The Candidates on the Economy: Broadband Internet

Interestingly, broadband Internet connectivity is an important component of the economic plans of both Sens. Hillary Clinton and Barack Obama. From Sen. Clinton’s campaign web site:

Support initiatives to establish leadership in broadband. Under the Bush administration, the country that invented the Internet has slipped to 25th in the global rankings for broadband deployment. In order to accelerate the deployment of sophisticated networks, Hillary Clinton proposes that the federal government provide tax incentives to encourage broadband deployment in underserved areas. She also proposes financial support for state and local broadband initiatives. Various municipal broadband initiatives are underway around the country to accelerate the deployment of high speed networks. The initiatives are useful for education, commerce, technology development, and the efficient provision of municipal services.

and

Ensure that we get broadband to rural Americans who don’t have access now. Hillary will strengthen tax incentives for extending broadband to underserved areas and support state and local broadband initiatives to expand wireless technologies and high-speed fiber optics.

and from Senator Obama’s:

Obama believes we can get broadband to every community in America through a combination of reform of the Universal Service Fund, better use of the nation’s wireless spectrum, promotion of next-generation facilities, technologies and applications, and new tax and loan incentives.

Senator Obama also mentions the idea of subsidies to extend broadband connectivity to rural communities. The positions of the two Democratic candidates on this issue are essentially identical.

Senator McCain makes no mention of broadband Internet connectivity on his web site other than a brief lament that American’s status in the deployment of broadband has slipped from 2nd place to 19th place.

I’m pretty sympathetic to the idea that some plan analogous to the Rural Electrification Administration will probably be necessary to extend broadband Internet connectivity to rural areas. I’ve had some experience with the issue and my experience was that where connectivity was available at all it was spotty and not particularly reliable.

However, I’m not convinced that subsidies are the best approach to facilitating the implementation and adoption of broadband Internet connectivity in urban and suburban areas. The first problem that you encounter is the “last mile problem” that I’ve mentioned before. How do you extend the service that last mile to the consumer? In most areas with which I’m familiar both landline telephone services and cable connections are controlled by local monopolies which are behaving exactly the way you’d expect monopolies to behave: they’re keeping prices high.

What about an end-run around the phone and cable companies? Why not high-speed wireless Internet connectivity? Unfortunately, reliable low-cost high-speed wireless Internet connectivity deployed over a wide area is NIY, not invented yet. That’s for the future. And there’s another reason: it’s too risky. That probably requires some explanation.

The investment required to put today’s equipment in place over the area of a city is pretty high and deployers are at the mercy of the phone and cable companies who already have their own systems deployed. High-speed wireless Internet access providers aren’t springing up all over because a) they’re regulated; and b) they’d have to compete with the monopolies.

I think the better solution to the problem of deploying high-speed broadband Internet connectivity in urban and suburban areas is regulatory reform. That doesn’t seem to me to be getting enough attention.