Refuting the Myth of U.S. Broadband Weakness

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The usual pattern of campaign rhetoric has the candidates at each others’ throats. But both President Bush and Senator Kerry agree on the significance of a claim that the United States lags well behind other countries in “broadband” or new advanced telecommunications services, ranking 10th or lower.


Messrs. Bush and Kerry are mistaken. Last Thursday, the Federal Communications Commission released its periodic report on the deployment of advanced telecommunications services in America. To the surprise of no one outside Washington, these services are expanding rapidly.


Nearly 30 million households, or almost 30% of American homes, subscribe to a high-speed communications service. More than half of American households have a choice of four or more broadband providers. New broadband wireless services are spreading.


As positive as is the FCC report, the actual picture of broadband availability in America is even better. The FCC focuses exclusively on residential and small-business subscriptions and does not examine the full range of broadband services available to Americans.


And a full range it is. Just last Tuesday, Verizon announced that it was upgrading substantially its residential and small-business broadband offerings throughout its region. Other telephone and cable companies have made or will make similar announcements.


As a competitive industry, many broadband businesses struggle. But any business in America can deploy new equipment or offer new services, and the government is not in the way.


The only evidence that America is behind in broadband comes from Organization for Economic Co-Operation and Development studies that find that America ranks 10th or lower in broadband deployment. The simple statistic divides broadband subscriptions by total population. The underlying concept does not capture the extent of broadband services because many individuals use broadband without subscribing.


Some choose not to subscribe to broadband because they have broadband at work. Others, such as Boeing workers, have facilities at home that are paid for by employers. Still others prefer to go to libraries, schools, or other public buildings. Many 20- and 30-somethings in Manhattan do not subscribe, reportedly because they tap into free WI-FI systems.


The United States accounts for a disproportionate share of Internet activity, electronic commerce, and practically every measure of economic activity related to the Internet. We remain the Mecca for bright Internet entrepreneurs because America still provides opportunities unimaginable elsewhere


Yet, with the excuse of the OECD studies, no fewer than 50 congressional bills related to broadband have been introduced. And the administration, the FCC, and state and local governments issue new rulings just on broadband. Senator Kerry proposes tens of billions of dollars in new federal spending on broadband.


What is wrong with broadband that requires all of this industrial policy?


Some say broadband is a new technology that needs special governmental attention. True, but broadband has prospered, not with a special industrial policy, but with benign neglect. And despite its glamour, it remains less than 1% of the economy.


Some say broadband is regulated too much. Nonetheless, broadband is regulated much less than other forms of communications services. Overregulation weakens our economy, but it is a much greater harm to many other industries. Ask a government official which broadband rules should be repealed and expect a long silence.


Some say the possibility of future broadband regulation creates uncertainty. True, but uncertainty has an even more stunting effect on more heavily regulated sectors.


Many say the government does not subsidize or invest enough in broadband. But federal, state, and local governments spend billions of dollars on broadband services and equipment, some through direct purchase for the government itself and some through subsidies to support other institutions.


The shibboleth that America may be 10th in broadband is repeated by both the left and right as evidence that the government needs to do something – never mind what that something is.


Why would we trade places with the countries supposedly ahead of us – Korea, Japan, Hong Kong, Canada, and part of Western Europe? Most grow more slowly than we. Our dynamic economy is the envy of the world because we don’t impose excessive regulations on industries such as broadband, and we don’t use industrial policy to pick winners. Why change now?



Mr. Furchtgott-Roth is a former commissioner of the Federal Communications Commission. He can be reached at hfr@furchtgott-roth.com


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