The Flawed Focus of Universal Broadband
This month, the Federal Communications Commission begins drafting a national broadband plan as part of the 2009 stimulus package. This is not the first government attempt at broadband ubiquity, so the FCC can learn from past failures. The commissioners have less than eight months to “ensure that all people of the United States have access to broadband capability,” as well as provide additional guidelines for using existing high-speed Internet infrastructure to support more than a dozen socioeconomic and political objectives. Officials can sift through more than 1,700 suggestions from a gamut of activist groups, lobbyists and interested consumers. Many of them see the answer in some form of social and economic engineering by government bureaucrats, price controls, wealth redistribution, or other regulatory mandates. Nothing could be further from the truth. Now, as in the past, the FCC should reject proposals that are hostile to market forces. A new public fund to subsidize Internet access for poor and rural residents is not likely to be effective. Consider the case of E-Rate, a US$2.25 billion FCC fund created in 1997 to connect all children to the Information Age by underwriting up to 90 percent of the costs of hard-wiring classrooms and libraries. Since its conception, however, E-Rate has been a bust. Public and private reports detail the regulatory loopholes, rubber-stamped “gold plated” networks, and criminal abuse. After disbursing more than $20 billion in funds — collected, ironically, from fees that raise the cost of monthly phone bills — the FCC has still failed to establish basic accountability measures for E-Rate, and according to the Government Accountability Office (GAO) this March, excessive rules and paperwork keep thousands of schools from seeking reimbursements for legitimate costs. If the FCC is too inept to structure and manage our broadband funds properly today, what will make tomorrow any different? Read more here.