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mso-list:l0 level1 lfo3'><font size=2 color=black face=Arial><span
style='font-size:10.0pt'>FEBRUARY 1, 2009,</span></font><o:p></o:p></li>
</ul>
<h1><b><font size=5 color=black face=Arial><span style='font-size:16.0pt'><!-- ID: SB123353476246637693 --><!-- TYPE: Information Age --><!-- DISPLAY-NAME: Information Age --><!-- PUBLICATION: The Wall Street Journal Interactive Edition --><!-- DATE: 2009-02-02 00:01 --><!-- COPYRIGHT: Dow Jones & Company, Inc. --><!-- ORIGINAL-ID: --><!-- article start --><!--
CODE=STATISTIC SYMBOL=FREE
CODE=SUBJECT SYMBOL=OPIN
-->Congress Approves Broadband to Nowhere <o:p></o:p></span></font></b></h1>
<p class=MsoNormal><font size=3 color=black face=Verdana><span
style='font-size:12.0pt;font-family:Verdana;color:windowtext'><o:p> </o:p></span></font></p>
<h3><b><font size=4 face="Times New Roman"><span style='font-size:13.5pt'>By L.
GORDON CROVITZ<o:p></o:p></span></font></b></h3>
<h3><b><font size=2 face="Times New Roman"><span style='font-size:11.0pt'>Wall
Street Journal<o:p></o:p></span></font></b></h3>
<p class=MsoNormal><font size=3 color=black face=Verdana><span
style='font-size:12.0pt;font-family:Verdana;color:windowtext'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 color=black face=Verdana><span
style='font-size:12.0pt;font-family:Verdana;color:windowtext'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 color=black face=Verdana><span
style='font-size:12.0pt;font-family:Verdana;color:windowtext'><o:p> </o:p></span></font></p>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>In
<st1:place w:st="on"><st1:country-region w:st="on">Japan</st1:country-region></st1:place>,
wireless technology works so well that teenagers draft novels on their
cellphones. People in <st1:place w:st="on">Hong Kong</st1:place> take it for
granted that they can check their BlackBerrys from underground in the city's
subway cars. Even in <st1:country-region w:st="on">France</st1:country-region>,
consumers have more choices for broadband service than in the <st1:place w:st="on"><st1:country-region
w:st="on">U.S.</st1:country-region></st1:place><o:p></o:p></span></font></p>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>The
Internet may have been developed in the <st1:place w:st="on"><st1:country-region
w:st="on">U.S.</st1:country-region></st1:place>, but the country now ranks
15th in the world for broadband penetration. For those who do have access to
broadband, the average speed is a crawl, moving bits at a speed roughly
one-tenth that of top-ranked <st1:place w:st="on"><st1:country-region w:st="on">Japan</st1:country-region></st1:place>.
This means a movie that can be downloaded in a couple of seconds in <st1:country-region
w:st="on">Japan</st1:country-region> takes half an hour in the <st1:place
w:st="on"><st1:country-region w:st="on">U.S.</st1:country-region></st1:place>
The BMW 7 series comes equipped with Internet access in <st1:country-region
w:st="on">Germany</st1:country-region>, but not in the <st1:place w:st="on"><st1:country-region
w:st="on">U.S.</st1:country-region></st1:place><o:p></o:p></span></font></p>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>So
those of us otherwise wary of how wisely the stimulus package will be spent
were happy to suspend disbelief when Congress invited ideas on how to upgrade
broadband. Maybe there are shovel-ready programs to bring broadband to
communities that private providers have not yet reached, and to upgrade the
speed of accessing the Web. These goals sound like the digital-era version of
Eisenhower's interstate highway projects, this time bringing Americans as
consumers and businesspeople closer together on a faster information highway.<o:p></o:p></span></font></p>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>But
broadband, once thought to be in line for $100 billion as part of the stimulus
legislation, ended up a low priority, set to get well under $10 billion in the
package of over $800 billion. This is a reminder that even with a new president
whose platform focused on technology, and even with the fully open spigot of a
stimulus bill, technology gets built by private capital and initiative and not
by government.<o:p></o:p></span></font></p>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>The
relatively small appropriation is not for want of trying. A partial list of the
lobbying groups involved in the process is a reminder of how Washington's
return to industrial policy requires lobbying by all: the Information
Technology Industry Council, Telecommunications Industry Association, National
