The Growing Global Movement of Broadband Cost Recovery
An Opportunity for TPRC Authors to Help Resolve the $2 Trillion Global Shortfall in Broadband Network Investment and Connect the Unconnected
Shortfalls in broadband investment and adoption have been documented at a global, national, and local levels by multiple sources. The 2021 report from the International Telecommunications Union and UNESCO suggests a global broadband network investment gap of USD $428 billion-$2 trillion and calls for contributions from the largest online platforms. Broadband cost recovery is rational, linear process to identify and resolve shortfalls in broadband network investment and adoption. It includes accounting of broadband network traffic and the associated cost; defining the network requirements so that all can access to healthcare, employment, education, and other essential social benefit services online; ensuring affordability through policies which allows freedom and flexibility to provide broadband offers which are relevant and tailored to subscribers’ needs, particularly for the disadvantaged; and augmenting business models with contributions from parties beyond end users.
The Affordable Connectivity Program (ACP) is likely the most successful broadband cost recovery program to date in the US. Some 18 million eligible Americans use a monthly $30 voucher toward their choice of preferred broadband plan and provider. ACP has helped Americans find jobs, launch businesses, and learn new skills. It has been a boon to America’s digital ecosystem, driving hundreds, if, not thousands, of dollars in revenue per user to America’s leading advertising platforms Google, Facebook, Amazon Display, and TikTok. The federal funding for these programs is about to run out, but there is practice and precedent for self-sustaining business models to fund such programs going forward.
Countries
The United Nations Digital Inclusion report observes that broadband enables people to access essential services for health care, employment, and education. The Covid-19 pandemic increased the urgency for universal broadband as people had to learn, work, and receive healthcare from home. More largely, the internet increasingly drives the economy and productivity and is becoming the key medium for the delivery of government services. Despite broadband being more important and necessary than ever, adoption efforts have stalled at 3.7 billion people, half of the world’s population, for lack of access and affordability.
Efforts to remedy infrastructure shortfalls are underway in the South Korea, USA, European Union, the Caribbean, Brazil, and India among others tracked by Strand Consult’s Global Project on Broadband Cost Recovery. This challenge reflects larger economic challenges following the Covid-19 pandemic in which nations engaged in massive public financial stimulus of their economies and now find coffers depleted for social spending.
The UN report on 21st Century financing suggests that content providers should be incorporated into broadband policy in a more systematic, realistic way to realize connectivity goals. These new approaches include broadening the base of contributors, ensuring that those which derive financial benefits from the network also contribute financially; that the contributions should be sustainable and predictable; and that they should be managed efficiently and disbursed in a timely and prioritized manner. In other words, neither should consumers nor taxpayers bear the entire burden of the cost of broadband networks; enterprises should participate.
Indeed, this idea is embedded in the practice of universal service from more than a century ago. The Digital Progress Institute’s Joel Thayer explains that in the pre-1996 US model, “Businesses that relied on the telephone system to make long-distance calls bore the lion’s share of the cost of providing universal service to local residences. The current contribution regime saddles American families, veterans, working adults, and the elderly with the brunt of the costs for universal service. Yet the corporations that rely on broadband and the telephone network to make a profit and contribute little if anything at all.”
Methods
Fortunately, there are a range of emerging cost recovery solutions to study and compare. They can be categorized as market-based, regulated, technological, financial, and philanthropic. The leading exponent is likely South Korea which has been a recognized global broadband leader years by the ITU and OECD. Its policy recognizes that ensuring quality content delivery is a shared responsibility between content and broadband providers. Its Ministry of ICT provides transparent information to facilitate individual market-based negotiation between the 5 largest content providers and Korean broadband providers for cost recovery on private, confidential terms. This ensures that Korean networks are best in class while reducing financial burdens on consumers. Unsurprisingly, the country enjoys the world’s highest rate of fiber to the home adoption and 5G. Moreover, it is the world’s seventh largest content creator, a result of a similarly holistic policy for domestic content. Notably the country which has ubiquitous networks is also one where Google and Netflix booked record profits last year.
The South Korean approach is relevant for the European Union which contemplates market-based solutions for its shortfall of €174 billion to reach its Digital Decade goals and to close the divide for some 45 million Europeans.
Notably the USA can adapt existing mechanisms and agencies to deliver cost recovery goals and avoid the pass-through effect which has dogged Universal Service. Minor assessments on the largest and most profitable advertising platforms and cloud computing can raise revenues of $5 billion or more without increasing fees on end users. Bipartisan bills are already underway to empower the Federal Communications Commission to move forward.
Cost recovery also includes technology enhancements to make more efficient use of networks like global multicasting and platform enabled default settings for data saving and disabling auto play and pre-download.
Policymakers can also consider pricing innovations practiced in emerging countries like South Africa which promote user-centered models allowing consumers to value the underlying data based upon their preferences. Similarly, developed country policymakers may consider updating the status quo which presently prioritizes the privately valuable internet of video entertainment over the socially valuable internet for health, education, and employment. Important work exploring these concepts comes from TPRC authors Briglauer, W., Cambini, C., Gugler, K., & Stocker, V. (2022); Jeanjean, F. (2022); Nikkhah, A., & Jordan, S. (2022), and Howell, B. E., & Potgieter, P. H. (2022).
Interested authors should submit their proposals to TPRC next year and to the Call for Chapters for the forthcoming Handbook on Digital Regulatory Agencies (Edward Elgar) by August 31. Most of all, register and engage at TPRC51 this fall.