Why Teens Are Smarter Than Regulators — The Difference between Ubiquity and Substitutibility

Greetings gentle reader! Welcome to another chapter in my occasional series “What All Policy Wonks Need to Understand About Economics So They Can Spot The Industry Baloney” aka “The Econ 101 Gut Check.”

In today’s lesson, we look at two concepts often confused with one another. UBIQUITY, which means how widely available something is; and SUBSTITUTIBALITY, which means whether people regard one thing as a substitute for their first choice. Most arguments for deregulation of the media and the internet rest on confusing these related but very different concepts. For example, the argument that the availability of video clips on YouTube or other types of content creation confuses ubiquity and substitubality, as does the argument that cellphones compete with DSL and cable for broadband access.

But according to this USA Today article (reporting on this study by the PEW Internet and American life project), teenagers who actually use this stuff on a regular basis understand the differences perfectly. And if regulators, policy types, or even just folks who care about getting it right for its own sake want to get our national media and broadband polices right, then we better learn from these teenagers and get the difference between ubiquity and substitutibility straight.

Class begins below . . . .

As we all know, affordable access to high speed internet is everywhere. Or so says the Bush Administration, which gives itself a great big Mission Accomplished! on meeting President Bush’s 2004 broadband goal of “universal, affordable access for broadband technology by the year 2007.” As a consequence of this accomplishment, it follows that everyone now uses broadband in place of all that foolish “old media” stuff like newspapers or television.

At least, so say regulators in Washington like Commissioner Deborah Tate who explained her vote to effectively eliminate the ban on owning a newspaper and holding a broadcast license in the same market as reflecting this dramatic change in the media marketplace.

Throughout this process, I was struck by the ongoing, dramatic changes in how Americans use the media to receive news, information, and entertainment. Increases in broadband penetration have transformed the Internet into a viable platform for streaming full-length video programming, with more content moving online daily. And our mobile phones now provide us with stock quotes, email and news updates from sources locally and around the globe. With the multiplicity of sources now available at the click of a button, the historic concerns underlying the newspaper-broadcast cross-ownership ban would seem to be alleviated.

Nor is Commissioner Tate alone. I can sum up the most common criticism of the media reform movement by supporters of relaxing the ownership rules: “Do you really mean to say that nothing has changed in the 30 years since the FCC adopted the newspaper/broadcast cross-ownership rule? Get real.”

The problem is that the relevant question is not “has anything changed?” Of course things have. The relevant question, however, is far more complicated: “How have the changes in technology changed the sources of news people rely on, if at all?” Lots of things have happened in the 30 years since the FCC enacted the cross-ownership ban on a theory that newspapers, radio, and television were the primary sources of local news and opinion and that preventing any one company from holding too many outlets pushes these outlets to compete and prevents any one company from having undue influence on public opinion. But have the changes in the last 30 years changed the reliance of the public on television, radio and newspapers and so mitigate the influence of these outlets that letting one person own all three puts too much power in one place? That is the key question, and the widespread use of broadband access cited by Tate doesn’t — on its own — answer the real question.

Lets assume that we’ve reached the level of availability of affordable broadband access that the Administration claims we’ve reached. That would make internet ubiquitous. In fact, lets even include cell phones as possible outlets, so we can all agree on ubiquity. i.e. Internet access and cell phone access is as widely available as broadcast television, radio, or newspapers and therefore as ubiquitous as any other mass medium. But ubiquity doesn’t tell us whether anyone uses broadband access or cell phone access for the same purposes as the mass media, a property economists call “substitutability.” Movie theaters are equally ubiquitous, but it’s been a long time since anyone relied on Movietone News, and only the cable people pretend that movie theaters compete with television as a source of entertainment. People still go to movies, but they don’t confuse movies with television programming or use movies as a source of news — despite the fact that movie theaters, Blockbusters, and other ways of getting movies are as ubiquitous as mass media or broadband access or cell phones.

People certainly can use the internet or cell phone access for news. Heck, they can use it to report news or create news. But do they? Or, like movie theaters and Blockbuster, do people use these new outlets for different purposes, while still relying on the traditional news media for news? Are cell phones and other new outlets merely ubiquitous, or are they substitutes for older mass media?

Which is why I find the recent survey by the Pew Internet & American Life Project (PIALP) so useful. It has the advantage of being an independent study with absolutely no connection to any ongoing proceedings. PIALP is a well respected and neutral research shop, funded by foundation money, that cranks out studies on how people use the internet and how internet use changes people’s behavior because that seems like a useful thing to know. So while one might suspect that even we noble and disinterested public interest types occasionally let our natural biases influence how we structure studies and interpret raw data, the same can’t be said for PIALP.

