Federal Communications Commission

The Cost of Digital Exclusion

March 9th, 2010 by Brian David - Adoption and Usage Director, Omnibus Broadband Initiative

By Brian David, Adoption and Usage Director , John Horrigan, Consumer Research Director, and Scott Wallsten, Economics Director (Adoption and Usage Team)

For those following how the Broadband Task Force has characterized the problem of non-adoption, the term “cost of digital exclusion” is familiar. The idea has roots in the academic literature, where Rahul Tongia and Ernest Wilson have argued in “Turning Metcalfe on His Head: The Multiple Costs of Network Exclusion” that the costs of not being online rise faster than the growth of the network. Blair Levin’s “Wired for Social Justice” speech touched on this idea in noting the societal benefits that come about from getting more people online.

A new report prepared by the Digital Impact Group and Econsult Corporation (DIG/EC) adds to the discussion by attempting to quantify the economic impacts associated with digital exclusion. The DIG/EC report, The Economic Impact of Digital Exclusion, finds that the aggregate costs of having one-third of the nation without broadband access comes to $55 billion per year when looking across 11 areas of impact (e.g., health, education, economic opportunity). 

We note that the estimated cost should be approached cautiously.  In addition to the inherent data-related challenges in this kind of undertaking, the report explicitly does not attempt to estimate the net benefits - it does not include the cost of programs that may be necessary to bring about the growth in broadband access that create the estimated benefits.

Nonetheless, we hope that the DIG/EC study will spur an ongoing discussion of the costs of digital exclusion.  Such a discussion among policy-makers, practitioners and economists is crucial to building an inclusive broadband future.  As Mark Cooper of the Consumer Federation of America (CFA) observed in The Challenge of Digital Exclusion in America: A Review of the Social Science Literature and Its Implications for the U.S. National Broadband Plan, “digital exclusion can be seen as exacerbating the underlying problems of social exclusion and inequality.” The DIG/EC study helps us think of the potential opportunities that may come about if more people have broadband access, while challenging analysts to do more to understand the costs of getting there. 

As we approached today's Digital Inclusion Summit, DIG/EDC and CFA remind us of the stakes involved with closing gaps in home broadband access. Broadband is a pathway to benefits that the already-wired among us take for granted: news about our communities and government, better understanding of health care challenges, more information for purchase decisions and job search, and staying in touch with family and friends. The DIG/EC study helps us think in dollar terms about the potential scope of benefits, and CFA focuses on how digital exclusion can harden established patterns of inequality – possibly making it even more costly over time to address access gaps. Stayed tuned for how the Broadband Plan proposes to address these gaps.

4 Responses to “The Cost of Digital Exclusion”

  1. Jim Tobias says:

    Thanks so much for pointing to the excellent DIG/EC study. I was particularly glad to see its many references to the cost of excluding people with disabilities in education, employment, and other areas of social participation. It may be that the dollar estimates there are too conservative.

    One point I did not see raised in the DIG/EC study or in the 2005 Litan study it cites is unpaid caregiving. Millions of people forego productive economic activity of one type or another in order to care for their family members with disabilities of all ages. Broadband technologies such as remote monitoring and advanced communications applications could reduce this economic loss while improving the quality of life for both sides of the caregiving equation.

  2. Jim Tobias says:

    One potential cost of exclusion that I did not see in the DIG/EC study might be called "deferred digitalization" in the public sector (either "civic engagement" or "e-government"). When there are concerns about equality of service, a public sector agency may elect to delay migrating to online forms, information services, etc. For example, a school district may continue to use printed parental notification and permission slips because they know, or believe, that too few of the students' families are "connected". This adds up to hundreds of instances per year, as any parent can attest! This may make the estimate on p. 28 far too conservative, both by its frequency count (1 per month) and by the fact that it attributes the loss only to directly excluded households, not to all households in the deferring jurisdiction.

    This issue may deserve not only quantification, but the development of some decision support tools that public agencies might use to improve the management of their migration to e-government.

  3. Jim Tobias says:

    Although the DIG/EC study does mention disability as a digital exclusion factor in some important ways, it treats disability as if it were simply another demographic category. Missing is any attribution of broadband underadoption to well-known accessibility issues. That is, there are perhaps millions of Americans who are choosing to stay offline because they know or believe that they will not be able to use broadband technologies effectively or conveniently. Some studies have teased out non-adoption reasons such as "too hard to use" and "don't understand it", but we still lack a rigorous, explicit, quantified analysis. The usability and accessibility of broadband technologies should be improved, and an important step in that direction would be to convince hardware and software marketers and designers -- and broadband adoption advocates in the public sector -- that these user interface gaps are significant adoption barriers.

  4. Jim Tobias says:

    I wish that one component of the CFA study (and indeed almost every study I've ever seen on ICT adoption) were elaborated and re-thought, and that is the role of design, usability, and accessibility in adoption. The CFA study and others have pointed to "skill" or "digital literacy" gaps as barriers to adoption, and indeed they are. But we could just as easily reverse the burden, and argue that hardware and software designs are still not inclusive enough, that large numbers of potential users are unintentionally intimidated away from exploring and committing to broadband technologies. Certainly there are limits to what mainstream designers can be expected to do to make their products less forbidding to late adopters, but just as certainly they have not exhausted the range of simple, effective, well-documented solutions to this problem.

    When it comes to accessibility, the situation is even more clear. We are talking about absolute barriers that no degree of consumer training or even confidence can overcome. A website with images which lack text alternatives, but which are essential for navigation and comprehension, an uncaptioned online video, or a page of text in light grey on a medium grey background, make unreasonable and insurmountable demands on a significant and growing number of users.

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