us to have competitiveness in broadband speeds and why aren’t we — the inventor and creator of the Internet — in the world’s leading position for broadband speed and penetration?

When you think about the relative sizes of countries vs. US states, you begin to get a feel for the enormity of the problem. Japan is roughly the size of Montana, for example, and (as of 2001), 79% of the population lived in urban areas with ~20% in Tokyo alone. That makes it considerably easier to provide a high speed broadband infrastructure for the overwhelming majority of Japanese. It’s a lot tougher to do so across the vast geography that is the United States.

The stakes are too high, however, to NOT solve this accelerating need for true broadband. ArsTechnica has a good article on House Democrats and discussions about ‘true’ broadband. I’m not even going to get into the lobbying and politics of broadband, telephony and wireless, but suffice to say there are alot of complexities on why we’re NOT the world’s leader. What most discussions don’t focus on, however, is that broadband is viewed as a driver of gross domestic product (GDP) output and we need to be accelerating the Internet — both in speed and penetration — now.

What if a 1% increase in broadband penetration equaled 300,000 jobs? Read on for a very interesting set of data…

The Brookings Institute has a good overview here (PDF) of the effect of an increase in broadband penetration :

Our empirical investigation of state data on broadband penetration, employment and output thus suggests that employment is rather strongly related to broadband deployment, particularly in certain service sectors, such as finance, education, and healthcare. Surprisingly, even manufacturing employment appears to be related to broadband penetration. To provide some perspective on the estimated size of this effect, we have used the estimated coefficient from our 2005/2003 U.S. employment growth equation to project the increase in 2006 employment from a one percentage point and a three percentage point increase in broadband penetration for the entire United States and for selected individual states. Table 5 provides the results.

Note that a one percentage point increase — equal to roughly 3 million lines — is associated with nearly 300,000 more jobs, assuming that the economy is not already at full employment (or the lowest rate of unemployment that can be achieved with a low, stable rate of inflation). Obviously, such a projection is subject to estimation error and depends on the existence of some slack in the labor market. It is impossible to ‘create’ jobs if the economy is at full employment.

Just stop for a minute and think about YOUR use of the Internet as you either access it at the office or library with a high speed connection or through one at home.

This is one of those “Doh!” studies done by the Pew Internet group (who I love, by the way) that said in part,

“Previous Pew Internet Project research has highlighted the strong relationship between high-speed internet access and the richness and intensity of the online experience. Compared with individuals with a dialup internet connection, broadband users use the internet more regularly and engage more frequently in a variety of online activities.”

“In addition to using the internet more frequently than individuals with dialup access, broadband users also participate in a wider range of online activities. It is perhaps not surprising that broadband users exhibit greater rates of participation in bandwidthintensive activities, such as internet telephony, that are cumbersome and time consuming at dialup speeds. What is particularly notable is that broadband users are also more likely than dialup users to take part in several comparatively low tech (i.e. less bandwidthintensive) online activities such as searching for information on Wikipedia or reading online news sites.”

If you think about your use of the Internet, why aren’t you using an online backup system? There are literally dozens of ways to do so but if you’re like me, I’ve got gigabytes of photos, music, and other files that — even with a fairly fast broadband connection — still takes hours to upload. Since I use voice over IP technology (e.g., Vonage; Skype) I don’t want to interrupt my services to upload and I’ve only got a reasonable 768kbps (and atypically fast, by the way) upload speed.

I’d love to use more online services than I do (and I use many of them) but even my speedy connection is too slow. I could see computer stores selling more boxes that are actually servers; more video related offerings; service providers that would build and deliver many more online services that would be a click away for most consumers and businesses. THAT is what the Brookings Institute identified in their study on how a 1% increase in broadband penetration equals 300,000 jobs.

If you’re not already whining to your ISP about speeds…do it now. As the questions. Email them. Then do the same thing to your Congressperson. If you don’t ask, you won’t receive.