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Rethinking Universal-Service Policy in a Broadband Internet Era

Bringing inexpensive broadband connectivity to as many people as possible
Policy Study 376

Steven Titch
September 2, 2009

Historically, government initiative was behind the great water and power infrastructure projects undertaken during the Progressive Era. Many see parallels between the need for electricity and running water in the past and the need for broadband today, and are calling for even more federal and state government involvement in the construction and deployment of broadband. The general belief is that broadband, like water, power and one-time narrowband phone service, is a utility.

Broadband, in truth, has little in common with classic utilities. The only real similarity is that the underlying infrastructure is expensive to build. Utilities require high investment up front, which can be amortized over several decades. Broadband requires not only high investment up front but continued high investment thereafter. Technology cycles are short. Entire network platforms change every five to ten years. Broadband is also competitive across multiple facilities platforms—telephone, cable and wireless—each with relative advantages and disadvantages. Competition in broadband is a critical dimension and is why government funding and subsidy programs carry a much greater risk of failure, or mere ineffectiveness, wasting public capital and resources.

While the goal remains to bring inexpensive broadband connectivity to as many people as possible, a more enlightened approach shifts away from large infrastructure projects to making the benefits of broadband relevant to all classes of potential users. The best way to accomplish this is to promote universal-service policies that:

• Engage all segments of the broadband industry,
• Create climates conducive to investment,
• Reduce or eliminate central infrastructure planning at the federal level, and
• Energize leadership and expertise at the state and local levels.


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