Dot com, dot gone. The internet was once the talk of the town, B2B this, and e-commerce that. It was a grand story -- millions of people learning new technologies, "making" money, but there wasn't a fairy tale ending: most left the internet bubble jobless and even hopeless. But for many more, the internet story has yet to be told for the very reason that there is nobody to tell it. Under-served rural and inner city communities are hungry for the internet and other communicative technologies, but with little incentive to offer broadband to unprofitable communities, broadband corporations have ignored the have-nots. Known as the "last mile" problem, connecting underserved communities is important to the economic growth of our country. Solving this problem with a dash of government help could be the long term spark to a revitalized, tech-propelled economy.
The numbers are in: more than half the nation is online. E-commerce continues to escalate, 39 percent of web users are purchasing products online, and the Department of Commerce predicts e-commerce could soon crest at $350 billion. It isn't enough to land Amazon.com's CEO Jeff Bezos "Time Person of the Year" again, but the economic forecasts are certainly rosy. The IDEC even reports that organizations using the internet have seen a 55 percent boost in productivity. Other studies go further and claim entire communities, towns and cities have seen higher productivity gains.
But those are the haves. Much of the U.S. is under-connected and underserved. In fact, some European countries have deployed more internet connections (and faster connections) than the U.S. Oftentimes communities cannot afford broadband connections. And sometimes the last mile isn't just about disconnected rural communities in the middle of Kansas (sorry, Dorothy). Inner cities in several parts of the country have no internet access where one mile away, it seems like AOL's world headquarters, plenty of connections to go around. In Cincinnati, 24 percent of the inner city has some access to the internet, well below the national average of over 50. Carl Steidtmann, chief retail economist at PricewaterhouseCoopers, recognizes the meaning of internet access to the inner city, "the Internet opens doors for these people that they never saw before." Under-served areas are missing out on increased productivity and a global resource. And at what cost?
If we deem the internet as a communication highway, similar to that of interstate highways in the 20th century and the transcontinental railroad in the 19th century, shouldn't most have access to it? If companies aren't providing services to underserved communities, shouldn't someone step up to the plate to help? If we think of information as part of education, shouldn't the public have access to it? Finally, when the capital market fails in providing services to underserved communities, shouldn't we do something about it?
Yes. I'm an adamant government minimalist, but in this case, the government has the capacity to right some wrongs. To make a long technical story less technical: TELCOs, companies that provide broadband, have little incentive to support underserved communities because they have "fixed amortization schedules," compensation for previous investments. In other words, their last mile is nothing but a "cash cow." They get their money no matter if they make future investments.
There is one broad solution on the table. When I asked Governor Howard Dean about the last mile, he suggested that the key is investing in small business. He has a strong internet campaign, but much of the nation can't access his website. Dean says revitalized small business could help in closing the last mile, especially if they're trained in information technology. Sounds good to me, but still not specific enough.
I say municipalities, towns and other underserved areas develop their own infrastructure. Towns can become their own internet service providers (ISP). A little crazy? Maybe, but some towns such as Dearborn Heights, Michigan are already doing this (Michigan is by far one of the leaders in U.S. internet deployment). Even towns as far as Oslo are seeing powerful results. Previously under-served areas have been transformed into information-rich hot-spots. Education and economic productivity escalate.
Price is a chief concern. Municipal, state and federal matching funds have been floated as possible ways to foot the bill, enough money to get the ISP running. A small pilot program of seven to eleven municipalities ought to start their own ISPs to see if these services can have any type of national effect, as experts predict. Because a municipality-owned ISP scares the competitive marketplace, why not install a threshold like they do in Minnesota where 65 percent of the vote is needed to establish such a program? Under-served communities will vote accordingly because there is nobody to compete with the municipality-owned ISP: it's a city-supported ISP or nothing.
The last mile can be closed, and the other half of America must enter the digital era. Economic productivity will rise with more Americans participating in e-commerce. It's a relatively small program to start, but, oh the long term dividends it would pay.