Cable & Telecommunications Association, Fiber-to-the-Home Council, National
Association of Telecommunications Officers and Advisors, National
Telecommunications Cooperative Association, Independent Telephone and
Telecommunications Alliance and Organization for the Promotion and Advancement
of Small Telecommunications Companies.<o:p></o:p></span></font></p>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>The
result was a relatively paltry $6 billion for broadband in the House bill and
$9 billion in the Senate, with each bill micromanaging the spending
differently. The bills include different standards, speeds and other requirements
for providers that would use the public funds. This may balance competing
interests among cable, telecom and local phone companies, but it doesn't
address the underlying problems of too few providers delivering too few options
to consumers.<o:p></o:p></span></font></p>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>Techies
may be surprised by how these funds would be dispersed. The House would give
the Department of Agriculture's Rural Utilities Service control over half the
grants and the Commerce Department's National Telecommunications and
Information Administration control of the other half. Tax credits would have
been a faster way to make a difference than government agencies dividing spoils
across the</span></font> country.<o:p></o:p></p>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>The
House bill also calls for "open access." This phrase can include
hugely controversial topics such as net neutrality, which in its most radical
version would bar providers from charging different amounts for different kinds
of broadband content. Now that video, conferencing and other heavy-bandwidth
applications are growing in popularity, price needs to be one tool for
allocating scarce resources. Analysts at Medley Global Advisors warn that if
these provisions remain in the bill, "it will keep most broadband
providers out of the applicant pool" for the funds intended specifically
for them.<o:p></o:p></span></font></p>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>More
fundamentally, nothing in the legislation would address the key reason that the
<st1:place w:st="on"><st1:country-region w:st="on">U.S.</st1:country-region></st1:place>
lags so far behind other countries. This is that there is an effective
broadband duopoly in the <st1:place w:st="on"><st1:country-region w:st="on">U.S.</st1:country-region></st1:place>,
with most communities able to choose only between one cable company and one
telecom carrier. It's this lack of competition, blessed by national, state and
local politicians, that keeps prices up and services down.<o:p></o:p></span></font></p>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>In
contrast, most other advanced countries have numerous providers, using many
technologies, competing for consumers. A recent report by the <st1:place w:st="on"><st1:PlaceName
w:st="on">Pew</st1:PlaceName> <st1:PlaceName w:st="on">Research</st1:PlaceName>
<st1:PlaceType w:st="on">Center</st1:PlaceType></st1:place> entitled
"Stimulating Broadband: If Obama Builds It, Will They Log On?"
concluded that for many people, the answer is no, often due to high monthly
prices. By one estimate, the lowest monthly price per standard unit of millions
of bits per second is nearly $3 in the <st1:country-region w:st="on">U.S.</st1:country-region>,
versus about 13 cents in <st1:country-region w:st="on">Japan</st1:country-region>
and 33 cents in <st1:place w:st="on"><st1:country-region w:st="on">France</st1:country-region></st1:place>.<o:p></o:p></span></font></p>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>We're
told that we now live in an era of more regulation and more government
spending, but neither approach is how problems get solved in technology. Government
mandates on how networks should be operated and subsidies administered by USDA
aren't going to ensure broadband access, make connections faster, or lower
prices.<o:p></o:p></span></font></p>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>What
we need to get the <st1:place w:st="on"><st1:country-region w:st="on">U.S.</st1:country-region></st1:place>
back into the top ranks of wired countries is more competition, not taxpayer
handouts. That would be a real stimulus.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 color=black face=Arial><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 color=black face=Verdana><span
style='font-size:12.0pt;font-family:Verdana;color:windowtext'><o:p> </o:p></span></font></p>
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