1. Broadband, ICT Investment and Public Policy Robert W. Crandall The Brookings Institution and Criterion Economics KMB Video Journal 41 st Invitational Conference St. Pete Beach, FL May 12-14, 2008

2. The OECD Estimates of Broadband Penetration Show the U.S. Lagging

3. But the OECD Measures Are Very Misleading Generally ignore wireless broadband Fail to adjust for household size Include business subscribers with residential subscribers for DSL Do not capture other high-speed business services delivered by telcos Result: Countries with highest “broadband penetration” are, in reality, those with greatest business use of mass-market broadband –presumably because high-speed dedicated lines are either too expensive or unavailable

4. Household Penetration Statistics Year-End 2006 Provide a Very Different Picture U.S. Household Penetration: 47% as of October 2006 Source: European Commission, E-Communications Household Survey, 2007; Pew (2007)

5. A Much Broader “Connectivity Index” Has Been Constructed Using 25 Indicators Public telephones per 1,000 peoplePersonal computers (per 1,000 people) Total telephone lines (per 100 people)Adjusted Business software and hardware spending per capita Mobile subscribers (per 1000 people)Application secure internet servers per million Internet users (per 100 people)International outgoing telephone traffic (per capita) Broadband subscribers (per 1000 people)Percentage of population with at least primary school complete" in the 15 and over workforce Literacy rateMobile e-mail composite (Business users) Adjusted Software spending by ConsumersMobile internet composite (Business users) Female home internet userse-Government ranking Mobile e-mail composite (Private users) 8Schools connected to internet Mobile internet composite (Private users) International bandwidth per capitaAdjusted Government software and hardware spending per capita Business data access lines per 1,000Government services online Business PSTN Lines per 1,000Adjusted computer services spending by Government Source: Waverman, Dasgupta & Tonkin, The Connectivity Scorecard, LECG, 2008

6. The United States Has the Highest Connectivity Index Among OECD Countries Summary of The Connectivity Scorecard Country Score United States 6.97 Sweden 6.83 Japan 6.80 Canada 6.50 UK 6.10 Finland 6.10 Australia 5.93 Germany 5.52 France 5.07 1 Korea 4.78 Hong Kong 4.46 Italy 3.85 Spain 3.56 Hungary 3.18 Czech 3.11 Poland 2.18 Source: Waverman, Dasgupta & Tonkin, The Connectivity Scorecard, 2008

7. U.S. Telcos Have Been Investing Far More than EU Telcos

8. And Productivity Growth Has Been Much Greater in the U.S. than in the EU Source: Groningen Growth & Development Center

9. Dale Jorgenson and Colleagues Have Estimated Sources of U.S. Productivity Growth

10. Source; Dale Jorgenson, PFF Presentation, 2007 Information Technology Drives U.S. Productivity Growth, but Software Has Dominated Other IT Products