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The broadband economy: A square deal all around
A century ago, President Theodore Roosevelt launched an era of activist government, checking the excesses of the Industrial Age with new antitrust, labor and social safety net rules. Yet the “Trust-buster” was no anti-capitalist; he also inveighed against the political left who argued that private enterprise was irredeemably corrupt.
“We demand that big business give the people a square deal,” Roosevelt said. “In return we must insist that when anyone engaged in big business honestly endeavors to do right, he shall himself be given a square deal.”
Roosevelt’s point was that the free market was the engine of unprecedented opportunity and prosperity. But, like anything else, it has flaws and breakdowns; we need the gird of government to make markets work more efficiently and fairly.
This balance is the kind of sensible compromise that most voters — and most economists — seem to endorse today. The breakdown of the auto, banking and health care industries were all met with activist intervention by the federal government. The jury seems to be in, at least on the auto and banking industries.
In the 15 years after President Clinton signed the Telecom Act of 1996, broadband Internet providers invested $1.2 trillion in wireline and wireless high-speed networks, including $250 billion in the past four years alone. The high-speed Information Superhighway touches 95 percent of the U.S., and most consumers can choose from among six or more wireless or wireline providers (90 percent can choose from at least two). And the price of Internet access — measured by megabits per second — has fallen 87 percent since 1999, even as the speed has increased tenfold.
The wonders of the Internet Age weren’t created solely by these broadband Internet providers, but ever-faster speeds and capacity have enabled a new entrepreneurial culture for software developers that are creating freedom and convenience in many areas of modern life through now-ubiquitous “apps.” Apps are making it easier to read a magazine on the go, send the results of a blood sugar test to the doctor in real time, participate in civic discourse or just watch some TV — not to mention nearly 650,000 other uses.
And there’s more to come, as networks grow faster and more accessible: 80 percent of U.S. homes now have access to download speeds of 100 megabits per second, and 4G wireless service will soon be available nationwide, with speeds of up to 20 megabits per second. While some challenges remain – such as getting broadband to remote rural areas, a market condition well-suited to government intervention – on the whole the broadband positives far outweigh the negatives by any reasonable standard.
Despite the evidence, however, there are those who wonder whether there is sufficient competition for Internet access, whether speeds are too slow and prices too high. Others object to new pricing plans that allow a consumer to purchase the amount of bandwidth that best suits his needs.
In fact, some have asked the government to stop these new tailored pricing plans, even though these plans save nearly all consumers from having to underwrite the “outliers” whose monthly usage is gigantic — over 300 GBs a month or the equivalent of over 500 standard definition movies
Others want to go to European regulatory models that force broadband Internet providers to lease their high-speed networks to competitors at regulated rates. But this model of creating competition already failed in the U.S.; the nations that have since adopted it have watched investors sink tens of billions annually into network upgrades in the U.S. – $64 million in 2009, triple the levels of supposed international leaders like Japan, according to the OECD. Meanwhile, our companies trip over one another to announce new speeds and services every few months. The European Commission this summer signaled that it would back away from this policy to promote more investment.
The reflex to regulate or not regulate is just that: an impulsive reflex often devoid of analytical rigor. And if Teddy Roosevelt were with us today, he would likely argue that we can walk and chew gum at the same time, pointing to the banking industry as an example of industry excesses in need of a public check and the telecom industry as an example of how private competition, with occasional nudges, could better make the markets work.
Isiogu is a member and immediate past chairman of the Michigan Public Service Commission. He is co-vice chairman of the National Association of Regulatory Utility Commissioners Committee on Telecommunications.
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