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The Answer to Broadband Expansion Isn’t the Government

April 15, 2014

Last week the Inside-the-Beltway newspaper The Hill published another opinion article critical of government owned networks. (See the other articles we’ve highlighted recently here and here.) The Hill piece is by Larry Irving, former administrator of the National Telecommunications and Information Administration (NTIA). Blue and red fibre optical cables

Irving argues history indicates, “private-sector investment is to be preferred strongly in building telecommunications networks.” Irving says he’s confronted arguments for government involvement before. He explains, “Some industry leaders were concerned [President Bill Clinton] intended to use public dollars to build the ‘information superhighway,’ as we then called the Internet.”

The Clinton Administration nipped that rumor quickly and “clarified” at every opportunity that it preferred private sector investment.

Since then – the early 1990s – Irving notes U.S. policymakers have argued worldwide for private ownership of telecom and Internet networks “because we believed it.” They believed private ownership was “more effective and efficient, promotes innovation, and helps assure freedom of speech and open networks.” Since the Clinton Administration took that stance, Irving says the private sector has invested $1.2 trillion in wired and wireless broadband. (Indeed, he reports, “[T]he top two telecommunications companies invest annually more than the top five oil and gas companies and nearly four times as much as the Big Three automakers combined.”)

Irving acknowledges the private sector broadband market isn’t perfect, but says public ownership won’t solve the problems that exist. In fact, he says, they could make things worse. He argues, “[T]he specter of governments operating broadband networks in competition with the private sector, or of state or local governments serving as both regulators and owners of competing broadband networks, could stifle investment or reduce private-sector access to capital.”

To expand wired and wireless networks over the next 10 to 15 years, Irving says the market will need an additional $1 trillion. He asks, “Are cash-strapped states, cities and municipalities the optimal source for that investment in our networks?” Even if local and state government has the money, Irving asks, “[S]hould those dollars be spent on broadband networks, where considerable private capital already is at work and more is available …?”

No, Irving says. Why? Because other infrastructure needs are too great. He argues, “Rationally, city and municipal governments should invest in roads, railways, ports, bridges, parks and the like where governments are the primary or only investors, rather than divert limited public resources to broadband.”

Irving also argues you don’t need government-owned broadband to expand service to all Americans, increase competition and interconnection, protect consumers or increase network reliability.

What the market needs in order to achieve these goals is for government to set the stage. Irving concludes, “Twenty years ago, the Clinton administration believed that the principal role of the government was promoting private-sector investment through appropriate tax and regulatory policies. Today, after trillions of dollars of private-sector investment, we have seen an explosion of broadband-enabled activities, products and services, and millions of Americans are connected to the Internet. We got the policy right in the ’90s, and private-sector investment continues to be the right path going forward.”