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domingo, maio 25, 2008

Broadband may just need more time before its real benefits show through.


The OECD released its latest report on May 19th. It surveys the broadband landscape to December 2007, and tells a warm tale. The number of broadband subscribers in the world's 30 biggest countries grew by 18% to reach 235m, or one-fifth of those countries' total population. Between 2005 and 2006, prices fell by an average of 19% for DSL connections and 16% for cable lines. At the end of 2004 the average speed was 2 megabits(MB) per second; in 2007 it increased to almost 9MB.

But the excellent report, written by Taylor Reynolds and Sacha Wunsch-Vincent, goes beyond the numbers and examines why broadband is actually useful. And here the authors face a problem: there simply is not good data to show that broadband matters.


Ultimately, the report makes a strong case that the chief benefit of broadband is its creation of a participatory culture on the internet. This is a new form of collaboration, both for work and fun. Again, though, this is most evolved in laggard America.

All of this has public policy implications. First, it suggests that focusing on the sophistication of the infrastructure is only one part of the story. The rankings miss something crucial about how broadband is used, regardless of where a country stands. The OECD readily admits this.

Second, it is still early days. The countries that currently lead in broadband have little to show for it because the substantial uses that it can be put towards have yet to be created. So there is time for the slowpokes to catch up.

How long? Paul David, an economist at Oxford University, has shown that electric power, introduced in the 1880s, did not immediately raise productivity. Not until the late 1920s—when around half of America’s industrial machinery were finally powered by electricity—did efficiency finally climb. New technologies need a 50% adoption rate before the effects are seen, he reckons.

Broadband, too, may just need more time before its real benefits show through. After all, the top six countries only have penetration rates between 30%-35%. Although policymakers and the public might feel that super-fast broadband is essential, that view is based more on faith than fact.


The Economist


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