Out of Control Policy Blog

APR Telecom Section Released

The telecom section of Reason’s Annual Privatization Report was released last week, and it wraps up the past year’s developments in state IT privatization and network.

The report also looks ahead to the National Broadband Plan, which the FCC appears ready to tackle now that net neutrality has shifted to Capitol Hill.

This, at least, presents the type of elevated policy debate that regulators should be having. It is welcome amid the alarmist calls for regulation of in-app purchasing and moral panics about privacy and web tracking.

In contrast to the FCC Chairman Julius Genachowski’s network neutrality document, which made all sorts of questionable assumptions about the state of the market, the relative power of specific companies, and the inability of the market to correct itself, the broadband plan provides an accurate picture of the current situation and the challenges and opportunities ahead.

As I write in the report:

As a document, the national broadband plan reveals a solid understanding on the FCC’s part of the impact broadband has on the U.S. economy and the impact it has had in American life. This is a welcome change from the regime of the previous Chairman, Kevin Martin, who seemed
preoccupied with regulating broadcast and Internet content for indecency, and expanding
regulation over cable companies. Overall, however, after years of the FCC’s attempts to regulate the business as if it still existed in the legacy silos of yesteryear—local vs. long distance, wireline vs. wireless, dial-up vs. broadband—its broadband plan seems to grasp how the new ecosystem of Internet companies, service providers, content providers, software developers and device makers form a diverse yet functionally interdependent group.

There is also a strong understanding, even endorsement, of the role of wireless in broadband development. In the past, wireless has been approached by policymakers as a second-rate service, hence the reluctance to extend Carrier of Last Resort requirements to wireless service providers. WiFi and 3G wireless were seen as “poor man’s” alternatives to DSL and cable modems. With the introduction of platforms such as the iPhone, Android and WiMax, as well as the advent of Web 2.0, which builds on the way the Web can interact with mobile devices, the FCC has acknowledged inherent value in mobile and wireless broadband.

Broadly, the Federal Communications Commission’s National Broadband Plan calls for policies to ensure robust competition. It also aims to ensure efficient allocation and management of assets the government controls in a way that encourages upgrades and competitive entry. These assets include spectrum, public rights-of-way and utility poles.

There are sound free-market approaches to all of policy issues the plan raises. More than ever, I look forward to the debate on universal service. For example, President Obama and Genachowski say the current Universal Service Fund mechanism needs to be reformed, and I couldn’t agree more. But will we finally end a long-abused system of cross-subsidies with a market-based policy that encourages innovation, new entrants and new investment, or will we simply replace one rent-seeking regime with another?

The expansion of wireless broadband, both in geographical and functional terms, opens the way to new thinking about practical ways market-based broadband service can work in rural areas. One thing the National Broadband Plan does not assume is that rural service can never recover its investment, a thought on which it's worth keeping an open mind.

If there’s a positive side to the network neutrality debate, it’s that it delayed action on the broadband plan past the mid-term elections. The new Congress brought with it an upsurge in members more open to free-market, Jeffersonian ideas. Although both chambers have those who reflexively fly to the big government solutions, there stands to be significant libertarian counterpoint to discussion. Bring it on.


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