Important features of the debate on the digital divide in the academic and policy literature are the long identification of the problem (it seems to have emerged in the early 1990s, coinciding with the initial commercialization of the Internet), its apparent intransigence (the number of empirical articles measuring the divide increases over time and their content seems to indicate that the divides, if not increasing, at least persist unabated, despite many political interventions), and a strong bias towards comparisons between countries (focused mainly on (developed) OECD countries and between developed countries and countries in development). However, three very striking patterns emerged as a result of a recent reading of the economics and policy literature as part of my research on the 'digital divide' in New Zealand.
Current policies
5Mbps technology agnostic broadband connections to schools and 252,000 households in the most rural parts of New Zealand. While addressing the issue of infrastructure availability in the most rural parts of the country, it leads to the creation of a new 'gap' of about 10% of households in provincial areas not covered by either the UFB or the RBI 41 Although they have access to 'best effort' ADSL, it is not clear what will happen to them when, as policy directions inevitably show, fiber replaces copper in the UFB areas and the remaining (nationally, at least regarding backhaul, etc.) copper network in a long thin country it must now necessarily become much more expensive per customer to serve the remaining customers.
Other Policies
If the same disjunctions prevail in other countries, then the question arises as to whether there are more fundamental flaws in what has become the widely accepted "solution" to the "problem" of the divide as a result of limitations in digital divide policymaking. . This section seeks to identify what to look for in a 'good' policy to reduce the digital divide - if the question can really be answered so directly.
Typical Policy Processes
The debate on New Zealand's digital divide policies highlights some real differences between the understanding of the nature of the digital divide and the effectiveness of the policies used to reduce it. Such reviews should also include an assessment against criteria that would indicate that the policy should be abandoned49.
Which Divide: Infrastructure or Applications?
It is noted that in the absence of regulation, there has been a significant delay in establishing the collection of official statistics on the use of non-telco provision of Internet connections. This suggests that a comprehensive analysis of the effects of disconnections, and policies to improve them, should also include analysis of the extent to which the connections are used, and the applications used. It is therefore surprising to find that very few of the papers in the "digital divide" economic and policy literature use this type of survey.
These factors lead to the conclusion that, at least given the current range of applications, proportionally more of the scarce Internet resources are being consumed by those individuals whose consumption value, with current applications, is likely to be relatively low.
Whose Divide? And Why Does it Matter?
This effect is exacerbated by the use of "flat rate" pricing, which results in all individuals consuming to the point where the marginal benefit of consumption is zero, rather than the marginal cost56. If digital divide policies increase the connectivity rate of these groups via subsidies, then the net economic effect may be a reduction in aggregate welfare, since the low value of the welfare they gain from using the Internet may be less than the loss of welfare for the individuals whose taxes must rise to finance the grant. Therefore, much more emphasis needs to be placed on the role of applications in assessing the effect of policies on closing divides.
More attention to these factors can help in assessing the effects of policies.
How to Measure It?
Competition policy analysts are familiar with the use of these dimensions in defining markets to analyze the welfare effects of mergers, but so far this approach does not seem to have had much impact on the analysis of digital divide policies, despite (as shown in the New Zealand case) infrastructure deployment policies to address digital divides often have objectives or priorities for subgroups. Again, this is consistent with cross-country research on the relationship between various measures such as ICT spending, telephone and internet connections, and GDP growth. Although in most cases there is a positive effect, the analyzes are almost unanimous in finding that the effects are greater in lower-income countries.
Again, this is consistent with a scenario of convergence rather than increasing divergence, and even simple economic reasoning.
Who Cares, and Why?
In developed countries, additional investment is usually in projects with very low marginal benefits, as the "low-hanging fruit" has already been picked. But in developing countries, the investment is aimed at fruit that in other countries would have been picked long ago, namely those with very high marginal benefits that flow through to the larger proportional effects on GDP per capita. inhabitant. The implication of this discussion is that many of the perceived "digital divides" that attract so much political attention may simply be artifacts of a world that is inherently unequal but, even without policy intervention, exhibits patterns of convergence , as might be expected from the natural forces of activity in a global economy where factors such as trade barriers and obstacles to the flow of information in any form (eg censorship) are collapsing.
None of these examples required the development of a new theory, but rather illustrates how a simple theory, applied to actual policy, highlights some of the inherent tensions between apparent policy goals and likely outcomes.
A Quick Economics Tutorial
However, such subsidies are worth pursuing in total if the total surplus gained is less than the amount of the subsidy required and the negative welfare effects that follow. Most policies use the additional anticipated consumer surplus compared to the cost of the subsidy alone. Alternatively, it can be expressed as the effect that a change in the price of the item will have on that individual's propensity to purchase the item in the first place.
Economists call this property "elasticity of demand" and it is reflected in the "slope" of the demand curve.
Case Study 1: Rural Email
The likely reason is that the communications for which email is a substitute (long-distance phone calls, faxes, longer trips to less numerous postal centers to post physical communications) are much more expensive the farther away businesses are. be from the people they need. communicate with (and less densely populated regions). One possibility is that high-ranking regions are major tourist regions, where communication with individuals (and thus the value of a listing in a contact directory) is particularly valuable. This would be consistent with the lack of any discernible difference – and the finding that there was no evidence to suggest that non-urban businesses were "lagged" relative to their urban counterparts.
As the North-South email gap narrowed (i.e. Auckland “catched up” to the rest of the country as technology spread), the number of provincial areas with higher email listing rates than the highest metropolitan area had increased. indicating that the true differences in the cost of substitutes persisted.
Case Study 2: Universal Service Pricing
If a single PK price is charged, then the number of connections sold in the rural market increases from Q to Q1. However, rural customers, who in all other dimensions are equal and have the same surplus as these urban customers at different prices, now receive a "bonus" welfare gift (they are better off) for paying a higher price. low for the connection they would still have bought. with the highest price. The price change will cause proportionally more urban losers than it creates rural winners, at the same time as it exacerbates the divide between mostly low-income urban individuals and all other Internet users.
An increase in rural usage is not a net gain if it comes at the expense of urban subscribers who might buy without a policy but don't buy when it's in place.
Case Study 3: Access Regulation and Non-discrimination – The Single Price Curse An important lesson from the last case study is that there may be circumstances where charging
If these circumstances exist, selling more compounds means that the average cost of producing them is lower than if fewer are produced. Assuming that high and low value consumers can be identified and resale is not possible, from the cost and demand curves Q units can be produced at cost per unit. unit P. From the demand curve, these units can be sold to low-valued customers at price P Low, at a loss of P – P Low per unit.
For a mature technology, this may not be a major problem as production is probably already at the flat part of the average cost curve.
CONSUMER DEMAND
Ironically, the presumption that competition policy will help address digital divides by lowering prices and enabling more people to buy, ultimately reducing barriers to closing digital divides, may not be borne out in practice.
MARKET DEMAND AND SUPPLY
Second, allocations to infrastructure acquisition do not take into account the consequences of the economic and social effects arising from the use of applications enabled by Internet access. If the negative effects of separating existing policies are high, then it is imperative that they be re-evaluated. No policy should be beyond re-evaluation, it also signals the need to evaluate digital divide policies in their wider context, not just in close relation to individual metrics in a localized context.
This paper suggests that improvements of this kind in the digital divide policy-making process could lead to both resolving persistent disparities and enabling the economic and social benefits that resolving them is expected to deliver. The purpose justifies the definition: the many visions of the digital divide and their practical usefulness for policy making.
