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Making the Nation Ready for Broadband

February 23rd, 2010 by Blair Levin - Executive Director, Omnibus Broadband Initiative

At last week's open Commission meeting, I explained how writing a National Broadband Plan is like solving a mystery.

The mystery involves why some parts of the economy have embraced modern communications to greatly improve their performance while others lag far behind.

We see this in our daily lives.

Since I started using ATM machines and moved to online banking, I, like millions of others, don’t exchange information with a bank the way I did 10 or even 5 years ago.

Why is it that when I recently had the occasion to visit a great emergency room in Chicago, they collected data from me just like a hospital I visited while in college?

When I started as an equity analyst, my firm physically published notes but within a short time relied entirely on digital distribution.

Why is it that despite my having graduated high school almost forty years ago, my sophomore daughter’s back-pack, and its 25 pounds of books, looks just like mine did? 

Indeed, some of the books appear old enough that they might be the same.

Since 9/11, a day we all watched television news networks together, we’ve radically altered how we obtain news.

Why is it that the networks our first responders rely on, networks the 9/11 Commission told us we needed to upgrade, still offer technology that could only be considered modern by the standards of the last century.

A recent book--Wired for Innovation—offers some clues.  In researching why certain companies benefit from the use of information technology while others, similarly situated, do not, the authors found the benefits of the technology only come to life if the companies also change their fundamental processes and develop what the authors refer to as a digital culture.  Having technology is not enough.

Similar clues can be found in the 1990 paper, “The Dynamo and the Computer”, which explored why major innovations in microelectronics, fiber optic communications and computing had not yet shown up in productivity statistics.

Part of the answer turns out to be diffusion lag---it takes time for one technical system to replace another.  The author points out in the early 1900’s factories didn’t reach 50% electrification until four decades after the first central power station opened.

One cause of that diffusion lag was the unprofitability of replacing “production technologies adapted to the old regime of mechanical power derived from water and steam.”  

The problem was not just getting the electricity.

It was the cost of completely reengineering factories to benefit from electric power over the tried and embedded techniques of an earlier time.

So today, some sectors of our economy have a diffusion lag in adopting their processes to take advantage of the modern communications era.

But why?

Solving the mystery of today’s diffusion lag turns out to be critical to what Congress asked us to do in directing us to give our country a plan for utilizing broadband to advance national goals.

The world, the economy, the way we live our lives, are all moving from the analog to the digital.   Yet some sectors---particularly health care, education, energy, public safety and government generally---are not keeping up with the opportunities presented by information communications technology, and thereby keeping us from achieving a high-performing America.

The national  broadband plan will show how our country can act to utilize broadband to have these sectors perform at a higher level. 

While the challenges are different than those faced in transforming our industrial base to electrification, it is similar in that an old regime--in this case regulations, reimbursement policies, and other requirements--has created barriers to improvements. 

The plan will present ways we need to act to remove those barriers, overcome the diffusion lag and capture the opportunities that others are already seizing.

 
 

2 Responses to “Making the Nation Ready for Broadband”

  1. Bill Reagan says:

    The information technology lag is a direct result in the government policies. I the gov would put money into the schools - for computers only - giving children - rich and poor - all computers - beginning in the first grade - this country would soar. As it stands now we will not. You can contact me at www.electronic-cigarettes-now.com if your interested in ideas that will work.

  2. Paul A. David says:

    Dear Blair Levin,

    A colleague at Stanford called my attention to the nice use you make in this 'post' to the main point of my American Economics Review (May 1990) paper on "The Dynamo and the Computer."

    If you have the time to read more of the details of the dynamic processes, including the varied infrastructure investments and the organizational and institutional adaptations that were involved, and which make the "diffusion lag" both more understandable, I would be happy to send you a digital copy of the longer study on which that brief article as based. All that I would need is an email address.

    Yours faithfully,

    Paul David
    Professor of Economics (Emeritus), Stanford
    & Senior Fellow, Stanford Institute for
    Economic Policy Research

    and point to the vari

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