PIALP studied teenage use of broadband. It found 93% of teenagers use the internet. I think we can take that as fairly ubiquitous. But teens do not use the internet primarily as a “push” medium to gather news and entertainment in the same way they use television. Instead, according to the study, teens view the creation and use of video and other content online as a means of social interaction, and nested in other complex forms of social interaction. For example, one in four teens reports creating some kind of online video mash up. Nearly all teens that create and upload content expect some kind of feedback or comment in response.

Perhaps more significantly, teenagers do not discard previous technologies in place of new technologies. According to the PIALP report, teenagers layer technologies. Face to face communication and communication by landline remain critically important for teenagers communicating with each other, even for “multi-channel teens” who intensely use all media of communication available to them. As USA today aptly summarized: “Teens choose the proper tool for each task, be it cellphone texting at a noisy party, Facebook for a quick hello, instant messages for multiple conversations, and seeing friends in person to, well, talk.”

Mind you, everyone talks about teens as the most wired, connected, cutting edge segment of the population. As the report itself observes, teenagers appear to use electronic media far more intensely than adults. Despite this, we do not see the kind of substitutability and disregard for medium of transmission assumed by Tate, McDowell, and just about every other policy type advancing the deregulation argument. Rather, with intensive use of these “new media” comes a sophisticated differentiation of use among these media. Rather than demolishing the differences between media, making concentration of ownership in any one “stovepipe” irrelevant, the ubiquity of wireless and broadband technologies enhances the differences in media and creates greater emphasis on matching specific media with specific purposes. Like Darwin’s finches, the evolution of media into more specialized outlets increases specialization and differentiation. And just as we do not countenance the extinction of bald eagles because we have lots of pigeons and both are birds descended from dinosaurs, we should not countenance the monopolization of old media in traditional media markets because we have the internet and cellular to use for very different purposes.

This is not to say that these new media have no impact on how people use traditional media — the reductio ad absurdum to which proponents of deregulation seek to reduce this argument. The PIALP study also showed that 80% of teens use the internet for entertainment, and 77% of teens use the internet to gather news and information (numbers apparently consistent with previous surveys). But this statistic hardly proves that broadband access competes with traditional video or newspapers or displaces them. To the contrary, as with the layering of communication options like landline and cell phone and IM, the use of the internet for news and entertainment appears to add channels and intensify the experience rather than substitute for traditional media.

To illustrate this point, consider a separate PIALP study of the use of the internet (by adults) in the 2006 election. On the one hand, it noted that more people than ever before used the internet to gather information, participate online in campaign activities, and even (gasp!) engage in discussion with their fellow citizens about politics and seek alternative viewpoints. Clearly internet access made a big difference in people’s level of civic engagement. At the same time, however, respondents indicated that television remained their primary means of getting news about candidates and issues relevant to the election, followed by radio and daily newspapers. In fact, while 69% of respondents stated they got “most” of their news via broadcast television (up 3% from 2002), 24% from newspapers (up 1% from 2002), and 17% from radio (up 4% from 2002), only 15% indicated they got “most” of their news relevant to the 2006 election online (up 7% from 2002). So while the nternet may have substantively changed the way many people related to politics, it is also clear that massive changes in the ownership structure for newspapers, radio and television would impact the way vast majority of Americans received “most” of their news relevant to the election.

Which brings us back to our sophisticated teenagers and simplistic regulators. Teens understand from their daily lives that the differences in media do matter. They may live awash in communications options. They may have access to more sources of news and entertainment than ever enjoyed in human history. But they also understand that this ubiquity of communications technologies and news sources does not magically render them all equal and the same. Rather than making all channels of information fungible, and therefore all subject to deregulation as competing directly with one another, the explosion of new outlets has created an explosion of new uses that co-exist with new media rather than replacing them. Thus teens still reserve the landline and “f2f” for close friends, even when they intensely use the cellphone and txt each other constantly.

Sadly, teens turn out to be more sophisticated than regulators. The number of folks in Washington who look at the relatively low percentage of people who have “cut the cord” on their landline, combined with the ubiquity of cell phones, and conclude that the landline is on its way out so we should deregulate it is mind blowing. The notion that people will use their different ubiquitous communication devices (or media) differently does not appear to register. While teens see an increasingly sophisticated universe in which every communication channel matters, regulators crave the simplicity of a world in which ubiquity and substitutibility mean the same thing. For regulators, if cell phones are everywhere and you can stream video through them, they must be the same as televisions. Because regulators, unlike teenagers, don’t seem equipped to handle the complexity of the real world.

Stay tuned . . . .