Broadband

This has been a busy week for broadband policy, especially early on.
On Monday, OECD released its 2006 statistics for broadband penetration- OECD Broadband Statistics to December 2006

Over the past year, the number of broadband subscribers in the OECD increased 26% from 157 million in December 2005 to 197 million in December 2006. This growth increased broadband penetration rates in the OECD from 13.5 in December 2005 to 16.9 subscriptions per 100 inhabitants one year later.

It also showed the US slipping to 15th in broadband usage. (See also U.S. Broadband Access Slips Further.)
That was quickly followed by a report from the Information Technology and Innovation Foundation, Assessing Broadband in America: OECD and ITIF Broadband Rankings and an official statement from the State Department, expressing concern over the methodology.
Tuesday, the U.S. Senate Committee on Commerce, Science, & Transportation held a hearing on Communications, Broadband and Competitiveness: How Does the U.S. Measure Up? (See Answers Sought for U.S. Broadband Decline – News and Analysis by PC Magazine for a summary of the hearing.)
The House Commerce Subcommittee on Telecommunications and the Internet also held a hearing on Tuesday – the latest in its series of hearings on the Digital Future of the United States: Part IV, Broadband Lessons from Abroad
I have been some what agnostic about broadband. Yes, broadband is needed but speed isn’t everything. Nor is broadband penetration the best measure. It is like measuring the number of cars per person and how fast they can go. That says little about the important questions of usage by whom and for what.
One of the first activities of Athena Alliance was a conference on Inclusion in the Information Age: Reframing the Debate. Our focus was on the question of access to information and services. I think the findings of the conference still relevant for today’s broadband debate:
Points of Consideration
As America enters the 21st Century, we are simultaneously confronted with great opportunities and formidable challenges. A fundamental change is occurring in how human beings organize work and economic activity, driven only in part by developments in information technology (IT). As part of this transformation, those individuals and communities currently left behind are in danger of being further disadvantaged. Others who are currently just coping are at risk of being left behind.
To explore these issues, Athena Alliance – a non-profit organization dedicated to public education and research on the emerging global information economy and the networked society – hosted a conference on “New IT – New Equity – New Economy.” The discussion at that conference – and subsequent events – has resulted in the following points of consideration concerning the technological, economic and social aspects of the revolution in IT and the rise of a new economy.
Point one: Focus on the transformation, not the technology.
The issue of concern is the transformation to the Information Age. It is not simply a question of technological deployment. The end purpose is not to narrow some gap, but to ensure that everyone has access to the expanded opportunities. Our framework should be one of inclusion for all in the broader activities that make up society and the economy.
Point two: Review and coordinate efforts.
The problem has aspects of telecommunications policy, such as infrastructure and standards and elements of technology policy, such as research and development and technology deployment. But it also has aspects of policies on training and workforce development, education, economic development, housing and community development, human services and trade. Reaching our goal requires a coordinated approach — in the private, public and non-governmental sectors – that combines the various elements of providing opportunity and inclusion in the information age. To coordinate policy, the focus of governmental digital opportunity efforts should be the White House, not in any one department or agency.
It is also time to take a new look at some policy areas. For example, a comprehensive approach is needed toward all parts of managing the information commons: privacy, intellectual property rights, “right-to-know” policies and other related areas.
Point three: Work to ensure that everyone has access to the technological infrastructure.
Barriers to access to the infrastructure are many. Ways of overcoming those barriers are also varied, including public access facilities that can combine access with training and other activities, as well as home access. With respect to access in the home, we must return to the question of universal access. We also need to address the development of broadband capabilities – both at home and at work. Both home use and public access points are important. Multiple access public points are needed, such as existing public facilities, training centers, libraries, and after-school centers. For these facilities, sustainability is the key. But, it is not enough to simply provide access. We must work to weave information technology into the operations of community groups in a way that will both help individuals use the technology and will make those groups more efficient and effective in their core mission.
