Obama on Broadband
Given all the problems he has to deal with, Barack Obama may not have the future of the U.S. broadband business at the top of his "to-do" list, but he did make several strong commitments in the run-up to the election that suggest change is coming to broadband America. Those changes could have major ramifications for the industry, both inside and outside the U.S.
Space precludes a full discussion of the Democrats' plans, but two commitments stand out.
First, Obama said that he "strongly supports" the principal of network neutrality – a commitment that could lead to legislation outlawing the use of deep packet inspection (DPI) and related technologies that discriminate among applications and the way bandwidth is consumed by them. If that happens, many telcos, cable MSOs, and others will have to think again about what services they supply and at what price. But the commitment raises many difficult issues. For example, will it apply to the increasingly important suppliers of wireless broadband services that use cellular network technologies such as EVDO and HSPA? And if it does, how would that affect the way they provide those broadband services?
Second, Obama said that the U.S. should "lead the world in broadband penetration and Internet access." The U.S. isn't actually doing that badly; it's true that it lies 15th out of 30 developed economies that are analyzed by the Organization for Economic Cooperation and Development (OECD) , but many of the countries ahead of it are small Scandinavian territories, and leading economic rivals like Japan and China (which is not analyzed by the OECD) are lagging behind the U.S. All the same, if it wants to be a leader, it has a lot of work to do, and a long way to go to achieve universal broadband access – currently, household penetration is around 60 percent.
What might Obama's commitment mean in practice? Could the U.S. commit public money to kick-start the construction of more fiber broadband networks, or to encourage the buildout of low-cost wireless broadband services – and if so, on what terms, and to whom? And given the strong implicit commitment to open networks and services, might the Federal Communications Commission (FCC) revisit its decision to give incumbents such as Verizon Communications Inc. (NYSE: VZ) a regulatory holiday on network unbundling when they build out fiber? What if Verizon responded to such a move by suspending its fiber build-out – where would the U.S. then look to meet its commitment to lead the world on next-gen broadband? Ditto the wireless service providers, which would play a big role in providing broadband to the 40 percent of households that don't yet have it – but might kick up rough if the Democrats impose net neutrality on them as well?
As in all major policy revisions, the losers often shout louder than the potential winners, and the implementation of Obama's pre-election commitments could be an uphill slog in practice. Pledges such as "universal broadband" tend to require tradeoffs among the many groups that have a stake in that pledge. It will be interesting to see where and how those tradeoffs are made.
— Graham Finnie, Chief Analyst, Heavy Reading