As mentioned previously, we were attending the Personal Democracy Forum earlier this week. Winding up Monday’s session was a panel entitled “The Obama Broadband Initiative and the Future of the Internet,” with opening remarks by Blair Levin of the FCC (video here) and a discussion, moderated by PDF’s Andrew Rasiej, involving Free Press’ Josh Silver, NCTA’s James Assey, and AT&T’s Hank Hultquist.

The WSJ’s Digits blog offered an accounting of the panel:

Panelist Josh Silver, the executive director and co-founder of Free Press, a media advocacy organization, ripped into his co-panelists, who represented the wireless and telecommunications industries.

He accused them of price-gauging Americans on Internet service and monopolizing the industry rather than engaging in competitiveness and helping provide affordable access to the poor. “We’re looking at industries which are protecting a very lucrative business model, and there are starting to be increasing numbers of people at the gates understanding that the ISP market should be competitive,” Mr. Silver said.

It was a very spirited discussion.

Let me quote a few notable remarks on Twitter:

@mikemathieu: AT&T and cable industry reps wriggling on stage as Josh Silver points out price protection schemes of broadband providers.
@zbrisson: One of the best things of the day, Silver from free press calling the cable companies out for their oligarchic greed.
@abenamer: josh silver points out that the lack of competition with the cable and telephone duopoly keeps prices artificially high
@jonathanpberger: The hatred for ATT & Cable co.’s is palpable. The people want blood.

Tough crowd.

Among James Assey’s comments, he pointed out that companies are investing significantly in infrastructure, which will encourage faster speeds. As he put it, “We’re leaning forward to the future.” As we’ve said many times, the cable industry along has invested well over $100 billion since 1996. Assey also noted that there is competition in the broadband marketplace; however, it costs a lot to build & maintain robust broadband networks and private capital is generally required. He also pointed to a recent Pew report (Home Broadband Adoption 2009) that found that value & utility beat availability & price when it comes to why respondents did or did not take broadband.

This national discussion of America’s broadband future is important and we’re committed to taking part in the conversation. We look forward to other events like PDF as the process moves forward.

Rarely a day goes by in DC without a panel discussion, new report or legislative hearing on the importance of broadband. Yesterday, the Pew Research Center’s Internet & American Life Project released a lengthy survey on Home Broadband Adoption. Not only does the study delve into the importance of Internet in the everyday lives of Americans, but it also shows a noteworthy rise in broadband usage over the last year.

The study notes that now, “63% of adult Americans now have broadband internet connections at home, a 15% increases from a year earlier.” That is up from 54 percent in 2007.

In addition, Pew’s study also looked at specific populations, like seniors, rural Americans and lower income households. Some key statistics from the report include:

• “Respondents reporting that they live in homes with annual household incomes below $30,000 experienced a 34% growth in home broadband adoption from 2008 to 2009.”
• “Broadband usage among adults ages 65 or older grew from 19% in May, 2008 to 30% in April, 2009.”
• “Adults living in rural America had home high-speed usage grow from 8% in 2008 to 46% in 2009.”

The broadband adoption numbers have definitely moved upwards in recent years and we should take a moment to applaud this progress. At the same time, there is still work to be done. We should ensure that all American households have access to some kind of broadband connection.

Broadband can be engine of job creation, a facilitator of educational and health care opportunities, and a means of shrinking the distances between isolated communities. Yet, without access, some folks are left behind.

This is why a broadband stimulus package (part of the American Recovery and Reinvestment Act) is so important. The stats demonstrate while broadband usage is going up, there is still a clear need to increase broadband adoption and use.

How these stimulus grant funds are used is critical. Earlier this year, we laid out a few ideas on how program should be structured around the following priorities:

1. Extending broadband facilities to unserved areas.
2. Supporting programs that enable underserved populations to acquire and to make effective use of broadband service where it is already available.
3. If funds remain, extending broadband facilities to underserved areas defined in terms of below-standard speed and other qualitative measures relative to today’s current-generation broadband services.

We’ve talked about the broadband stimulus package several times of the past few months. A white paper we released back in March provides our perspective on how funds should be implemented. And NCTA President & CEO Kyle McSlarrow shares his thought on this issue in this video. We also posted a White Paper from the U.S. Chamber of Commerce about the impact of broadband on senior citizens.

The handwringing about broadband adoption in the US continues unabated with yet another group calling for either some sort of government intervention or some form of nationalization (though Vint Cerf now claims he was joking – mostly). In trying to clarify his comments, Cerf actually added more confusion.

