Choice — and a Voice: Broadband Advice for the Obama Administration

Date: 26 Nov 2008 | posted in: information, MuniNetworks | 0 Facebooktwitterredditmail

Fiber-to-the-home is essential infrastructure.  Communities know they need better broadband networks.  DSL is already too slow, especially on the upload side.  DOCSIS3 cable networks may promise fast speeds this year and next, but ever increasing numbers of users, each inevitably increasing bandwidth utilization, will soon overwhelm this legacy shared architecture.  

Our international competitors have invested in technologies that will bring very fast speeds all the way to the home.  In most areas of the U.S., this can only be achieved with fiber to the home.  And we can connect a fiber to every home if we make it a priority.  Our geography gives us a bigger challenge than others, but we are a nation that rises to challenges.

We have already wired nearly every home with electricity and phone lines.  We take those for granted, but they resulted from both public and private investments on a large scale.  Recent administrations have put too much emphasis on the private sector in telecom, trying to keep the U.S. competitive in broadband with one hand tied behind its back. Without public investments, the U.S. will continue dropping in broadband rankings and guarantee future innovation occurs offshore.

The Institute for Local Self-Reliance has some suggestions for the Obama Administration to improve broadband across the United States.  Being focused on self-reliance, we always ask the federal government to first, do no harm.  No federal legislation should preempt a community’s right to invest in the network they need or the right to regulate cable and phone networks for the public good.  Nor should states be permitted to preempt local authorities over these matters.  The Community Broadband Act, a bill in Congress with bipartisan support, is the best way to begin achieving this objective.

Restoring community self-determination is not a sufficiently ambitious means to rapidly expand broadband.  These networks are expensive to build, especially in the rural areas that are least served.  The federal government must support these networks financially.

Our policies have focused for too long on tax breaks and subsidies for private companies to build the infrastructure we need in the digital age.  In our zeal to both expand access by expanding profits for a few phone and cable companies, we have disadvantaged tens of thousands of companies, and millions of Americans, who pay too much for broadband connections that are too slow.  

The Obama Administration should offer low-interest loans to communities want to build modern, fiber-to-the-home networks. Given the current financial market instability, public networks will have difficultly attracting debt capital.  Because these networks generate substantial public benefits, such as increasingly government efficiency, reducing the digital divide, encouraging economic development, and spurring innovation, there is a strong argument for federal financing.  These loans should be available to all communities – though there should be an emphasis on underserved areas first.

Many interest groups will undoubtedly push for loans to private providers as well.  ILSR believes public money should be spent on projects that are accountable to the public.  Any network built with public money must put the public good first, not profits.  

Dramatically expanding broadband access should also encourage competition at the provider level.  Competition on the infrastructure level has proved a failure because few companies have the resources overbuild an existing provider.  The solution to this problem is open access networks, where many providers compete for customers on a single fiber-to-the-home network. However, because closed networks generate higher revenues with their monopoly prices, no rational profit-maximizing company would build an open access network.  Fortunately, publicly owned networks maximize community benefits, not just profits, and are ideally suited for open access.

To encourage open access networks, the federal government should offer a mix of both low-interest loans and grants to publicly-owned, open access networks.  Grants could pay for between 15-25% of the initial network cost in order to encourage a model that offers substantial benefits to the community despite generating less revenue than a monopolistic network.  Partial grants will change the economic dynamics around this model.  

Grants should be limited to networks accountable to the public, whether municipal, cooperative, public utility, or nonprofit, because a private owner could decide to stop wholesaling access without community input.  

The U.S. should set a goal: By 2015, everyone should have access to a fiber network connection and a competitive market of service providers from which to choose.   This goal is more modest than that of getting to the moon when it was announced.

The goal of taking a fiber line and choice of providers to every house in the United States is achievable. These networks will pay for themselves many times over in the coming decades, but need some federal help to begin.  We need significant public investment into networks that are accountable to their community.  Closed, monopolistic networks may offer higher profits, but citizens and businesses benefit from choice – and a voice – in the network.

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Christopher Mitchell

Christopher Mitchell is the Director of the Community Broadband Networks Initiative with the Institute for Local Self-Reliance. He runs as part of ILSR's effort to ensure broadband networks are directly accountable to the communities that depend upon them.