[1st-mile-nm] Broadband to Nowhere

[Carroll Cagle]

  _____  

*	FEBRUARY 1, 2009,


Congress Approves Broadband to Nowhere 


 


By L. GORDON CROVITZ


Wall Street Journal


 

 

 

In Japan, wireless technology works so well that teenagers draft novels on
their cellphones. People in Hong Kong take it for granted that they can
check their BlackBerrys from underground in the city's subway cars. Even in
France, consumers have more choices for broadband service than in the U.S.

The Internet may have been developed in the U.S., but the country now ranks
15th in the world for broadband penetration. For those who do have access to
broadband, the average speed is a crawl, moving bits at a speed roughly
one-tenth that of top-ranked Japan. This means a movie that can be
downloaded in a couple of seconds in Japan takes half an hour in the U.S.
The BMW 7 series comes equipped with Internet access in Germany, but not in
the U.S.

So those of us otherwise wary of how wisely the stimulus package will be
spent were happy to suspend disbelief when Congress invited ideas on how to
upgrade broadband. Maybe there are shovel-ready programs to bring broadband
to communities that private providers have not yet reached, and to upgrade
the speed of accessing the Web. These goals sound like the digital-era
version of Eisenhower's interstate highway projects, this time bringing
Americans as consumers and businesspeople closer together on a faster
information highway.

But broadband, once thought to be in line for $100 billion as part of the
stimulus legislation, ended up a low priority, set to get well under $10
billion in the package of over $800 billion. This is a reminder that even
with a new president whose platform focused on technology, and even with the
fully open spigot of a stimulus bill, technology gets built by private
capital and initiative and not by government.

The relatively small appropriation is not for want of trying. A partial list
of the lobbying groups involved in the process is a reminder of how
Washington's return to industrial policy requires lobbying by all: the
Information Technology Industry Council, Telecommunications Industry
Association, National Cable & Telecommunications Association,
Fiber-to-the-Home Council, National Association of Telecommunications
Officers and Advisors, National Telecommunications Cooperative Association,
Independent Telephone and Telecommunications Alliance and Organization for
the Promotion and Advancement of Small Telecommunications Companies.

The result was a relatively paltry $6 billion for broadband in the House
bill and $9 billion in the Senate, with each bill micromanaging the spending
differently. The bills include different standards, speeds and other
requirements for providers that would use the public funds. This may balance
competing interests among cable, telecom and local phone companies, but it
doesn't address the underlying problems of too few providers delivering too
few options to consumers.

Techies may be surprised by how these funds would be dispersed. The House
would give the Department of Agriculture's Rural Utilities Service control
over half the grants and the Commerce Department's National
Telecommunications and Information Administration control of the other half.
Tax credits would have been a faster way to make a difference than
government agencies dividing spoils across the country.

The House bill also calls for "open access." This phrase can include hugely
controversial topics such as net neutrality, which in its most radical
version would bar providers from charging different amounts for different
kinds of broadband content. Now that video, conferencing and other
heavy-bandwidth applications are growing in popularity, price needs to be
one tool for allocating scarce resources. Analysts at Medley Global Advisors
warn that if these provisions remain in the bill, "it will keep most
broadband providers out of the applicant pool" for the funds intended
specifically for them.

More fundamentally, nothing in the legislation would address the key reason
that the U.S. lags so far behind other countries. This is that there is an
effective broadband duopoly in the U.S., with most communities able to
choose only between one cable company and one telecom carrier. It's this
lack of competition, blessed by national, state and local politicians, that
keeps prices up and services down.

In contrast, most other advanced countries have numerous providers, using
many technologies, competing for consumers. A recent report by the Pew
Research Center entitled "Stimulating Broadband: If Obama Builds It, Will
They Log On?" concluded that for many people, the answer is no, often due to
high monthly prices. By one estimate, the lowest monthly price per standard
unit of millions of bits per second is nearly $3 in the U.S., versus about
13 cents in Japan and 33 cents in France.

We're told that we now live in an era of more regulation and more government
spending, but neither approach is how problems get solved in technology.
Government mandates on how networks should be operated and subsidies
administered by USDA aren't going to ensure broadband access, make
connections faster, or lower prices.

What we need to get the U.S. back into the top ranks of wired countries is
more competition, not taxpayer handouts. That would be a real stimulus.

 

 

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