Some of the barriers to digital inclusion are physical: the usability of the technology. This is not, as commonly thought of, an issue only for those with disabilities. The problems of usability and human-machine interfaces affect all of us and research on ways to increase access for those with disabilities will pay off in increased usability for all.
Point four: Encourage and facilitate participation and involvement by all in the digital economy and information society.
To foster participation and involvement, the technology must meet people’s needs – not define those needs. Information technology can help people in their day-to-day lives if it is designed and structured in such a way that it helps answer their questions and solve their problems. Otherwise it becomes a barrier and a source of frustration. This is the danger of what some refer to as the “over-wired” world.
It is important to understand that individuals have different needs. A one-size-fits-all may help some – and increase their participation and involvement – but will block others. By focusing on “demand-pull,” rather than “technology-push,” we can better tailor the technology to meet individual needs.
Development of meaningful content, including more locally-based content, is one of the ways to increase the level of participation. E-government is one important form of meaningful content. But, we must also insure that those who are not on-line are not left behind. No services or information should be removed or dramatically cut back from traditional means of dissemination in favor of electronic dissemination until and unless all members of the community have access to that electronic means as easily as they have to the traditional means.
Point five: Focus economic development on the Information Economy, not the Internet Economy.
The information age will require a new approach to economic development. Key to the process is using and developing assets: financial, social, skill-based, and information assets. We must focus on building the local economy’s vitality and ability to compete in the age of globalization and help people make the switch to the new economy.
Our priorities should include:
• development of processes for identifying and assessing local assets,
• revitalizing programs for training the existing workforce,
• helping small and medium size enterprises make use of IT, and
• fostering entrepreneurship at all levels and in all sectors.
We must also develop and utilize new mechanisms for financing the transformation, including Individual Development Accounts and new ways of financing intangible assets.
The New Markets Initiative is another example of a way to reach out to communities left behind. It is a true bipartisan effort, which the Bush Administration and Congress would do well to emulate and build upon.
Collaborative learning and sharing of information is also important in the larger process of economic development. There are a number of examples of information assets being applied within businesses and with local economies. We need to utilize new knowledge management techniques and old-fashioned communications techniques to collect, disseminate and better utilize that information.
Point six: We need a better understanding of what is going on.
We need to re-look at the data needed for economic development in the information economy. The problem of data extends beyond the scope of local economic data. We need both better data and expanded analysis of the socioeconomic aspects of the information technology. That research must be translated into policy relevant terms. For this reason, Congress should seriously consider re-establishing the Office of Technology Assessment (OTA).
Point seven: The decision making process must be open.
True inclusion and opportunity can only occur if the process of decision making is open and transparent. Information technology has a tremendous potential for opening and maintaining channels for general input and advocacy. However, decisions made about the technology can have the effect of closing off the process rather than opening it up. We must insure that all parties are at the table when decisions, including issues such as standard setting, are made.
Point eight: Innovate and experiment.
We are in a time of transformation and change. The speed of that change and the pace of economic activity will vary. Yet the change is real and will continue. In such a time, we must often invent new ways of coping with our problems and new policies for guiding our economy and society. Such experimentation will require great policy discipline, however. It requires a strong, unbiased means of evaluating programs and policies – and the political discipline to follow the guidance of that evaluation. We must also find means to ensure that the evaluations are timely for the fast moving policy arena. The goal in evaluation is not simply proving the effectiveness of an action – it is to facilitate learning. Learning is the hallmark of the Information Age. Our public policy process must embrace that concept as tightly as the rest of our economy and society already have.

Innovation bills pass

Looks like the log jam on competitiveness/innovation bills in Congress has finally give way. Yesterday, the Senate passed the America COMPETES Act (S. 761) by a vote of 88 to 8. The bill is essentially the same bill as last year and implements many of the recommendations of the National Academy study, Rising Above the Gathering Storm. The full title describes the bills intentions: the America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science Act. It strengthens and creates new programs for education and R&D, including the creation of an Advanced Research Projects Authority in the Department of Energy (ARPA-E). Two more minor provision in the bill which I believe are especially important for the future: the creation of a Cabinet-level Council on Innovation (see our 2005 letter of support on this) and a request that the National Academy conduct a study on barriers to innovation. These actions should lay the foundation for the next step in crafting a more comprehensive innovation strategy.
And earlier this week on Tuesday, the House passed two of its innovation/competitiveness bills — the 10,000 Teachers, 10 Million Minds Science and Math Scholarship Act (HR 362) to authorize science scholarships for educating mathematics and science teachers and the Sowing the Seeds Through Science and Engineering Research Act (HR 363) to authorize appropriations for basic research and research infrastructure in science and engineering and for support of graduate fellowships. Both of these bills are much more narrowly focused on specific S&T issues.
Now come the really interesting part, reconciling the House and Senate actions. The Senate has passed a big package. The House has deliberately taken a more piecemeal approach. The two have to some how be put together.
The good news on this front is that the bills have overwhelming support. As the Los Angeles Times noted:

Congressional Democrats and Republicans have finally found something today that they can agree on–legislation intended to boost U.S. prowess in technological competition worldwide by improving science and mathematics teaching from kindergarten through graduate school and assisting researchers early in their careers.

So, there are still a number of bumps in the road, including less than enthusiastic support from the White House (see Statement of Administration Policy on S. 761, HR 362 and HR 363). But the tea leaves look promising.

Something to think about

Two good reads I would like to point out:
1) Steven Pearlstein – From Old World To Real World – washingtonpost.com — on globalization and strategic trade:

Consider Intel’s recent announcement that it would build an advanced, $2.5 billion chip fabrication plant in Dalian, on China’s northeast coast.
We can all agree this plant will be a boon to the Chinese economy. And we can be pretty sure it will be in the interests of Intel shareholders. But is it really in the best interests of the U.S. economy?
It would be one thing if the Chinese had developed the capacity to make advanced microchips on the basis of their own investment and ingenuity. But it is quite another when the technology for the chips and chip production has been created by American researchers and American companies, and transferred wholesale to a developing country that makes no secret of its intention to use that knowledge and experience to improve its own industry.
By what reasoning is this a net plus for an American economy that is supposed to prosper in this globalized world on the basis of its high-tech know-how? Can you really say that, in such a high-value-added industry, the lower cost of imported computer chips will offset the foregone economic output — jobs and profits — that Intel’s move entails?
As it turns out, the reason it will be cheaper for Intel to make those chips in China has little to do with lower-cost labor. That’s because chip factories aren’t particularly labor intensive. In fact, a study by the Semiconductor Industry Association found that 90 percent of Asia’s cost advantage over U.S. production is attributable to government subsidies and tax breaks. In the case of Intel’s new plant, I’m reliably told that those subsidies amount to about $500 million. That’s a sum well beyond anything available to Intel in the United States. And it hardly fits into any common-sense notion of free trade or fair and open competition.
. . .
Contrary to what you hear from editorial writers and other free-trade ideologues, it is not “protectionist” for the United States to impose countervailing duties on imports from a country that subsidizes exports and keeps its currency pegged to the dollar.
It’s not “anti-business” to toss out a tax code that encourages multinational corporations to invest overseas and replace it with one that gives tax preferences to companies that create high-value-added jobs in the United States.
And it is not “class warfare” to raise taxes on those who have benefited from globalization to pay for health care, wage insurance and retraining of workers who have lost their jobs as a result of globalization.

2) James Surowiecki’s It’s the Workforce, Stupid!: Financial Page: The New Yorker:

In the nineteen-nineties, with U.S. corporations in the midst of what the Times called “the downsizing of America,” a new term appeared: the “seven-per-cent rule.” It was a simple formula: when a company announces major layoffs, its stock price jumps seven per cent. No one worried too much about whether the rule was accurate—it was a catchy way of expressing a basic assumption about corporate layoffs: downsizing is an easy way to make Wall Street happy. So when, recently, two companies with lagging stock prices—Circuit City and Citigroup—announced major job cuts, one might have expected their stock to soar. Instead, Circuit City saw its stock price tumble four per cent the day after it announced it was getting rid of thirty-four hundred of its most experienced sales associates, and Citigroup’s stock barely budged when it said it would be cutting seventeen thousand jobs.
This may have surprised the executives who had planned the cutbacks, but it shouldn’t have. Over the past decade, many academics have looked at how layoffs affect stock prices, and they’ve found that the seven-per-cent rule is bunk. Instead of rising sharply, the stock of companies that trim their workforces is likely to fall. A recent meta-study that surveyed research from several countries, covering thousands of layoff announcements, concluded that, on average, markets had “a significantly negative” reaction to job cuts. Individual companies, of course, sometimes see stock prices jump after layoff news, but there’s no evidence that downsizing is a guaranteed hit with investors.
. . .
The increasingly short-term nature of C.E.O.s’ jobs, along with the pressure on them to deliver results quickly, doesn’t help matters. The average C.E.O.’s tenure today is just six years, long enough to see the benefits of downsizing (like a lower payroll) but not long enough to suffer costs that may appear in the long term. And the lack of job security means executives have to worry more about what shareholders and analysts are saying. While the market as a whole may be skeptical about downsizing, many powerful people on the Street aren’t. Before Citigroup announced its layoffs, for instance, it had to contend with a chorus of critics—including its biggest shareholder—insisting that the company was a bloated giant that needed to get its costs under control. Even if the job cuts didn’t move the stock price, they were at least a sign to those critics that the company was listening.
On top of all this, a C.E.O. is likely to look to layoffs as a solution because that’s what almost everyone else does, too. The word “downsizing” wasn’t even invented until the mid-seventies. The waves of layoffs that began at the end of that decade and peaked after the recession of 1990-91 were largely a response to crisis on the part of manufacturing companies swamped by foreign competitors and stuck with excess capacity. More recently, however, downsizing has become less a response to disaster than a default business strategy, part of an inexorable drive to cut costs. That’s why Circuit City can proclaim, “Our associates are our greatest assets,” and then lay off veteran salespeople because they earn fifty-one cents an hour too much.
There’s nothing wrong with costcutting, and in any dynamic economy layoffs will be necessary. The problem is that too many companies today define workers solely in terms of how much they cost, rather than how much value they create. This is understandable: after downsizing, it’s easier to measure a lower wage bill than it is to see the business the company isn’t getting because it has too few salesmen, or the new products it isn’t inventing because its R. & D. staff is too small. These lost opportunities may be hard to measure, but over time they can have a huge impact on corporate performance. Judging from its reaction to layoff announcements, the stock market understands this. It’s time executives did, too.

As I said, something to think about.

More or less outsourcing

An interesting juxtaposition of stories today on outsourcing. On the Business Week blog is this story – The Myth of High-Tech Outsourcing:

High-tech employees are back in demand. The U.S. technology industry added almost 150,000 jobs in 2006, according to an Apr. 24 report by the American Electronics Assn. (AeA), an industry trade group. That was the largest gain since 2001, before the implosion of the tech bubble resulted in the loss of more than 1 million jobs in three years.
The findings counter concerns—sometimes voiced by opponents of outsourcing—that high-tech jobs are being sent overseas.

And over on the UK blog, New Economist, is this posting – The road to India:

More evidence of the global relocation of white collar labour today. The week before last, Citigroup announced it was to cut 17,000 jobs, and relocate 9,500 to India and other “lower cost locations”. Today we read of another bank slashing jobs in the west and offshoring others: Barclays to Shift 10,800 Jobs to India, Elsewhere to Cut Costs,

Seems like we still don’t understand what is really happening with task-level competition (see Alan Blinder’s paper in Foreign Affairs- Offshoring: The Next Industrial Revolution?, the Grossman/Rossi-Hansberg paper at last summer’s Fed Jackson Hole symposiumThe Rise of Offshoring: It’s Not Wine for Cloth Anymore, and Baldwin – Globalisation: the great unbundling(s)).

Standard or IPR – part 2

Are standards becoming a new trade barrier? That is the question raised by China and other “developing” countries, according to a recent story on Intellectual Property Watch: China Leads Developing Country Push For Balance In IP And Standards:

A key focus is on the treatment of standards for technology and the related intellectual property rights. Xiaozhun Yi, vice-minister of the Chinese Ministry of Commerce, said at a conference last week that standards and IP rights are critical for economies such as China’s that are basing their development on science and technology. But, he said, an “inappropriate convergence” between standards and IP rights has “caused problems.”
“Delayed or inadequate IPR [intellectual property rights] disclosure, stringent IPR licensing conditions and expensive licensing fees run counter to fair competition, hinder the promotion and application of new technologies, obstruct the normal operation of international trade and impede the harmonious development of global economy and society,” Xiaozhun said at an April 17-18 conference cosponsored by the commerce ministry and other Chinese agencies, as well as Sun Microsystems. “Developing countries are the worst hit by such problems which effectively hinders their greater participation in economic globalization.”
Chinese officials such as Xiaozhun say international standards bodies, which are typically based in western developed countries, have begun to recognise the imbalance in their policies that insufficiently reflect the interests of developing countries. “Standards bodies are mainly controlled by developed countries,” he said. As a result, new standards putting developing countries in an “underprivileged position” have “become new obstacles to international trade.”

A number of recent patent cases in the US have also highlighted the problem of determining what is IPR and what should be a standard (for example the MP3 case and the VoIP case.)
Here is another example of where we need to get it right. Or, as the above story implies, others may impose a solution on us.

Copyright and re-runs

By now, many of you have probably heard of the copyright problems surrounding the civil-rights movement documentary “Eyes on the Prize.” Because copyright permission for much of the material had expired, the film could no longer be shown (although PBS has re-issued the TV series for educational purposes). Two years ago, American University’s Center for Social Media released a report outlining the increasing difficulty documentary film makers were facing due to stricter copyright (see earlier posting).
Well, nothing has changed in the copyright world, as is evidenced in this recent story from Wired:

Wired reported a couple years ago that copyright issues were preventing DVDs of the much-loved WKRP television sitcom from being released. The problem? The show depicted life at a radio station, and at radio stations, music tends to get played. The show’s creators licensed the tracks included in the show for the length of its original run, but nobody predicted that there might eventually be another life for the series in syndication or as pre-recorded media, so those licenses expired, making it impossible to release the DVDs with that music included.
The series will finally be released on DVD on April 24th, but fans are already irate. The music originally included in the show has been replaced by generic muzak in order to placate the almighty copyright gods, who would otherwise have prevented the series from being released by (apparently) demanding so much licensing money as to render the whole project unfeasible

Somehow, there should be a fix for all this. I understand the rights of the copyright holder to a portion of the residual income. However, I worry about the ability of the copyright holder to change the terms of the deal and essentially hold up the entire project. Once again, it seems that our balance is off.

Access to Knowledge conference

The Yale Law School is having its second Access-to-Knowledge conference later this month — see Yale Information Society Project – Access to Knowledge:

Access-To-Knowledge (A2K) social movement that champions human rights, human development, and the public interest as the focal points of innovation and information policy.
Yale’s ISP 2006 Access to Knowledge (A2K) conference advanced our commitment to building a broad conceptual framework of “Access to Knowledge” that can foster powerful coalitions between diverse groups. The A2k conference brought together over 300 leading scholars and activists from over 40 countries to participate in the construction of an intellectual framework for access to knowledge. Full conference proceedings and foundational resources for Access to Knowledge are available at the Yale A2K conference wiki.
This year, on April 27th-29th 2007, the weekend of World Intellectual Property Day, the A2K2 conference will be a pivotal event mobilizing the A2K coalition. A2K2 will further build the coalition amongst the institutions and stakeholders that crystallized at the first landmark conference, help set the agenda for access to knowledge policy and advocacy, and deepen the understanding of the theoretical underpinnings of access to knowledge issues. Developing both a theoretical framework and delving into the details of practical implementation, the program will focus on mobilizing the private sector, governments, technologists, and civil society around A2K issues. A2K2’s policy panels will be structured towards tangible legal and technological solutions and collaborative strategies for policy makers and individual institutions.

Looks like an interesting line up of speakers. For those of you who can’t make it, there will be a conference wiki. Interestingly enough, one of the conference sponsors is Microsoft.