Blog Post

Broadband Needs Political Leadership

There was no mention of the word “broadband” in the President’s State of the Union address last week, an omission of little surprise given everything else that’s going on. Still, it may have been tacit acknowledgment that yet another Bush administration campaign goaluniversal broadband access by 2007 — will fall by the wayside.

Granted, the President and the nation should focus first on pressing matters like wars and health care. But that doesn’t mean it’s OK for U.S. politicians to ignore this country’s broadband infrastructure. In fact, without political leadership and national-goal objectives, the current dismal state of American broadband penetration isn’t going to get better soon. The combination of archaic regulations, big monopoly service providers and the perform-now mentality of Wall Street simply won’t allow for any risky experimentation or network buildout that doesn’t have fast, demonstrable ROI. So we need politicians to take charge.

Already, you see such leadership happening on a local level, with municipalities and even some states drafting their own broadband plans, usually revolving around wireless (because wireless technologies offer the attractive if unproven idea of circumnavigating the telco infrastructure to deploy faster technologies more quickly). Maybe starting locally is the best way to go, since experiments can happen faster and more methods can be tested. Given the current President’s preoccupation with weighter matters like Iraq, and the current apparent unwillingness in Congress to take on big-picture telecom reform in 2007, local experiments may be all we have for the near-term future.

Leaving broadband build outs to the big telcos and cablecos — an idea that probably passes as strategy for the current administration — isn’t going to get us to ubiquitous broadband anytime soon. Both Verizon and AT&T are struggling to bring their networks up to speed, and are likely to focus on providing services to high-paying customers first to satisfy Wall Street.

As long as there aren’t too many more Katrina situtations to expose the underlying fragility of their networks, the telcos and their armies of lobbyists and lawyers should be able to stand their ground under the current byzantine structure of telecom laws, moving forward on a timetable that benefits their shareholders first. That’s as it should be for any public company worth its market cap. But is it good policy for all?

In the meantime what’s not happening is anyone building new networks on a national basis for the greater good. Rich folks with disposable incomes should have no problems. The worry should be about the classrooms and homes of mainstream America, and whether or not broadband will allow everyone a chance to participate or prepare for the digital economy of the future.

We are headed for problems as a nation if the best thinking that comes out of Davos is that YouTube is going to pay for videos, or that Bill Gates thinks the Internet will give us better TV. Now that politicians are finding the Internet as a communications vehicle, they should focus a bit on the medium as well as the message. Because it needs their help.

5 Responses to “Broadband Needs Political Leadership”

  1. The interdependent relationship between telecommunications infrastructure investment, and sustainable community economic development is a topic that I’ve tracked since 1998.

    I believe that the U.S. decline still needs to hit absolute bottom, where it will be ranked 20th in the world, based upon broadband penetration (currently it’s ranked 12-16th depending on which study you believe). This should happen within the next couple of years.

    Perhaps the next President of the U.S. will come back from a visit to a foreign country, upon discovering how a more advanced nation is prospering via superior broadband access, and then they will then champion a national telecom investment program.

    It’s similar to the momentum that led to President Eisenhower signing the Federal-Aid Highway Act of 1956, and the creation of the Interstate Highway System. His enlightenment was apparently influenced by discovering the advanced highway systems in Europe (during World War II), and then returning to the U.S. with its inferior roadways.

    Most American policymakers don’t comprehend just how far behind the U.S. is currently, relative to the leading broadband-enabled nations in the world. Also, national pride can fuel denial, so this is another reason for the public policy inaction that sustains the current U.S. duopoly status-quo.

  2. The first comment here smells of astroturf. The idea that a monopolistic deployment of telecom is the ideal runs completely against what we have seen in the real world.

    When the Telecom Act of 1996 opened up ILEC facilities, the ILECs fought tooth and nail against any other entities that wanted to use those facilities to deploy advanced services. They had to keep the entire pie to themselves, and the recent gutting of TA96 was the nail in the coffin for competitive ISP service on telecom infrastructure. What a waste.

    The one place where headway is being made to increase broadband penetration is the use of wireless by cities and entrepeneurs in areas unserved by the telcos and cable companies. Contrary to what the telcos want you to believe, wireless is a very effective and reliable way to deliver broadband service to the masses. It doesn’t fit into their plans, so they are trying to figure out how to kill it or at least smother it with their own systems of deploying it.

    The best way to get our country out of the broadband doldrums would be to pull out all ILEC favoring federal subsidies and gut the Universal Service Fund program (Unnecessary Slush Fund?). Fast failure of the telcos. The sooner that their assets can be redistributed to dynamic, competitive companies, the sooner we will have a higher standard of broadband accessibility in our country.

  3. I agree with Anon to a point. This can be illustrated by Deutsche Telekom’s refusal to rollout VDSL as planned until the EU allows the German NRA to refrain from forcing DT to open up this new network to competitors.

    However, on the other hand, LLU in Europe has greatly lowered prices of and increased the speed of broadband connections. A key aim of regulators and governments.

    Therefore, a combination of the two situations is surely the best policy. Following UK’s example of a separation of wholesale and retail access. It can be argued that the regulator can give the wholesaler a certain ROI in return for new network build out and univeral service provisions.

    That way you get the new network build out, as low as prices can economically go to recompensate the wholesaler for the new build and not give any market player any unfair advantage that would have impaired market forces in the future.

  4. An old comment in new light…

    If there were 10,000 customers in an area and it cost $1,000,000 to create the infrastructure to provide the services the customers want, then it would cost the telecom company $100/per person. But assume there were two competing companies that built their infrastructure to cover all 10,000 customers and it still cost $1,000,000 per network, and assume that each company had an equal number of customers, 5,000 each. Then that would mean it would cost $200 per person instead of $100 per person.

    Yes this is an over simplified example, and yes you could use the argument that the lower cost for the telecom company would mean they would just charge the same amount and make more profit. But, it still sets the foundation that one company can provide the same services cheaper than two companies, and if that one company could be properly regulated, consumers would save money and more services such as fiber to the premise would already exist.

    The telecom act of 1996 made it law for the incumbent local exchange carriers to share their facilities to anyone that wanted to use their last mile (the line that runs from the central office to the home). You can thank the FCC for creating the telecom act of 1996 for delaying the deployment broadband solutions like fiber to the premise.

    The ILECs delayed deploying solutions like fiber to the premise that because they wouldn’t be able to get a ROI necessary to justify the cost of deployment. Once the industry has righted itself and there is only one telecom provider per area, we will start to see more and more services being rolled out. The industry is already well underway in consolidating itself with mergers like SBC and ATT, MCI and Verizon, ATT and Bell South, etc. It is inevitable that the industry will return to ma bell days, simple economics dictates that it will, and I welcome its return!