NCPA - National Center for Policy Analysis


February 5, 2009

The Internet may have been developed in the United States, but the country now ranks 15th in the world for broadband penetration.  Upgrades to broadband access were once thought to be in line for $100 billion as part of the stimulus legislation and are now set to get well under $10 billion in the package of over $800 billion. This is a reminder that even with a new president whose platform focused on technology, and even with the fully open spigot of a stimulus bill, technology gets built by private capital and initiative and not by government, says the Wall Street Journal.

Although it ended up a low priority, the relatively small appropriation for broadband upgrades is not for want of trying.  Lobbying groups managed to get $6 billion for broadband in the House bill and $9 billion in the Senate, with each bill micromanaging the spending differently. 

The bills include different standards, speeds and other requirements for providers that would use the public funds:

  • The House would give the Department of Agriculture's Rural Utilities Service control over half the grants and the Commerce Department's National Telecommunications and Information Administration control of the other half.
  • Tax credits would have been a faster way to make a difference than government agencies dividing spoils across the country.
  • The House bill also calls for "open access," which can include hugely controversial topics such as net neutrality, which in its most radical version would bar providers from charging different amounts for different kinds of broadband content.

However, nothing in the legislation addressed the key reason the United States lags so far behind other countries: the effective broadband duopoly in the United States, with most communities able to choose only between one cable company and one telecom carrier.  It's this lack of competition, blessed by national, state and local politicians, that keeps prices up and services down, says the Journal.

What we need to get the United States back into the top ranks of wired countries is more competition, not taxpayer handouts. That would be a real stimulus, says the Journal.

Source: Editorial, "Congress Approves Broadband to Nowhere," Wall Street Journal, February 1, 2009.

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