Silicon Valley, you'd better watch your pocketbooks, if that vision is anything like the tortured history of FCC and state public utility commission involvement in telephone investment and deployment. This bold vision will not only be costly but could well end up stymieing the goal of competitive broadband deployment.
In Washington, choosing words carefully is important. Every sentence uttered by the president can cause tectonic shifts in thinking and actions. The president made an incredibly simple, feel-good statement about broadband: "We ought to have a universal, affordable access for broadband technology by the year 2007, and then we ought to make sure, as soon as possible thereafter, consumers have got plenty of choices, when it comes to purchasing the broadband carrier."
Those simple words will cause lots of action, not all of it positive.
There are hundreds of people running around Washington trying to figure out how they can profit, both monetarily and politically, from this bold new policy initiative. Economists call those people "rent seekers." Like all rational people, they respond to incentives--as did Powell, who heard his president call for universal broadband and claimed to be ready to work on implementing the vision.
The current slush funds used to provide narrowband service subsidies are a terrific example of what not to do.
The competitive local telephone providers will respond by saying, "You need to ensure that competition can survive, so you need to doubly enforce the provisions of the Telecommunications Act.
And then there are the fiber companies, the satellite companies, the cable companies and state regulators. Consumers, overall, are likely to be underrepresented in the process.
This supposedly market-oriented administration must find a way to fund its call for "universal affordable access." The tens of billions or hundreds of billions of dollars for building the network and providing the service do not come free, even with this record-setting, deficit-spending administration.
Where will it come from? The current slush funds used to provide narrowband service subsidies are a terrific example of what not to do. These billions of dollars are raised within the telephone system and are redistributed disproportionately, on the basis of political clout; representatives of rural states have disproportionate power in the Senate and even more so on the powerful Committee on Commerce, Science & Transportation. The FCC and state commissions are looking to perpetuate the historic narrowband system by taxing voice over Internet Protocol and other broadband services they claim to want to perpetuate at low cost. Talk about a mixed message.
We need a president who can articulate a plan, not a simplistic vision that will get twisted and end up frustrating broadband deployment.
Higher prices will frustrate the broadband desires of many low-income folks who are likely to be more price sensitive than the few higher-income rural residents they would subsidize. If our high-tech economy really wants a broadband nation, companies should fight tooth and nail against the current inefficient subsidy system and instead work to ensure that cable, digital subscriber line, wireless and satellite services--in addition to power companies and anyone else--have the ability to provide competitive service without the shackles of the narrowband subsidy system.
If the idea is to ensure that lots of people get access to broadband service, making a simplistic, bold statement like, "We want a universal monopoly provider by 2007 and competition at some point in the future" and then having policy wonks run amok is not the way to succeed.
Much better leadership would include outlining a clear and specific plan to ensure to broadband service provider competition and then to let the market provide the services Americans want. Words matter a lot in Washington. We need a president who can articulate a plan--not a simplistic vision that will get twisted and end up frustrating broadband deployment.
Gregory L. Rosston is deputy director of the Stanford Institute for Economic Policy Research and previously served as deputy chief economist of the Federal Communications Commission. He provided auction advice to Frontline Wireless.
7 commentsJoin the conversation! Add your comment