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Jon Peha
Jon Peha
Jon Peha
Jon Peha
Jon Peha
Jon Peha
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Jon Peha

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Jon Peha is Chief Technologist at the FCC. He spoke on Session 4: The Politics of Regulation at the Freedom to Connect 2009 conference. …

Jon Peha is Chief Technologist at the FCC. He spoke on Session 4: The Politics of Regulation at the Freedom to Connect 2009 conference.

If you'd like more info about the conference, see
http://freedom-to-connect.net/

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  1. Mythology of Rural Broadband Jon M. Peha Chief Technologist, FCC Professor, Carnegie Mellon University Freedom to Connect, March 2009 Opinions expressed are those of the author alone © 2009 Jon Peha Myth 1: Less Interest in Rural Areas (So the market is right) There is great speculation about why a third less households would want broadband. Income? Education? Profession? Culture? © 2009 Jon Peha
  2. % US Households with Internet But rural households are roughly as interested in Internet © 2009 Jon Peha A Simpler Explanation • Roughly one third of rural households do not have access to terrestrial broadband services at any price. – (No one knows exactly how many) – So not surprising that % of rural households subscribing to broadband is one third less. © 2009 Jon Peha
  3. Myth 2: If customers unwilling to pay cost of buildout, costs exceed benefits. (So the market is right, version 2) • But the benefits of broadband do not go only to those who subscribe, and thus pay for build-out. – People decide to pay based on benefits to themselves, not based on benefits to everyone. – A free market will underinvest in any product with this property. – (Positive externalities lead to market failure.) © 2009 Jon Peha Reasons for Spill-Over Benefits • Impact on local community – Some studies show broadband deployment is followed by increases in small business creation, job creation, and property values. • Even those who do not use the Internet benefit • More studies are needed! • Impact on Internet users outside the community – Other Internet users gain ability to communicate with residents of newly served community • Social networks gain members, ecommerce merchants gain customers, etc. – “Network effects” – increasing the size of a network benefits those who are already in it. © 2009 Jon Peha
  4. Myth 3: Unserved communities don’t gain from broadband, but not harmed by lack of broadband • More network effects: reducing the size of a network harms those who remain. – Dial-up Internet can be seen as a network. • Applications were once optimized for dial-up users • Designers now assume broadband, so Internet experience for dial-up users gets steadily worse. – Non-Internet services also degraded as broadband- based replacements become popular. • Newspapers, airline reservations, government documents, health care information, book stores, ... © 2009 Jon Peha Myth 4: Government involvement in infrastructure always helps. • Kenya builds 140 Megawatt Kiambere Dam • Benefits exceed costs? A fit for the community? – Kenya accepts debt – 7000 residents displaced – Farms under water. 82% of income lost. © 2009 Jon Peha
  5. No “one size fits all” solution • Some communities have created wireless broadband nets – with public funds, private funds, or combination thereof. – Some boast of great success, e.g. government savings greater than build-out costs, advancement of other community goals. – Others expended a lot of money and time, with limited benefit. • Pittsburgh leaders hoped for citywide wifi network. – For Pittsburgh at that time, benefits did not seem to justify costs – Pittsburgh had DSL, cable. Getting 3G wireless. • An effective and uniquely Pittsburgh solution – Wifi deployed throughout downtown, but not citywide – Financially sustainable – Builds on resources and ideas from Pittsburgh institutions – Part of broader community goal: revitalizing downtown © 2009 Jon Peha Lessons • Broadband matters • We should not – assume that the market solves all problems perfectly – devise initiatives that merely replicate what the market is already doing very well – assume that an effective strategy in one community can be replicated in another • We should continue to – seek innovative technology, business, and policy approaches – study past experiences, learn from successes and failures – let government create right environment © 2009 Jon Peha
  6. New Developments • New spectrum in 2009. – Spectrum availability is important for rural broadband – DTV transition frees up spectrum • Cellular carriers gain access to new licensed spectrum • Unlicensed devices allowed to operate in TV “white spaces” • New funding in 2009 – $7.2 billion for grants and loans related to broadband • New information gathering begins in 2009 – New “broadband inventory” • New National Broadband Plan under development © 2009 Jon Peha For More Information • Jon M. Peha, Bringing Broadband to Unserved Communities, Brookings Institution Press, July 2008. www.brookings.edu/~/media/Files/rc/papers/2008/07_broadband_peha/07_broadband_peha.pdf • Jon M. Peha, Wireless Pittsburgh: Sustainability of Possible Models for a Wireless Metropolitan-Area Network, New America Foundation Working Paper, Feb. 2008. www.newamerica.net/files/WirelessPittsburgh_Peha.pdf • More at www.cmu.edu/~peha © 2009 Jon Peha

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