Out of Control Policy Blog

I Hate to be a Downer, But…

W. Kenneth Ferree and Barbara Esbin of the Progress & Freedom Foundation, in 12 succinct pages, spell out reasonable goals and guidelines for the broadband stimulus in comments submitted today in the joint Commerce, Agriculture and FCC inquiry into disposition of the $7.2 billion allocated for high-speed Internet development, now christened the Broadband Technology Opportunity Program (BTOP).

Quite correctly, the filing urges policymakers to focus on projects that stand to yield greater private sector investment, rather than foster greater dependency on more government handouts in the future.

This includes defining "unserved areas" as areas without any terrestrial broadband service, favoring technology-agnostic solutions over glitzy, expensive solutions that might be inappropriate for a given area, and taking appropriate steps to mitigate the "demand divide" as much as the lack of rural infrastructure.

"In the meantime, given the speed with which the BTOP funds must be dispersed (likely within only 12 months from the issuance of the initial Notice of Funding Availability), [the National Telecommunications and Information Administration] should prioritize funding of projects, consistent with the overarching goals of stimulating spending in the economy and job creation, that (1) extend broadband to known unserved and markedly underserved areas (supply-side programs) and (2) support programs aimed at problems of low adoption rates where broadband is available but not subscribed to for reasons such as affordability, computer illiteracy and lack of personal computers (demand-side programs). In other words, to close the broadband gap in America, BTOP stimulus funding should be awarded first to projects addressing immediately-ascertainable areas of unmet demand for broadband service due to unavailability of infrastructure and addressing the inability of certain populations to benefit from available broadband service due to lack of funds or computer illiteracy."

While I think PFF is on the money here, I remain a bit despondent over the likelihood that the current administration will follow the advice. Although Obama and his telecom advisors have acknowledged the wisdom of market-based economics and latter-day critiques on the application of Keynesian-style deficit spending, much of it has proved to be lip service. Enabled by a Congressional mindset that has combined anti-business and nanny-state fervor and raised it to a new level, I don't believe that the Obama administration will be able to resist intervening in the nation's technology sector. So far, the government has had no qualms about laying diktats down to the financial, insurance and automotive industries that do far more than encourage economic growth.

There is no reason to expect that this unprecedented attempt to use the power of the government purse to direct commercial operations toward social policy goals will stop there. The carrot and stick are powerful. For American business, the choice is either to accept the subsidies and get on board with the program, or resist and watch competitors line up for the handout.

The Internet's affect on business and behavior and been profound and disruptive and the macro and micro levels, and that alone makes the ingrained government urge to "bring it all to heel" that much more tempting. I can see the Internet easily turning into another one Obama's great social experiments, starting with the strings that will be attached to companies that accept broadband stimulus funds. Those requirements could include:

  • Some form of network neutrality;
  • Conversely, while preaching "Internet freedom," imposition of intrusive filtering or regulatory requirements, perhaps against adult sites, gambling sites, social networking sites and peer-to-peer;
  • Agreement to collect sales taxes, even if federal and state laws in this regard, such as in New York, are under challenge;
  • Agreement to erect barriers to online sales of products that might be banned under future legislation, such as incandescent light bulbs and big-screen TVs; 
  • Agreement to be deputized into law enforcement activities, including an obligation to turn over phone, email and search records on government request;
  • Agreement to some kind of "fairness doctrine" for the Internet, say a requirement to push links to a liberal site on conservative blogs (and vice-versa).
  • Agreement to ban the use of targeted Web ads, even though they are invaluable to the growth of small commercial Web sites.

All these regulatory ideas been proposed in the recent past in Congress, at the FCC and in state houses. Some have been successful. The only counterweight toward regulation is the speed at which technology moves. A few years ago, for example, wireless was not seen as a viable platform for broadband. The build-out of third-generation systems and the anticipated commercialization of WiMax have changed that perception. The negative implications of network neutrality are better understood, and one-time aggressive supporters such as Google, Amazon and Microsoft, have tempered their support of all-out bandwidth regulation. Privacy has become a more sensitive issue and several high-profile data breach blunders have consumers rightly concerned about how the government collects and protects sensitive information.

The Departments of Commerce and Agriculture must get stimulus money out by this summer, so that puts time pressure on debate and may limit regulatory experimentation. This may mean that broadband stimulus money gets where it's needed, and is not attached to a progressive social agenda that consumers would otherwise reject as too costly and/or undesirable. The FCC, however, does not plan to issue a formal broadband policy until next February. This will allow more time for politicization of the process. One can only hope that by then the market moves forward enough to render these regulatory ideas meaningless or moot.


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