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CHAPTER IV - Measuring Results and Their Consequences

One important question is how to evaluate the impact of government intervention. Not everything is a problem that must be solved, argued Robert Pepper, Head of Global Connectivity and Technology at Facebook. Christopher Yoo, Professor of Law, Communication and Computer & Information Science at the University of Pennsylvania, agreed, cautioning not to assume that an intervention to fix a problem lacks flaws; the better approach is to compare the two.

Alden Abbott, General Counsel at the Federal Trade Commission, agreed. It is critical to ask, “What are the costs and benefits of any government intervention,” and “Is this the most efficient way we can try to promote this public good?”

The question remains, however, whether regulators have the institutional capability to undertake such an analysis. One recurring theme was the need for better economic research to measure outcomes from governmental action to advance broadband. Unfortunately, too often all that is available is anecdotal evidence. The group noted the FCC will be in a better position to address such questions through its new Office of Economics and Analytics.

One of the consequences of the current system with fragmented governmental responsibility for funding broadband is that no one agency is undertaking a comprehensive cost-benefit analysis of the value of broadband infrastructure investment in the context of broader public policy objectives. For instance, two federal agencies have a direct funding role with respect to broadband infrastructure—the FCC, through its Universal Service Fund, and the Department of Agriculture’s (USDA) Rural Utility Service (RUS), through its broadband loan and grant programs. Each agency is constrained by its authorizing statute, and neither is in a position to fully fund ubiquitous next generation infrastructure in areas of market failure. This is unfortunate as such action could have important externality effects impacting other parts of the federal government, such as lowering the cost of healthcare. When looked at across the entire government, the case for more investment is clear. Yet, given institutional and political constraints, neither agency is willing or able to shoulder the full cost.

Wayne Leighton, Chief of the FCC’s Office of Strategic Planning and Policy Analysis, pointed out the danger of conflating outputs and outcomes. For instance, focusing solely on the number of homes with newly available broadband does not answer the question of what benefits come from that connectivity. The more difficult task, he added, is establishing causation: does the availability of broadband actually cause improvements in specific areas, such as job growth or productivity?

While there was general support for the notion that government intervention should be subjected to a cost-benefit analysis, not all agreed. Jonathan Chaplin, Managing Partner of New Street Research, pointed out that we are not going to know what will drive the economic return at the time when a decision to build communications infra- structure is made. If we demand a demonstration of economic return, nothing would ever be built. Simply put, we cannot today foresee the applications that will justify the investment.

Moreover, not all governmental interventions are susceptible to rigorous quantitative analysis. Several participants suggested that the goal of promoting greater access to broadband should not be viewed just through the lens of economic benefit; there is a broader dimension that implicates social equity and citizen participation in a connected world. Paula Boyd, Senior Director at Microsoft, observed that if we do not have connectivity in certain areas, it has consequences not just for rural areas, but rather for all of us. Safiya Umoja Noble, Assistant Professor in the Department of Information Studies at the USC Annenberg School for Communications and Journalism, urged policymakers to think about what connectivity means in the broader context of income inequality; does the minimum wage or basic universal income need to be on the table to make connectivity affordable for all?

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