"The digital divide is not a failure of the market. Individual broadband needs vary enough that universal service cannot be guaranteed by pervasive infrastructure. The market already has demonstrated that private capital exists for infrastructure development. Enlightened policy seeks to create a climate that welcomes that investment. So far we've seen that this is best accomplished by avoid¨ing attempts at government-funded centralized infrastructure planning, engaging all segments of the broadband industry and energizing leadership at the state and local level."I was pleased to find Glass in general agreement, both in his comments on the panel and during a brief chat with me after (although he and I would disagree on spectrum policy, but that's another post). Glass is particularly unhappy with the current universal service regime, which transfers funds between large incumbent phone companies, which effectively chills more investment in cost-efficient rural broadband. As a wireless operator, he also does not subscribe to the fiber-¸ber-alles call from some policy circles, who say nothing less than fiberâ€“even if it has to be subsidizedâ€“is good enough for rural broadband. Rather than endorse a particular telecom platform, Glass suggests "a framework that focuses on putting resources into the market." If the government is going to fund broadband, he'd rather see the money go to consumers, who could then chose the service provider. He believes that in a less regulated market, more investment dollars would flow and new business models, such as his, would get more attention.
Wireless Broadband Proves Feasible
Fiber optics gets all the good press, but wireless is proving to be sound platform for delivering broadband in rural markets. Among the many notable speakers at the Progress & Freedom Foundation's Aspen Summit this week was Brent Glass, founder and chairman of Lariat.net, a wireless Internet service provider serving 150 square miles in and around Laramie, Wyo. Lariat.net's success answers critics who say rural broadband service cannot be delivered by free market mechanisms. Lariat.net, which Glass says is but one of 4,000 wireless ISPs operating in the U.S., is entirely funded by private equity. It was the first company to deliver broadband of any kind to the Laramie area, although the local phone and cable companies have since begun their own offerings. Nonetheless, Glass says Lariat is holding its own. It has made it local presence a point of competition, and it tries (and succeeds according to Glass) to offer superior service. The success of Lariat.net contrasts with the failures of municipal attempts at wireless broadband, their main rationale being that private rural wireless has been a "market failure." As I wrote in an article on municipal broadband Reason's 2008 Annual Privatization Review: