Because every American
should have access
to broadband Internet.

The Internet Innovation Alliance is a broad-based coalition of business and non-profit organizations that aim to ensure every American, regardless of race, income or geography, has access to the critical tool that is broadband Internet. The IIA seeks to promote public policies that support equal opportunity for universal broadband availability and adoption so that everyone, everywhere can seize the benefits of the Internet - from education to health care, employment to community building, civic engagement and beyond.

Library

$30 Billion Dollars in Benefits Annually

This groundbreaking study by Jonathan Orszag, Mark Dutz and Robert Willig has found that consumers are using broadband to reap $30 billion dollars in benefits annually. The report predicts those gains will increase as more people adopt broadband and more applications become available. The full Orszag-Willig-Dutz study, “The Substantial Consumer Benefits of Broadband Connectivity for U.S. Households” is available below.

Download Study - The Substantial Consumer Benefits of Broadband Connectivity for US Households

Audio Podcasts

Talking Technology with Leroy Jones, JR.
http://www.technicaljones.com/2009/07/new-show-consumer-broadband/

IIA Press Conference Call
podcast - Consumber Benefits of Broadband Conference Call
download - consumer_benefits_broadband_study.mp3

Press Coverage

Study: Broadband Adoption Increased More Than Six Times From 2001 to ‘08
By John Eggerton
Broadcasting & Cable – 7/14/2009
http://www.broadcastingcable.com/article/315174-Study_Broadband_Adoption_Increased_More_Than_Six_Times_From_2001_to_08.php

Broadband adoption, benefits on the rise
By Sarah Reedy
TelephonyOnline – 7/14/09
http://telephonyonline.com/residential_services/news/broadband-study-internet-innovation-alliance-0714/

Study shows broadband access translates to $32B to consumers
By Marc Leh
Washington Business Journal – 7/14/09
http://www.bizjournals.com/washington/stories/2009/07/13/daily31.html

Dayton Business Journal
http://www.bizjournals.com/dayton/stories/2009/07/13/daily20.html

Tampa Bay Business Journal
http://tampabay.bizjournals.com/tampabay/stories/2009/07/13/daily31.html?surround=lfn

Wichita Business Journal
http://www.bizjournals.com/wichita/stories/2009/07/13/daily15.html?surround=lfn

Denver Business Journal
http://www.bizjournals.com/denver/stories/2009/07/13/daily31.html?surround=lfn

Atlanta Business Chronicle
http://www.bizjournals.com/atlanta/stories/2009/07/13/daily29.html?surround=lfn

Austin Business Journal
http://www.bizjournals.com/atlanta/stories/2009/07/13/daily29.html?surround=lfn

Broadband benefit = $32 billion
By Bret Swanson
Maximum Entropy [blog] – 7/14/09
http://www.bretswanson.com/index.php/2009/07/broadband-benefit-32-billion/

Broadband Generates $32B annual ‘consumer surplus,’ study finds
Broadband access becoming more of a necessity for household
By Brad Reed
Network World – 7/14/09
http://www.networkworld.com/news/2009/071409-broadband-surplus.html

The Substantial Consumer Benefits of Broadband Connectivity for U.S. Households
Docuticker [blog] – 7/14/09
http://www.docuticker.com/?p=26824

Today in Washington
CQ Today Midday Update [blog] – 7/14/09
http://congress-today-call-985-320-6006.blogspot.com/2009/07/cq-midday-update_14.html

Home broadband bringing new benefits to consumers: study
eChannelLine – 7/14/09
http://www.echannelline.com/usa/brief.cfm?item=16768

It’s official: we’re hooked on broadband
There may still be a digital divide among US consumers, a new report says, but once they’ve got broadband, people of all races agree that it has become a “necessity.”
By Matthew Lasar
http://arstechnica.com/tech-policy/news/2009/07/its-official-were-hooked-on-broadband.ars

Broadband@Home = $32 Billion in Consumer Benefits
News & Views [blog] – 7/15/09
http://bbpmag.com/wordpress2/2009/07/broadbandhome-32-billion-in-consumer-benefits/

IIA study finds consumers/businesses see utility in broadband
By Sean Buckley
FierceTelecom – 7/16/09
http://www.fiercetelecom.com/story/iia-study-finds-consumers-business-see-utility-broadband/2009-07-16

Broadband Internet is undervalued $32 billion, study says
By Andrew Nusca
ZDNet [blog] – 7/16/09
http://blogs.zdnet.com/gadgetreviews/?p=5950

Consumers Get $32 Billion More Than They Bargained For With Broadband, Says Study
By Phil Villarreal
The Consumerist – 7/16/09
http://consumerist.com/5315796/consumers-get-32-billion-more-than-they-bargained-for-with-broadband-says-study

Consumers Get $32 Billion More Than They Bargained For With Broadband, Says Study [How Broad This Band]
Financial Tips and Tricks [blog] – 7/17/09
http://financialtipsandtricks.com/2009/07/consumers-get-32-billion-more-than-they-bargained-for-with-broadband-says-study-how-broad-this-band/

All Agree That Broadband is a Necessity Races
BlackWeb2.0 [blog] – 7/23/09
http://www.blackweb20.com/2009/07/23/all-races-agree-that-broadband-is-a-necessity/

Survey Quantifies Value of Broadband
By Jim Barthold
Broadband Daily – 7/20/09
http://www.broadband-daily.com (subscription only)

Broadband Investment Spurs Business Growth and Job Creation, Studies Find
By Douglas Streeks
BroadbandCensus.com – 7/23/09
http://broadbandcensus.com/2009/07/broadband-investment-spurs-business-growth-and-job-creation-studies-find/

Home Broadband Soars, Becomes Hot Housing Commodity
By Tom Amontree
USTelecom.com [blog] – 7/23/09
http://www.ustelecom.org/Video_Blogs/Blog/index.php/2009/07/23/home-broadband-soars-becomes-hot-housing-commodity/

Pew: minorities embrace internet via handheld devices
The Pew Internet Life Project says that more and more African Americans and Hispanics get their internet from hand held devices, a trend that evens the digital divide.
By Matthew Lasar
Ars tecnica – 7/26/09
http://arstechnica.com/tech-policy/news/2009/07/pew-minorities-embrace-internet-via-handheld-devices.ars

Benefit of Home Broadband Up 50% in Three Years, Study Says
Telecommunications Reports – 8/1/09
http://www.tr.com (subscription only)

FCC Chairman Declares Nationwide Broadband Integral To US Future
Hot Hardware [blog] – 8/7/09
http://hothardware.com/cs/forums/p/44350/335546.aspx#335546

Broadband: Now a ‘Necessity’
By Jonathan Orzsag
Compass Lexecon – Multichannel News – 8/10/09
http://www.multichannel.com/article/326968-Broadband_Now_a_Necessity_.php

Download Study

Special Reports Access to Broadband Internet: Top Ten Areas of Saving - 2013



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METHODOLOGY

In updating the “Top 10 Ways Being Online Saves You Money” report, IIA looked at the top areas of consumer spending and the discounts that are available to Internet users.  Based on the 2012 Consumer Expenditure Survey released by the U.S. Department of Labor, we used online resources and applications to find discounts on essentials like housing, apparel, gasoline and food.  Mobile broadband and apps have changed the way that people shop online, providing access to discounts on everything from leisure activities to groceries. Some areas of this analysis, like housing, gasoline and newspaper expenditures, required data specific to certain cities.  For the purposes of this report, we chose five of the top 12 U.S. cities by population (New York, Chicago, Los Angeles, Dallas and Jacksonville) also keeping geographic diversity in mind. In a departure from last year’s methodology, we factored in the average annual cost of a mobile data plan ($690) rather than the average annual cost of a home broadband connection. Overall, we found that, after figuring in the cost of a mobile data plan, the savings in this year’s analysis ($8,674) were slightly higher than those in last year’s analysis ($8,170) and the year prior ($7,695).  We looked at comparable products across the board and used similar websites for comparison, along with a number of apps available for tablets and other mobile devices.  The below methodology provides more detail as to the calculations used for each savings category.

ONE. HOUSING. POTENTIAL SAVINGS: $1,850/YR (13.52%)

Source: Search based study on apartments in New York, Chicago, Los Angeles, Dallas and Jacksonville
Methodology: Sampled 50 online postings in the above markets to determine average cost savings relative to local apartment rent.  Considered the average annual expenditure on shelter ($16,887) minus the annual mortgage interest and charges for owned homes ($3,200) based on the Department of Labor annual study on consumer expenditures.  Applied 13.52% savings factor to the remaining average expenditure for apartment living ($13,687).
Source examples: www.craigslist.org, Craigslist App, www.trulia.com, Trulia Rent App, www.apartments.com , Apts.com App

TWO. AUTOMOTIVE. POTENTIAL SAVINGS: $500 (A ONETIME SAVINGS OF 1.63%)

Source: Cost analysis based on average new car purchase price in 2012
Methodology: Applied $500 savings factor from Dealership Internet Departments vs. Traditional Car Buying to the average 2012 vehicle purchase cost net outlay ($30,748) based on a report by TrueCar.com.
http://www.autoblog.com/2012/04/11/average-price-of-new-cars-hits-all-time-record/

THREE. TRAVEL. POTENTIAL SAVINGS: $1,800/YR (20%)

Source: Amadeus Case Study amadeus.com/us/documents/aco/us/BearingPoint.pdf
Methodology: Applied 20% savings factor from Amadeus study to the average amount spent on travel ($8,998) based on the Department of Labor annual study on consumer expenditures.

FOUR. FOOD. POTENTIAL SAVINGS: $760/YR (19.38%)

Source: Search based study on basic basket of groceries based on top selling categories (Carbonated beverages, Milk, Fresh bread, Beer, Salty snacks, Natural cheese, Frozen dinners/entrees, Cold cereal, Wine, Cigarettes)
Methodology: Created a standard basket of monthly groceries to establish a baseline retail cost.  Conducted a series of online searches against the baseline to identify cost savings exclusive to the Internet.  Potential savings based on cost reductions at the aggregate basket level.  Applied 19.38% savings factor to the average annual expenditure on food at home ($3,921) based on the Department of Labor annual study on consumer expenditures.
Source example: www.couponmom.com, www.peapod.com, www.coupons.com

FIVE. NON PRESCRIPTION DRUGS. $114/YR (31.94%)

Source: Search based study on common over the counter medicines (Pain Relievers, Antacids, Cold Remedies, Allergy Relief, Natural Remedies)
Methodology: Created a standard basket of the best-selling non-prescription drugs to establish a baseline retail cost.  Conducted a series of online searches against the baseline to identify cost savings exclusive to the Internet.  Potential savings based on cost reductions at the aggregate basket level.  Applied 31.94% savings factor to the average annual expenditure on non-prescription drugs, which was derived as 10% of the average annual expenditure on healthcare ($3,556) from the Department of Labor annual study on consumer expenditures.
Source example: www.drugstore.com, www.amazon.com

SIX. GASOLINE. POTENTIAL SAVINGS: $142/YR (5.57%)

Source: Search based study on lowest gasoline prices in New York, Chicago, Los Angeles, Dallas and Jacksonville
Methodology:  Researched average gas prices for each of the above cities, and found the lowest advertised prices in each, for a savings of 5.57% off of average gasoline expenditure ($2,549) based on the Department of Labor annual study on consumer expenditures.
Source example: www.gasbuddy.com, GasBuddy App

SEVEN. ENTERTAINMENT. POTENTIAL SAVINGS: $2,964/YR (56.11%)

Source: Search based study on restaurant dining, sporting/concert tickets and leisure activities in New York, Chicago, Los Angeles, Dallas and Jacksonville
Methodology: Applied savings factor of 56.11% on dining outside of the home ($2,605) and entertainment such as concerts, events and leisure activities to the entertainment budget ($2,678) based on the Department of Labor annual study on consumer expenditures.
Source example: Groupon App, Living Social App, www.bargainseatsonline.com

EIGHT. APPAREL. POTENTIAL SAVINGS: $1,100/YR (63.38%)

Source: Search based study on basic clothing combinations for men and women
Methodology:  Created a set of standard baskets of apparel for a man (khakis/jeans and shirts) and a woman (skirts/jeans and tops) to establish a baseline retail cost in each of five price categories.  Conducted a series of online searches against the baseline to identify cost savings exclusive to the Internet.  Applied 63.38% savings factor to the average annual expenditure on apparel ($1,736) based on the Department of Labor annual study on consumer expenditures.
Site example: JackThreads App, Overstock.com – Mobile, Gilt App

NINE. NEWSPAPERS. POTENTIAL SAVINGS: $87/YR (37.37%)

Source: Search based study reviewing major newspapers in New York, Chicago, Los Angeles, Dallas and Jacksonville
Methodology:  Calculated the standard annual rate for a daily delivery (including Sunday) subscription for the top three papers in each of the above cities.  Potential savings factor based on average annual daily subscription rates vs. online subscription rates and access to the newspaper’s app (where available).
Source example: www.nytimes.com, www.chicagotribune.com, www.dallasnews.com 

TEN. BILL PAY. POTENTIAL SAVINGS: $47/YR (100%)

Source: Cost analysis based on average consumer’s postage for six bills per month, plus one pay-by-phone charge.
Methodology: Created a standard multiple of monthly bills that are traditionally paid via postage (Rent/Mortgage, Gas, Electric, Water, Cable/Phone/Internet, Mobile). Applied average cost per US postal stamp ($0.44) for each monthly bill, plus the savings of one average pay-by-phone charge ($15).
Site examples: www.mycheckfree.com, www.chase.com, www.bankofamerica.com

 

Special Reports Access to Broadband Internet: Top Ten Areas of Saving - 2012

Top Ten Areas of Savings 2012

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METHODOLOGY OVERVIEW

In updating the “Top 10 Ways Being Online Saves You Money” report, IIA looked at the leading areas
of consumer spending and the saving opportunities that are only available to Internet users. Based
on the 2011 Consumer Expenditure Survey released by the U.S. Department of Labor, we calculated
the amount and percentage that can be saved by having and using a high-speed Internet connection
with online resources for finding discounts on essentials like housing, apparel, gasoline and
food. Additionally, we took into account the power of group buying sites like LivingSocial and
Groupon that have changed the way people spend on basics like entertainment and provide tremendous
discounts on leisure activities, restaurants and sporting events. Other online resources like
couponmom.com and gasbuddy.com alert savvy consumers to deals at establishments in their city.
Some areas of this analysis, like housing, gasoline and newspaper expenditures, required data
specific to certain cities.  For the purposes of this report, we chose five of the top 12 U.S.
cities by population (New York, Chicago, Los Angeles, Dallas and Jacksonville) also keeping
geographic diversity in mind. Overall, we found that the percentage of savings in this year’s
analysis was relatively similar to last year’s research and the year prior. But as pointed out by
the U.S. Bureau of Labor Statistics, average annual expenditures rose 3.3 percent in 2011, causing
a jump in the total dollars saved (in $8,870.01 2012, $7,694.56 in 2011, and $7,707 in 2010) with
consumers spending more in the 10 categories. This rise in spending in 2011 barely outpaced the
3.2-percent increase in prices for goods and services from 2010 to 2011, as measured by the
average annual change in the Consumer Price Index (CPI-U). The below methodology provides more
detail as to the calculations IIA used for each savings category.

ONE. HOUSING. POTENTIAL SAVINGS: $1,736/YR (12.75%)

Source: Search based study on apartments in New York, Chicago, Los Angeles, Dallas and Jacksonville
Methodology: Sampled 50 online postings in the above markets to determine average cost savings relative to local apartment rent.  Considered the average annual expenditure on shelter ($16,803) minus the annual mortgage interest and charges for owned homes ($3,184) based on the Department of Labor annual study on consumer expenditures.  Applied 12.75% savings factor to the remaining average expenditure for apartment living ($13,619). Site examples: www.apartmentfinder.com, www.apartments.com, www.craigslist.org

TWO. AUTOMOTIVE. POTENTIAL SAVINGS: $444 (A ONETIME SAVINGS OF 1.5%)

Source:Cost analysis based on average new car purchase price in 2011
Methodology: Applied 1.5% savings factor from JMR study to the average 2011 vehicle purchase cost net outlay ($29,602) based on a report by the New York Times. http://www.nytimes.com/2011/05/21/business/21auto.html?_r=0

THREE. TRAVEL. POTENTIAL SAVINGS: $1,659/YR (20%)

Source: Amadeus Case Study amadeus.com/us/documents/aco/us/BearingPoint.pdf
Methodology: Applied 20% savings factor from Amadeus study to the average amount spent on travel ($8,293) based on the Department of Labor annual study on consumer expenditures.

FOUR. FOOD. POTENTIAL SAVINGS: $994/YR (25.90%)

Source: Search based study on basic basket of groceries based on top selling categories (Carbonated beverages, Milk, Fresh bread, Beer, Salty snacks, Natural cheese, Frozen dinners/entrees, Cold cereal, Wine, Cigarettes)
Methodology: Created a standard basket of monthly groceries to establish a baseline retail cost.  Conducted a series of online searches against the baseline to identify cost savings exclusive to the Internet.  Potential savings based on cost reductions at the aggregate basket level.  Applied 25.9% savings factor to the average annual expenditure on food at home ($3,838) based on the Department of Labor annual study on consumer expenditures.
    Site example: www.couponmom.com, www.peapod.com, www.coupons.com

FIVE. NON PRESCRIPTION DRUGS. $110/YR (33.25%)

Source: Search based study on common over the counter medicines (Pain Relievers, Antacids, Cold Remedies, Allergy Relief, Natural Remedies)
Methodology: Created a standard basket of the best-selling non-prescription drugs to establish a baseline retail cost.  Conducted a series of online searches against the baseline to identify cost savings exclusive to the Internet.  Potential savings based on cost reductions at the aggregate basket level.  Applied 33.25% savings factor to the average annual expenditure on non-prescription drugs, which was derived as 10% of the average annual expenditure on healthcare ($3,313) from the Department of Labor annual study on consumer expenditures.
Site example: www.drugstore.com, www.amazon.com

SIX. GASOLINE. POTENTIAL SAVINGS: $161/YR (6.08%)

Source: Search based study on lowest gasoline prices in New York, Chicago, Los Angeles, Dallas and Jacksonville
Methodology:  Researched average gas prices for each of the above cities, and found the lowest advertised prices in each, for a savings of 6.08% off of average gasoline expenditure ($2,655) based on the Department of Labor annual study on consumer expenditures.
Site example: www.gasbuddy.com

SEVEN. ENTERTAINMENT. POTENTIAL SAVINGS: $2,497/YR (48.10%)

Source: Search based study on restaurant dining, sporting/concert tickets and leisure activities in New York, Chicago, Los Angeles, Dallas and Jacksonville
Methodology: Applied savings factor of 48.10% on dining outside of the home ($2,620) and entertainment such as concerts, events and leisure activities to the entertainment budget ($2,572) based on the Department of Labor annual study on consumer expenditures.
Site example: www.groupon.com, www.livingsocial.com, www.bargainseatsonline.com

EIGHT. APPAREL. POTENTIAL SAVINGS: $1,046.78/YR (60.16%)

Source: Search based study on basic clothing combinations for men and women
Methodology: Created a set of standard baskets of apparel for a man (khakis/jeans and shirts) and a woman (skirts/jeans and tops) to establish a baseline retail cost in each of five price categories.  Conducted a series of online searches against the baseline to identify cost savings exclusive to the Internet.  Applied 60.16% savings factor to the average annual expenditure on apparel ($1,740) based on the Department of Labor annual study on consumer expenditures.
Site example: www.overstock.com, www.jackthreads.com, www.gilt.com

NINE. NEWSPAPERS. POTENTIAL SAVINGS: $174.52/YR (84.88%)

Source: Search based study reviewing major newspapers in New York, Chicago, Los Angeles, Dallas and Jacksonville
Methodology:  Calculated the standard annual rate for a daily delivery (including Sunday) subscription for the top three papers in each of the above cities.  Potential savings factor based on average annual daily subscription rates vs. online subscription rates.
Site example: www.nytimes.com, www.chicagotribune.com, www.dallasnews.com 

TEN. BILL PAY. POTENTIAL SAVINGS: $47/YR (100%)

Source: Cost analysis based on average consumer’s postage for six bills per month, plus one pay-by-phone charge.
Methodology: Created a to a standard multiple of monthly bills that are traditionally paid via postage (Rent/Mortgage, Gas, Electric, Water, Cable/Phone/Internet, Mobile). Applied average cost per US postal stamp ($0.44) for each monthly bill, plus the savings of one average pay-by-phone charge ($15).
Site examples: www.mycheckfree.com, www.chase.com, www.bankofamerica.com


 


2011 Cost Savings Report

2010 Cost Savings Report

Special Reports Start-Up Savings: Top 10 Ways Broadband Saves American Entrepreneurs Money

In partnership with the Small Business and Entrepreneurship Council (SBE Council), IIA presents the top 10 ways America’s entrepreneurs can save money with broadband.

To see the results in a cool interactive, click on the feature above or head here. You’ll also find our methodology, along with an embed code. Our press release on the study is available in the Press Room.

(cut and paste below to include this graphic on your blog)
<img src="http://www.internetinnovation.org/small-biz/Start-Up-Savings-IIA-SBE-graphic.png" style="border:solid 1px #ccc">

Special Reports Home Broadband Adoption 2009: Broadband adoption increases, but monthly prices do too.

Home broadband adoption stood at 63% of adult Americans as of April 2009, up from 55% in May, 2008. 

The latest findings of the Pew Research Center’s Internet & American Life Project mark a departure from the stagnation in home high-speed adoption rates that had prevailed from December, 2007 through December, 2008. During that period, Project surveys found that home broadband penetration remained in a narrow range between 54% and 57%.

The greatest growth in broadband adoption in the past year has taken place among population subgroups which have below average usage rates. Among them:

  • Senior citizens: Broadband usage among adults ages 65 or older grew from 19% in May, 2008 to 30% in April, 2009.
  • Low-income Americans: Two groups of low-income Americans saw strong broadband growth from 2008 to 2009.
  • Respondents living in households whose annual household income is $20,000 or less, saw broadband adoption grow from 25% in 2008 to 35% in 2009.
  • Respondents living in households whose annual incomes are between $20,000 and $30,000 annually experienced a growth in broadband penetration from 42% to 53%.

Overall, respondents reporting that they live in homes with annual household incomes below $30,000 experienced a 34% growth in home broadband adoption from 2008 to 2009.

  • High-school graduates: Among adults whose highest level of educational attainment is a high school degree, broadband adoption grew from 40% in 2008 to 52% in 2009.
  • Older baby boomers: Among adults ages 50-64, broadband usage increased from 50% in 2008 to 61% in 2009.
  • Rural Americans: Adults living in rural America had home high-speed usage grow from 38% in 2008 to 46% in 2009.

Population subgroups that have above average usage rates saw more modest increases during this time period.

  • Upper income Americans: Adults who reported annual household incomes over $75,000 had broadband adoption rate change from 84% in 2008 to 85% in 2009.
  • College graduates: Adults with a college degree (or more) saw their home high- speed usage grow from 79% in 2008 to 83% in 2009.

Notably, African Americans experienced their second consecutive year of broadband adoption growth that was below average.

  • In 2009, 46% of African Americans had broadband at home.
  • This compares with 43% in 2008.
  • In 2007, 40% of African Americans had broadband at home.

The Pew Internet Project’s April 2009 survey interviewed 2,253 Americans, with 561 interviewed on their cell phones.

Read more: Broadband_Adoption_and_Pricing_Pew_Internet_62009.pdf

Special Reports Innovation and National Broadband Policies: Facts, Fiction and Unanswered Questions

Larry F. Darby
Joseph P. Fuhr Jr.

“Innovation” has emerged as a pivotal element in the debate over whetherthe Federal Communications Commission (FCC) should impose newconstraints on managers and providers of broadband network infrastructures. This study brings to bear facts and analysis emergingfrom a review of much of the literature on innovation and especiallythat bearing on claims by advocates of “net neutrality,” “open networks”and related notions.

We find that innovation is thriving at both the core and the edge of thenetwork in the current policy environment, which has fundamentallyallowed the Internet to evolve with little government involvement.Further, we find no evidence that greater FCC involvement in markets forbroadband services would protect or promote innovation in the InternetEcosystem. Indeed, we believe that such intervention is more likely todiscourage innovation than to stimulate it. In addressing these issues,the study finds and presents support for the following conclusions:

  • Responding to incentives and opportunities availed within the prevailing scheme of regulatory forbearance, network infrastructure providers have compiled an impressive record of innovation reflected in a cascade of new transmission and switching technologies; new local distribution and devices; an impressive array of new services; dramatically increased functionality; and adoption of creative business practices tailored to the changing topology of networks;

  • By any reasonable assessment, core cable, wireline and wireless networks reflect enormous historical and ongoing innovation as marked by the adoption of new technologies, incorporation of advanced equipment
    and software, expansion and improvement of services offerings, and the introduction/diffusion of new business models;

  • Presence of pervasive complementarities among services dictates that core innovations in network platforms have enabled, encouraged and increased the value of important edge innovations that would otherwise
    have been impossible;

  • While good and unambiguous measures of innovation are often lacking, there is an undeniable link between diffusion of network innovation and the enormous network investments now being made by
    broadband infrastructure providers;

  • Many of the innovations now apparent at the edge reflect investment and business model applications of services first introduced by Internet
    Service Providers at very early stages of the development of the Internet;

  • Imposing common carrier type regulation on network providers would diminish network providers incentives and opportunities to continue historic trends in innovation and investment;

  • There is no analysis or data in the literatures on innovation and regulation to prove claims that the proposed net neutrality rules would on balance promote innovation in the Internet Ecosystem;

  • Net neutrality proponents incorrectly characterize the incidence of innovation activities and accomplishments, particularly with respect to core v. edge innovation; and

  • The proposed net neutrality rules might be expected to reduce innovation in broadband networks and those that would be enabled at the edge. They would do so to the extent that new constraints on broadband
    network providers would increase uncertainty and risk, reduce prospects for growth, and undermine network managers’ incentives and opportunities to adapt to rapidly changing technical and economic conditions in the
    Internet Ecosystem.

  • This study finds no support in theories of innovation, innovation practice, or reviews of numerous empirical studies, of drivers of and constraints on innovation, for the main contentions of net neutrality supporters. Available data and analysis do not establish: a) the absence of network innovation in general; b) the primacy of innovation at the edge over the core; or most importantly; c) that greater ex ante regulation of markets for broadband infrastructure is needed, or can reasonably be expected to increase the rate of innovation and consumer welfare creation by network providers and elsewhere in the Internet Ecosystem.

    Our review finds no significant market failure attributable to insufficient innovation by network providers or superior innovation outside network infrastructures. As to the need for new regulations, the public interest would be well served were the Commission to heed the wisdom of Hippocrates: “First, do no harm!”

     

    Read more: Innovation_and_National_BB_policies_3210.pdf

    Special Reports The Internet Ecosystem: Employment Impacts of National Broadband Policy

    This study addresses some unexplored investment and job impact implications of new Net Neutrality regulations recently proposed by the Federal Communications Commission. The rationale for doing so has consistently been cast in terms of maintaining open networks, preserving end-to-end principles, ensuring neutrality, and other equally vague and essentially irrebuttable objectives. In context of a weak economy and bleak jobs outlook, the widely recognized, but limited, ability of monetary and fiscal policies to create jobs, and the increasing economic and political costs of citizens without jobs, this study suggests a third path – regulatory forbearance toward broadband networks – as a means of stimulating investment and job creation. The study concludes:

    By eliminating business options successfully practiced by proponents of more regulation, the Commission’s proposals would dramatically increase market risk, lower expected growth, suppress network investment, and dampen opportunities for network providers to maintain and create jobs.

    The proposed change from Ex Post to Ex Ante regulation would create lengthy regulatory delays and increase regulatory risk for investors, while dampening prospects for new job creation in the Internet sector and in others it supports.

    These and other threats to investment incentives and job creation opportunities are out of line with both the emerging national broadband policy and the growing imperative to create more good, permanent jobs.

    Historical data suggest that for every $1 billion in revenue, “core” network companies provided 2,329 jobs, while non-network “edge” companies provided 1,199 (about half as many). This indicates that Net Neutrality rules that reduce revenues and growth for network companies, and transfer benefits (revenue or growth prospects) to non-network companies, are a barrier to job creation.

    In short, these regulations will shift risk, returns, growth and opportunity away from “core” network providers and in favor of “edge” applications and content providers. SEC data show that, historically, “core” companies earn at lower rates, invest more and create more jobs per dollar of value received in the market than do “edge” companies. Regulation that shifts value away from network providers to non-network providers will reduce investment in network infrastructure and citizen access to broadband while dampening creation and preservation of jobs. This conflicts with consensus requirements of a National Broadband Policy and with our macroeconomic policy goals.
    In support of these conclusions, the study sets out financial and economic principles linking Net Neutrality style regulations, investment and jobs; it presents data (filed by firms with the Securities and Exchange Commission) depicting the record of broadband network providers and selected applications providers; and it projects those relationships into the future as guides to the potential responses of firms in the Internet Ecosystem to Net Neutrality type regulatory interventions.

     

    Read more: Jobs_Study_Final_.pdf

    Special Reports The Economic Impacts of Declining Broadband Investments

    Digital infrastructure, specifically broadband, supports jobs both within the broadband industry and throughout the economy. If capital expenditure falls, either through unfavorable market conditions or regulatory or other actions taken by government investment levels will decline and jobs will likely be lost, at least in the short term.

    Read more: http://www.itif.org/files/10.20.09.Broadband_Investment_and_Jobs.pdf

    Special Reports The Substantial Consumer Benefits of Broadband Connectivity for US Households

    A new study from Jonathan Orszag, Mark Dutz and Robert Willig finds that American consumers receive more than $30 billion in benefits each year from using broadband at home.



    Read more: CONSUMER_BENEFITS_OF_BROADBAND.pdf