“Maybe we should treat the Internet more like the road system, look for ways of creating incentives to make the Internet more accessible to everyone, and less likely to be abused by the private sector,” Cerf said. … “It’s not likely you’re going to want to have multiple roads owned by the private sector to get to your house. Generally speaking, that’s true of the power system — you don’t have multiple wires going to your house to carry power.”

It’s good that Cerf cleared this up. He doesn’t want nationalized Internet. He just wants one wire going to your house, no “multiple roads” run by the private sector and something that resembles the road system (which is run by government, right?)

As just one example of why making the Internet like roads is a bad idea, look at the Big Dig in Boston. It was completed five years late for almost five times its original $2.6 billion budget. Just after it opened, a huge chunk fell on a passing cars causing injury and a fatality. It is a perfect example of government inefficiency on large scale building projects. Not exactly a great model when compared to cable’s $130 billion investment in its network and the more than $200 billion the telephone companies are expected to invest in their upgrade.

While I’m still confused about how making the Internet like roads isn’t actually a call for nationalization (to me, it looks like a duck, walks like a duck, and quacks like a duck…), fortunately, in the midst of the confusion comes a voice of reason.

The Pew Internet & American Life Project released its latest report on broadband adoption on Wednesday. Pew isn’t a group you can write off as Astroturf. They’ve done a lot of extraordinary research into how Americans are using the Internet. What did they find?

• The average price of broadband dropped 4% since the last survey (12/2005) to $34.50;
• Prices dropped despite the fact that 29% of respondents reported opting for a premium tier of broadband service – taking cable’s high-value offerings of faster speeds at a higher price;
• Across the board, broadband adoption grew 17% nationwide for the 12 months ending May 2008 – the strongest growth areas were among senior citizens, lower-middle income households and rural areas;
• The number of dial-up users who report disinterest in upgrading to broadband service remains roughly constant at 62% – even though the average price of dial-up actually increased 9% since the 12/05 survey;
• Of respondents who do not use the Internet, only 7% said that price was a deciding factor.

What this clearly demonstrates is what cable has been saying all along – while the goal of connecting every American is certainly a priority, and one we are working towards – the notion that there is a national crisis which requires immediate government intervention is simply overblown.

Contrary to assertions that the price of broadband in the US is prohibitively high, very few respondents in the Pew study agreed. This correlates nicely with the a Parks Associates Study last year that found very few people refused to get connected due to cost considerations. Adoption increased among Americans in households earning between $20-40k per year by 24% – the highest growth rate among any economic group.  Only among household earning less than $20k a year did adoption rates actually fall.  Given the state of the economy and the weakened dollar, this is not surprising. 

It does, however, highlight the need to specifically target the barriers to adoption that low-income families face – ranging from lack of computer ownership in the home to lower education attainment. In stark contrast to the OCED figures touted by groups like Internet for Everyone – figures about which there is considerable debate regarding methods and measurements – Pew finds that when you actually ask America what they’re paying for broadband you get a very reasonable-sounding number.

Further, the 17% growth rate in broadband adoption is astounding given the level of economic uncertainty gripping other sectors of the economy. This speaks to the steady march toward near-universal nationwide adoption. With more than 55% now connected, broadband Internet has passed the 50% barrier faster than any technology in history – faster than cell phones, radio, television, and computers, Will all Americans be online next year?  No, but we’re definitely getting there – and as we do, cable services are improving to keep pace with faster speeds and lower prices.

Last, but not least, note that 24% of dial-up users in rural America report that they would adopt broadband if it became available to them.  The big takeaway here is that the US, working with ISPs on policies such as the changes to the broadband loan program that were included in the Farm Bill, is doing exactly what it should be doing – focusing on the small percentage of Americans who are either unserved or underserved. There is clearly demand in rural America for broadband, and we ought to use the power of the government wisely to provide the right incentives for companies to connect the unconnected.

The cable industry continues to work with Connected Nation to identify areas that are not reached by cable so every effort can be made to focus government resources on those areas that need it most.

Let’s also not overlook voluntary efforts by the private sector. For more than a decade, cable systems through Cable in the Classroom have been offering complimentary broadband service to any school within the cable system’s broadband footprint. That’s an offer that’s been accepted by thousands of schools already, and it continues to stand today.

What we should not be doing, and the Pew study makes this clear, is pursuing heavy-handed regulation (or even worse, the radical nationalization ideas proposed by Vint Cerf and others).