In a speech to lawmakers in Abequerque Friday, President George W. Bush called for affordable broadband access to be made available to all American homes and businesses by 2007, saying that such a move was vital to the nation’s economic growth. Many media outlets are attacking the President for not explaining exactly how this should be accomplished, but frankly it is the President’s job to define direction, not implementation. From a technology standpoint, this is a fairly trivial problem given the appropriate funding. As my grandfather used to say, “Even a broken watch is right twice a day.“
The economics of the situation are key here: the “last mile” problem that has plagued broadband deployments has largely been solved, except that the implementations that make sense in urban centers are simply not economically viable in more rural areas due to lower population densities. Given the appropriate tax incentives, it could be made profitable for companies to build out the appropriate infrastructure.
Why is this important to small business? There are a couple of reasons.
First of all, any company not located in an urban center is at a distinct disadvantage in that broadband connectivity is non-existent or extremely expensive. This increase in overhead is unacceptable, causing many such businesses to forgo the tremendous advantages made possibly by high-speed, “always-on” connectivity.
The other side of the broadband coin is that universal access to connectivity would make it possible (but not necessarily ensure) that a greater percentage of your potential customer base would have high-speed Internet access. If you are a company that sells “software” (whether that software is traditional computer software or media software like movies, songs, books, etc.) you can provide digital delivery on a more universal scale, which is practically friction-free. Remember that one of the best ways to cut costs today is by reducing the cost of distribution– when you buy a $100 CD player for Sony about $15 of the cost is profit, another $12 is the manufacturing cost, and the rest ($73) is locked up in distribution! Putting product in boxes, boxes in boats and tucks, trucks to stores, etc. is a very expensive–and often unnecessary–process.
Bush’s Democratic opponents, including John Kerry, have attacked him for not having a “broadband policy.” This speech is most likely just a response to those attacks, but it is a step in the right direction. Let’s hope that this hyperbole becomes policy, and that the bureaucrats are able to come up with an implementation plan that makes (financial) sense.