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In Search of US Broadband Policy

I was startled when I read the title of a recent column by my colleague, Graham Finnie. (See Does the US (or EU) Matter Anymore?) His central point is that the center of gravity in telecommunications has "shifted away from the U.S. and Western Europe to Asia and the developing world" and "is never going to shift back."

This prompted me to consider how dramatically the balance of power has tilted away from the U.S. over the last two decades. In the early 1990s, the U.S. telecommunications system was the envy of the world and a driving engine for the world's largest economy. In 1991, America represented 26 percent of global GDP, China ranked 10th (less than 2 percent share), and India ranked 18th (1 percent share).

Today, the U.S. still has a strong communications infrastructure – especially for business – but it ranks 15th in terms of broadband subscribers per 100 inhabitants, according to a May Organization for Economic Cooperation and Development (OECD) report. Recent information from China's Ministry of Information Industry (MII) suggests that China has surpassed or soon will surpass the U.S. in broadband subscribers.

On the economic front, the U.S. share of global GDP has dropped 5 points to 21 percent, China has soared past Japan to claim second place (11 percent share), and India has climbed to fourth (nearly 5 percent share).

It is difficult to measure the full impact of communications infrastructure developments on economic growth, but we can all agree that broadband is a key driver of productivity. Moreover, as communications services revenue has increased as a share of the global economy – rising from about 2 percent in 1995 to about 3.2 percent in 2007 – broadband connectivity has become an increasingly important factor in determining competitiveness.

Against this backdrop, I find it perplexing that Washington still has not adopted a national broadband policy, despite years of prodding from dozens of industry players, including the Communications Workers of America (CWA) , the Telecommunications Industry Association (TIA) , and others. Earlier this week, the CWA joined 30 organizations and companies to urge Congress to take a step forward toward a national policy by passing legislation to improve data collection on broadband deployment and create public/private partnerships to expand adoption.

Up until now, the U.S. Federal Communications Commission (FCC) has chosen to engage in modest initiatives aimed at encouraging the free market to drive broadband deployment, including: removing regulatory obstacles that discourage infrastructure investment; promoting Internet connectivity for public schools; and initiating an effort to connect hospitals and healthcare clinics.

While the FCC's initiatives are positive in and of themselves, they are no substitute for a guiding vision and employable strategy. The FCC needs to at least pull the plug on its embarrassing broadband initiative Website until it gets serious about this issue.

Right now, the most innovative thinking is taking place at the state level – in places such as California and Kentucky, which have implemented programs to collect comprehensive data on broadband connectivity and keep policymakers well informed. Both of these states recognize that widespread broadband adoption will give them a competitive edge in the knowledge-based economy.

— Stan Hubbard, Senior Analyst, Heavy Reading

fgoldstein 12/5/2012 | 3:36:24 PM
re: In Search of US Broadband Policy The policies you're calling for are simply the ones the monopoly ILECs have asked for. Don't regulate their monopolies, let them exclude competition, and have states promote them. This is exactly what got us in trouble.

In Europe, unbundling's the rule, common carriage ("bitstream") is the rule, and competition is vigorous. Not duopoly competition between two incumbents, but real competition at the service layer. Plus the middle mile costs are usually lower, though ISP backbone prices (never regulated) may be higher. What does this tell us about the current US approach?

There is no "free market" here. Demanding "market" solutions is a farce. Monopolies prevent a market from happening. Failure to regulate the monopolist (at the bottom layer, such as wire) who provides an essential facility to competitors (at the higher layer, such as IP) kills the competitive market. That's just low-grade mercantilism, the kind of thing you'd expect from impoverished tinhorn dictatorships.
krbabu 12/5/2012 | 3:36:21 PM
re: In Search of US Broadband Policy Stan hits the nail on the head when he says "While the FCC's initiatives are positive in and of themselves, they are no substitute for a guiding vision and employable strategy".
The slow but inexorable emergence of China and India as serious economic competition must be viewed and understood in the proper context. After more than 30 years of living in the United States, I amazed at the complacency in some governmental quarters.
What is the right forum to influence the government and the FCC, I wonder?
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