Experts Disagree on U.S. Broadband Competitiveness
Panelists differed Friday on U.S. models for international broadband competitiveness and domestic competition at a forum of the Innovation Technology & Information Foundation. They did agree that a new national broadband policy that promotes competition is needed from the new presidential administration.
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The U.S. broadband market isn’t keeping up with the rest of the world on speed and price, because it has too little investment and competition, said John Windhausen of Telepoly Consulting. He pointed to Asian countries’ broadband policies featuring strong government investment, and European nations’ policies stressing competition and unbundling policy. In France, local loop unbundling was required and multiple competitors emerged, and in Japan, the government subsidizes one-third of the cost of all fiber-to-the-home deployments in rural areas, he said. The U.S. has neither and the current broadband policy isn’t working, he said. Countries with strong unbundling policy are adding subscribers faster, Windhausen said.
Jeffrey Eisenach, co-founder of the Progress & Freedom Foundation, said the high level of competition in the U.S. can’t be found elsewhere and questioned Universal Service Fund policy. Deployment subsidies, particularly for rural areas, should be competitively and technologically neutral, he said. The USF is a poor model because it subsidizes only rural local exchange carriers and “duplicative wireless voice service,” and national wireline carriers like AT&T are ineligible, he said. That prohibits spending on broadband, he said.
As for domestic competition, some net neutrality backers incorrectly assume that telephone and cable companies make up a duopoly that restrains competition and innovation, said Everett Ehrlich, president of consulting firm ESC and an undersecretary of Commerce in the administration of Bill Clinton. The theory is too static and too limited to describe the competition between cable and telephone companies, he said. The high fixed costs of deployment give cable and telephone companies incentives to set prices to maximize yield, and dial-up customers are drying up, he said. That forces cable and telco companies to compete more aggressively with each other over time, Ehrlich said. Meanwhile, the public’s growing preference for mobility may disadvantage both cable and telephone companies’ wireline systems, he said.
Panelists agreed that a new national broadband policy that promotes competition should be high on the new administration’s agenda. Broadband infrastructure shouldn’t be subject to open-access rules, Eisenach said. Policymakers should take a cue from the FCC, whose decisions to forbear from access regulation were made largely based on its expectation that infrastructure competition would develop, he said.