Universal Service For Broadband Internet? Probably Coming in Hillary’s 2016-2024 Term(s).

I love S-Curves.  Society obeys them.  Which gives me that wonderful illusion of society doing my bidding.  Almost as good as an invincible robot army on a secret Pacific island fortress.  But I digress.

  • (see chart below – US broadband penetration – source Pew Research Center)
  • Way back in 2001-2002, I derived an S-Curve and predicted the US would hit 60%+ broadband penetration around 2010-2012 (if memory serves me right).
  • The tipping point would occur in 2002-2003 as we hit the classic “critical mass” penetration rate of 10%-15%.  We’d see a nice little hockey-stick of acceleration after that in the mid-2000’s.
  • Penetration would start to peter out around 60%-75% on the right end of the adoption bell curve.  People too poor, remote, un-interested, or just plain ga-ga to sign up.
  • I expected many would predict that broadband growth was “over” at this point.

My forecast was that it was only a matter of time before those late adopters were connected.  Penetration would go on to reach 98% of US households.

  • This was not a particularly bold forecast.  It simply matched the @98% penetration rates of US telephone service and electrical service.
  • The only leap of faith was that “the Internet” would come to be seen as an essential utility on par with electricity and phone service.   Weirdly enough, investors used to argue with me about this back in the early 2000’s.   Adoption curves being what they are, that seems pretty obvious now at 70% penetration.  Back then, high-speed Internet was seen as a privilege.  It is on the way to becoming a basic right.

All of the above was obvious (enough for me to write it up in public) 10-12 years ago.  Most of it has been borne out.  We are now just playing out the end game.

Looking forward, broadband will become a “necessity.”  Consider all the coverage of the Obamacare website’s failure.  The assumption is that it is totally OK to have poor people gain access to a national program via a medium that 30% of the country (mostly the poor) can’t access at home.  That disconnect can’t last forever (the Cato Institute’s best effort’s notwithstanding).

The question is not “if” we will extend broadband coverage to the final 25%-30%.    It is “how” and “when.”  The basic mechanisms are clear and well-established in the electricity and telecom space.  A mix of public subsidy, municipally-owned entities, and coercion.  The exact proportions remain TBD, but we are clearly going to see more of all of the above until we hit that 98%

I think the US telcos have already figured this out.  The cable co’s seem more oblivious.

  • That’s why Verizon dumped its rural access lines (where it could) in the Bush era.
  • That’s why AT&T tried to dump it rural operations (only to be stymied by post Obama, post 50% HH penetration state regulators).  It is also probably why AT&T is so busy trying to buy in a European wireless operation (probably to eventually split away from the local networks business).
  • Big Cable, which has always avoided meaningful regulation in the past, seems to think it will be able to maintain that winning streak.  However, their success in taking subscribers from the telcos only draws them deeper into the briar patch.  I’m not sure if I’d credit the telco’s with the same intelligence as Br’er Rabbit, but maybe they are smarter than I thought…

Which brings this all full circle to Hillary in 2016.  I think she will run and likely win (another post).

  • Internet penetration will probably have flatlined around 75% long enough to be an obvious problem.
  • More and more goods & services will be available ONLY over the Internet.
  • The US’s lame “private market” broadband speeds will seem that much lamer.  Also harder to obfuscate.  Gigabit islands are already springing up in affluent towns and development-hungry municipalities.  The gigabit “haves” will only highlight the inequality gap (and social envy) even further.
  • And so we will begin the end-game.

Hmmm…  I wonder if penetration of “real” gigabit-capable, fiber-based high-speed internet will have hit that magic 10%-15% tipping point by 2016?  Starting another S-Curve adoption cycle?  Seems possible as I think about it now.  Just slaves to the S-Curve.  Dreaming the levers we pull somehow afford us control.  Now if I could only get together that invincible robot army and find a nice warm island somewhere…

Pew-US-Home-Broadband-Dial-Up-Adoption-Trends-Aug2013

Share
This entry was posted in tech-telecom-markets-macro. Bookmark the permalink.

One Response to Universal Service For Broadband Internet? Probably Coming in Hillary’s 2016-2024 Term(s).