U.S. Broadband Policy Is About Neutering the Excellent

X
Story Stream
recent articles

US broadband policy today consists of approving those who do poorly and hampering those who do well. The latest chapter is a report by the Broadband Opportunity Council (Council), which seeks to expand broadband deployment and adoption in the US by increasing the roles of the weakest players, namely federal agencies that have been ineffective in their efforts to expand broadband. This is not a formula for success.

Earlier this year, President Obama - concerned that US consumers were not buying the type and amount of broadband recommended by the Federal Communications Commission - issued a presidential memorandum instructing the US Department of Agriculture and the US Department of Commerce to identify policy changes that would reduce regulatory barriers and encourage investment in broadband. While reduced regulatory barriers and more investment sounds good, the August 20 report, which has been embraced by the White House, contains a limited amount of good news and a lot of bad news.

The good news is that broadband providers may have to spend less to provide broadband for the public. They will now gain access to certain federal government resources, including land, rights of way, buildings, towers, and telecommunications facilities. The Council recommends the formation of a centralized database to identify the location of the assets. It will also be easier to obtain a permit to situate broadband facilities on federal lands.

Lack of broadband data has been a problem for academic researchers and government staffers, among others, for years. It is therefore encouraging to learn from the Council's report that the National Science Foundation and the Commerce Department will expand the availability of broadband data for researchers to better analyze markets, usage, and technological progress.

There is also bad news in the Council's report. For one, it increases the roles of the Department of Agriculture, Commerce Department, and other federal agencies in directing and subsidizing broadband expansion. The report justifies this expanded government role by claiming that since 2009, US broadband has experienced unprecedented growth "[u]nder the Obama administration's leadership" and that this builds on the successes of the American Recovery and Reinvestment Act (ARRA: best known as the 2009 stimulus package). But are the premises really true?

The administration's leadership has, in fact, resulted in a politically-pressured and politically-divided FCC that adopted a public utility-style regulatory framework for a vibrant broadband industry, perhaps triggering an unprecedented decline in broadband investment. The FCC has also adopted poorly designed subsidies for broadband and diminished transparency of FCC proceedings. Commerce and the White House have also decided to allow increased political control of the Internet. A recent study found that the "successes" of the stimulus plan include disproportionately funneling broadband subsidies to states with Democratic governors, states with Democratic voting majorities, and to counties with powerful congressmen and senators, rather than to areas with large low-income or minority populations, i.e. the target populations of the program. The ARRA "successes" also include a poorly managed subsidy program from the Agriculture Department that will connect 90% fewer customers than promised.

The Council report recommends expanding Commerce and Agriculture broadband subsidies without any promise to depoliticize the subsidies or improve program management. Subsidies will be also available to new entrants in areas where there already is a broadband provider even though the FCC's Federal State Joint Board on Universal Service found that subsidizing new competition was wasteful. Imagine being a broadband provider that has taken the risk to serve a small, rural population where costs are high and demand is uncertain. You have made your investment and demonstrated success. Now the government wants to confiscate some of your profits by subsidizing a competitor. The unintended lesson is to not invest your own money in broadband in such areas: Better to wait for the subsidy.

Ever distrustful of the abilities of customers to know what they want and what they will pay for, the Council report states that federal agencies will work with local governments to develop community connectivity indicators to promote local government broadband initiatives.

Sadly missing from the report are any regulatory impact analysis, any corrections to currently flawed programs, and any sense of irony that this administration is placing regulatory burdens on some of the world's most effective broadband providers while simultaneously expanding the roles of demonstrably failed federal programs.

If the administration truly wants to improve broadband development, it would do well to review the recent World Economic Forum's report on global competitiveness. The US private sector earns high marks for its innovativeness, sophistication, efficiency, and competitiveness. The US government earns low marks for its political favoritism, imposition of regulatory burdens, policy costs, and trade barriers. The appropriate policy direction should be more private sector involvement and less government decrees: the opposite of what the administration embraces.

A contributor to the American Enterprise Institute's TechPolicyDaily.com, Mark Jamison is Director and the Gunter Professor of the Public Utility Research Center at the University of Florida.  

Comment
Show commentsHide Comments

Related Articles