When I gave my first public speech about broadband planning process last July, I criticized the quality of analysis in the public comments we had received. Many comments were either uninformative or business-as-usual responses, and few offered concrete or creative ideas as to how to address the issues that caused Congress to ask for a plan.

As I reflect on the last six months, with the plan deadline less than a week away, I have to change my tune. The public record since July is voluminous, with nearly 25,000 filings. They included many documents that shaped our thinking and lead to core recommendations in the plan.  For example, Dr. Gerry Faulhaber, a professor at the Wharton School of Business, filed comments noting the importance of transparency for consumers in broadband speeds and service which provide the underpinning for our recommendations on that topic.

There are other filings I could note but perhaps the most interesting set of filings—or at least the most unexpected from my point of view—were those focused on the importance of personal data in regards to innovation and privacy.  The role of personal data in the online world is not a “new” idea, but its importance to broadband became increasingly apparent through public comments and events beyond the Commission. The Federal Trade Commission (FTC) held a series of roundtables, the last of which concludes March 17, focused on the balance between innovative use of personal data and privacy. Congress has spearheaded similar efforts at legislation, led by Rep. Boucher, with several pieces of legislation in the works. Just last week The Economist ran a front page article on the accumulation of information and data online, while over the last twelve months major online companies such as Google and Facebook have focused on enhancing privacy initiatives for consumers.

Many of the most innovative applications on the Internet are based on consumers sharing personal data. The data that businesses collect have allowed them to provide increasingly valuable services to end-users, as they are a source of significant value. Web searching, location-based services and many of the “apps” that consumers use on their smartphones make use of personal data in return for services and goods, which are often free. Targeted advertising uses better data to deliver more focused and relevant information to consumers, who in turn are up to six times as likely to click or act on the proffered offer.

There is a great potential for innovation but it is critical to get the privacy issue right.  At a basic level, privacy online and offline are similar – consumers want a right to the privacy of their data and the proper use of their information if voluntarily shared. They expect that companies and organizations will collect, analyze, share and safeguard their data properly. However, the online world brings additional complexity. For one, data are collected in manners that consumers often fail to understand. Browsing, searching and interacting online can result in the surreptitious collection of data -- for instance with the “cookies” that remember a user (and her information) -- in ways that are not fully transparent or known to consumers. The information being shared and the terms of its use are complex, and while better disclosure standards that are easy to read and simple to understand can help, additional actions are needed. 20th century notions of privacy protection break down once information is put into digital format. Unlike the offline world of paper and photocopiers, sharing of digital information is as easy as a click.

In addition, digital personal data are not just limited to traditional commercial information – health records, energy consumption, educational figures and governmental data are all critical pieces of an individual’s digital profile. As more applications utilize the Internet and more devices connect to the Internet, this information is exploding. Safeguarding this information and giving consumers control and choice are critical outcomes to ensure that any personal information shared benefits consumers and drives innovation.

The plan itself contains several recommendations for personal data in regards to innovation and privacy. It encourages Congress, the FTC and the FCC to work together to clarify the relationship between users and their online personal data profiles. It highlights the potential for Congress to help spur the development of private-sector companies that could aid consumers in better managing their own personal data. In addition, we think one of the most important agenda items for the country is to consider how the Privacy Act should be reformed. While the Act has done a tremendous job for consumer welfare since its enactment in 1974, the 21st century realities of personal data require an update.

These recommendations, taken together, can assure that consumers have control over their personal data and confidence in the security of that data, helping to increase innovation and promote a robust and healthy broadband ecosystem.

I'm speaking to a group of institutional investors about the Plan on  today.  It will be in a question and answer format, but I thought I would share how I will approach the conversation.

I hope to talk about how the Plan will affect the investment climate for what we think of the broadband ecosystem (suppliers of network services, devices and applications) both on the demand and supply sides. The Plan will increase demand and impact supply in every part of the ecosystem in the long-term in a few ways.

First, the plan will accelerate the move of certain sectors from processes designed and optimized for the technology of the past to more efficient processes enabled by broadband. 

As we discussed at the last Commission meeting, certain sectors of the economy-health care, education, public safety, energy, government services-have not utilized new, broadband-enabled processes nearly as effectively as they can.  We have identified barriers to that use that, if overcome, should spark an important increase in the demand for broadband across the board.

For an example of how such changes can positively affect the ecosystem, look at slide 101 from our September, 2009   meeting.  It reports on a study that demonstrated that using hosted electronic health records could save 18% over having such records on the doctors' own servers.  These savings are enjoyed even though for such hosting to work, the doctors have to spend twice as much on connectivity.  As noted in the slide, the dollar savings are only the beginning of the benefits of such services.

[Read the full speech here...]

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.

Nobody who was at the FCC’s broadband field hearing at Gallaudet University in November will forget the passion of Marlee Matlin. 

Her dedicated efforts led to captioning laws being passed nearly a generation ago.

But now, she told us, her work was being “erased.”  Closed captions were being taken out of broadcast content being shown on the Internet.  Among her many examples:  her own performance on “Dancing with the Stars!”  Her distress was palpable.

We posted a video clip of Marlee’s statement on our blog, and her passion was seen over the blogosphere.  Someone forwarded the clip to Disney.  And Disney got to work.

As a result, Disney has announced that ABC.com is expanding its captioning efforts. Instead of just captioning scripted dramas and comedies, it has committed to captioning all of its long form programs that it puts on its online player at ABC.com, including reality and live shows like “Dancing With The Stars.” 

Way to go, Marlee. Way to go, Disney. And way to go to the person in the blogosphere who thought to connect the two.