Telecommunications substituting transportation

In 1991, while working at Arthur D. Little, a consulting firm, I wrote a report titled “Can Telecommunications Help Solve America’s Transportation Problems?” It was a multi-client study performed for a bunch of telecommunications companies---remember when we used to have companies like Nynex, Ameritel, BellSouth?

My point then was that the transportation infrastructure was facing a crisis because demand exceeded supply. Most solutions at that time were directed towards increasing supply. My research looked into what could be done to reduce demand on the transportation systems, specifically by having telecommunications substitute transportation. My co-authors and I envisioned a world where people can telecommute, teleshop (what a quaint word?) and do teleconferencing instead to going physically to a location. These were not entirely new concepts but progress in adapting them were stymied because of lack of telecommunications infrastructure capacity and attitude of people. “How can we let people work from home? How would we know if they are really working?”

I assumed that 10% of commuting and a similar level of shopping and conferencing will be performed through services provided by telecommunications companies if their capacities were upgraded using fiber optics.

I estimated that these substitutions would lead to an annual reduction of 1.8 million tons of regulated pollutants and 3.5 billion gallons of gasoline, while freeing up 3.1 billion hours of personal time due to reduced highway congestion and elimination of trips. Finally, the move will save some half a billion dollars in the maintenance cost of existing infrastructure annually. When converted to dollar figures, these savings would amount to $23 billion in annual societal benefits (in 1988 dollars), and this was just for US. 

My report got quite a bit of publicity. I was quoted in several well-known newspapers, and the telecommunications companies used this work in making their case for investment in a high-capacity network. 

Fast forward to the current day. 

Covid-19 has forced us into substituting transportation by telecommunications in a way that was unimaginable just a few months ago. Almost nobody commutes to work, shopping is all on-line and there are no physical conferences. This is not just in US but around the world. Look at how many gallons of fuel are saved, how pollution has drastically reduced and time wasted travelling in the car is all but gone. What kinds of societal benefits are we accumulating?

Now, of course, all this comes at a horrible price. Hundreds of thousands of people have died, and the cost of developing this artificial new world has been incalculable. Still, there may be something positive that comes out of this crisis.

Companies would have discovered that almost all jobs could be done remotely. Not only do workers produce results while nobody is looking over their shoulders, but they probably put in more time because of they don’t need to commute. These lessons will have a lasting effect. 

How much of telecommuting will remain in place after the Coronavirus lockdown is over is anybody’s guess but I can imagine that to be substantial. The number of telecommuters was probably about 10% before the crisis (it was 7.9% in 2017) so if we assume 20% of workers telecommuting after the crisis, that will be an additional of 10% not driving to work. 

What kind of societal benefits are we talking about? Remember that for 10% of workforce telecommuting I had estimated the benefits to be about $23 billion. Given the fact that (i) the dollar figures in my research were in 1988 dollars, (ii) the actual number of people working has gone up by 40% since then and (iii) inflation has been 123% during that period, we get close to $70 billion in societal benefits annually due to the new work habits. This is of course a very crude estimate; I have no desire to repeat the work I had done almost 30 years ago to get a more accurate figure. However, the conclusion that there will be substantial societal benefits stands.

In 1991, no one had heard of Climate Change. Now it is here and real. The billions of tons of pollutants not emitted because of a substantial boost in telecommuting will help a lot in addressing that currently forgotten crisis, one which won’t be solved with an vaccine. 

Imagine if the fear of flying induced by Covid reduces desire to travel, and the future wanderlust will be satisfied through virtual reality. Then the number of tourists will reduce, making a big impact on pollution created by airlines and saving the desirable destinations from the trampling hoards. 

Covid a horrible curse that has fallen on mankind. However, if the new habits forced upon us by that curse stick, we will generate substantial benefits.