Wednesday, January 20, 2010

A 'National Broadband Plan'

One more solution in search of a problem.


The Federal Communications Commission recently told Congress that it will miss a February deadline for delivering a "national broadband plan" and requested a one-month extension. If it keeps missing deadlines, nearly everyone in the U.S. might soon have high-speed Internet.
As part of last year's stimulus package, Congress asked the FCC for a plan to ensure that everybody in the country has access to broadband. That's a worthy goal, but the idea of a government plan is based on a false presumption that the spread of broadband is stalled. The reality is that broadband adoption continues apace, as does the quality and speed of Internet connections.
Between 2000 and 2008, residential broadband subscribers grew to 80 million from five million, according to a study by Bret Swanson of Entropy Economics. Broadband penetration among active Internet users at home is 94%, and nearly 99% of U.S. workers connect to the Internet with broadband. A typical cable modem today is 10 times faster than a decade ago. Wireless bandwidth growth per capita has been no less impressive, showing a 500-fold increase since 2000.
Meanwhile, U.S. information and communications technology investment in 2008 alone totalled $455 billion, or 22% of all U.S. capital investment. Nominal capital investment in telecom between 2000 and 2008 was more than $3.5 trillion.
Those who favor more government control of the Internet ignore this private progress and point to international rankings. According to OECD estimates, the U.S. ranks 15th in the world in broadband penetration per capita. But because household sizes differ from country to country, and the U.S. has relatively large households, the per capita figures can be misleading. A better way to gauge wired broadband connections is per household, not per person. By that measure the U.S. ranks somewhere between 8th and 10th.
Such comparisons will soon be moot in any case because broadband penetration is growing rapidly in all OECD countries. The Technology Policy Institute notes that "at the current rates of broadband adoption the U.S. is behind the leaders only by a number of months, and all wealthy OECD countries will reach a saturation point within the next few years."
Even the Obama Justice Department seems to reject the broadband market failure thesis. "In any industry subject to significant technological change, it is important that the evaluation of competition be forward-looking rather than based on static definitions of products and services," said the Antitrust Division in a January 4 filing to the FCC. "In the case of broadband services, it's clear that the market is shifting generally in the direction of faster speeds and additional mobility."
Justice concludes that while "enacting some form of regulation to prevent certain providers from exercising monopoly control may be tempting . . . care must be taken to avoid stifling the infrastructure investments needed to expand broadband access."
No matter, the default position of the Obama Administration is that little useful happens without government, so the FCC is busy planning. Chairman Julius Genachowski is sympathetic to net neutrality regulations that would prevent Internet service providers from using differentiated pricing to manage Web traffic. Liberal interest groups like Public Knowledge and Harvard's Berkman Center for the Internet and Society are urging the agency to reinstitute "open access" mandates that would force cable operators and phone companies to share their infrastructure with rivals at government-set prices.
The irony is that the private investment and innovation of recent years have occurred in the wake of the FCC rolling back similar rules that held back telecom in the 1990s. Consumers continue to have access to more and more broadband services, while Google, YouTube, iTunes, Facebook and Netflix originated in the U.S.
Doesn't the Obama Administration have enough to do than mess with a part of the U.S. economy that is working well?

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