Carrots and Sticks

Connecting the economy through advanced broadband technology

By Ric Telthorst, President, MTIA

From the pages of Missouri Business, the Magazine of the Missouri Chamber of Commerce and Industry, January, 2013

When I flip on a light switch or turn the tap in the kitchen, I don’t know what happens. I know the lights blink on, and the water flows into the sink. But I don’t really have an understanding of all that is needed to make that happen. The infrastructure, investment, and technology that makes these essentials a part of my everyday life exist dimly in the background while I go about my day.

Broadband technology – that complex set of fiber optic cables, switches, computer gear, towers, and air waves that connect us to the Internet – is another example of an essential service that is little understood by those who benefit from it. From my back porch, I scan the morning news from around the world on my tablet, I check emails and texts from the beach on my smartphone. I talk to Aunt Sadie in Alask on my reliable landline phone while watching the Cardinals play the Royals on my IP-enabled TV in the living room. It’s clear that our 21st century economy is connected by broadband technology, both here in Missouri and around the world.

But what does it take the make this happen? Step one is access to capital. Without it, the very expensive fiber and copper network cannot be constructed or maintained. Step two is access to technology and technological innovation. Advanced technology makes possible all of the applications we take for granted. Step three is access to highly skilled, well-educated men and women capable of developing, maintaining, and improving our communications system. Without that key ingredient, the first two don’t count for much.

This three-legged stool of capital, technology, and talent supports the broadband network that powers our economy. But for the network to really thrive, another consideration is important. I refer to it as “more carrots, fewer sticks.”

Every business needs a reliable return on investment. The telecommunications industry is no different. In order to make the investments needed to extend and improve broadband networks, the industry needs customers. Increasing the number of residential and business customers who subscribe to broadband services are the “carrots” needed for growth.

On average, rural areas of the state have fewer than 20 households per square mile, and in some areas, no more than half of the residents subscribe to broadband. Costs to expand or upgrade networks can top $6,000 per customer. It’s tough for carriers to make a return on that kind of investment without more customers.

Programs that increase the digital literacy of senior citizen, school children, and small business owners through hands-on training or public computer centers help grow the necessary customer base. Expanding the number of public services and the amount of education information available online provides another incentive for customers to see the value of having a high-speed Internet connection.

The “sticks” are those things that get in the way of growth, namely outdated legislation. During the last dozen years, Missouri lawmakers have effectively revised state statutes and regulations to reflect changes in technology, competition, and consumer behavior.

Our legislature has done a commendable job in reducing the hurdles, lowering the barriers, and eliminating the roadblocks presented by outdated telecommunications laws and requirements designed for a monopoly age. It’s clear Missourians are the winners when state policymakers remove the “sticks” in the path of progess.

Missouri’s economic growth depends on reliable and robust broadband networks to carry us into the future. Smart government programs that promote digital literacy and revise outdated regulations can help make that happen.