The Senate version of the economic stimulus package (H.R. 1) winding its way through Congress would provide $9 billion in direct public subsidy for broadband network deployment subject to a “non-discrimination” requirement which, like the “open access” requirement in the House bill, could turn into onerous “network neutrality” regulation.
Meanwhile, Britain has outlined its digital transition plans in “Digital Britain – Interim Report.”
It is interesting to compare the substantially more free-market direction Britain is taking with the silly approach our own Congress is considering. For one thing, Britain is going to let private investors finance network upgrades.
The Government is not persuaded that there is a case now for widespread UK-wide public subsidy for Next Generation Network deployment, since such widespread subsidy could simply duplicate existing private sector investment plans or indeed chill such plans.
Another reason direct public subsidies should be avoided is they distort competition. Over at the Progress & Freedom Foundation blog, Ken Ferree cites a recent U.S. government audit report (analyzing significant problems with the current broadband grant and loan programs of the USDA Rural Utilities Service) which asked the evident question: “What is the government’s responsibility if, due to subsidized competition, a preexisting, unsubsidized broadband provider goes out of business?”
Next, the British report touches on the third rail of broadband policy, by noting that if Internet service providers offer guaranteed service levels to content providers in exchange for increased fees, it could lead to “differentiation of offers and promote investment in higher-speed access networks. Net neutrality regulation might prevent this sort of innovation.” The report adds that
the Government has yet to see a case for legislation in favour of net neutrality. In consequence, unless Ofcom [Britain’s FCC-equivalent] find network operators or ISPs to have Significant Market Power and justify intervention on competition grounds, traffic management will not be prevented.
So the British digital transition is based on some sound free market insights, and keep in mind that Britain has a Labour government! Here in this country we are heading in the other direction due to some muddled thinking, and not just on the Left. A prominent Republican writes that “conservatives should cheer” over the fact the stimulus package will include billions to promote broadband deployment and adoption.
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