As Congress considers ways to help the beleaguered telecommunications industry, experts told a Senate panel last Tuesday that the federal government should take action to spur broadband deployment in underserved areas.
In testimony before the Senate Commerce, Science and Transportation Committee, several witnesses said the government should help telecommunications firms upgrade and expand their cable and broadband infrastructure and use financial incentives to make high-speed Internet services more widely available.
Former Federal Communications Commission chairman Reed Hundt reminded the panel of the government's key role in building canals, railroads and highways, and said the government should play a similar role in deploying broadband services nationwide.
"There is no reason to think that a tremendously expensive broadband network … can be built entirely by the private market, and it certainly can't be built by the private market at a time that capital is fleeing the industry," Hundt said. "Consequently, you need to throw money at it. You need to have the consumers be able to have a subsidy in their pocket that they can award to the service providers to build that kind of network."
$300 subsidy plea
One investor proposed providing a $300 subsidy for each new subscriber who takes broadband service for less than $30 per month.
"I am so scared for this economy, I say let's do something that stimulates demand," said Michael J. Price, vice chairman of Evercore Partners Inc., a New York investment firm.
Price's goal: To afford 20 million homes with access to affordable broadband within two or three years, at a cost to the government of $6 billion.
A number of senators on the commerce panel — especially those from rural states — seemed to support government subsidies that would spur broadband deployment.
"The federal government does have a history of assisting industries to preserve America's global competitiveness," said committee chairman Sen. Ernest "Fritz" Hollings (D-S.C.), citing federal support for airlines in the 1970s, automobile manufacturers in the 1980s and semiconductor developers in the past decade.
"Investments in high-speed broadband infrastructure can pay similar dividends," he said.
Sen. Byron Dorgan (D-N.D.) said the experiences of some European and Asian countries indicate "that governments are deciding that in order to have universal access … we have to do something to stimulate that."
But some witnesses and senators balked at the idea.
"This Congress cannot pay our way to this end," said Peter W. Huber, a senior fellow at the conservative Manhattan Institute. "That will have to come from the private sector. It will have to come from a stable, balanced competitive environment in which capital can return to this market."
Several bills intended to make high-speed Internet services more widely available have been introduced in the Senate.
Aides say that a bill by Sen. Jay Rockefeller (D-W. Va.) to use tax credits to defray the costs of launching broadband in underserved areas might be inserted into a major tax bill currently under consideration by the Senate Finance Committee.
Legislation by Sen. John Kerry (D-Mass.) would give tax breaks to housing developers that install broadband infrastructure in low-income housing complexes. That bill is stuck in the Senate Finance Committee.
And Sens. George Allen (R-Va.) and Barbara Boxer (D-Calif.) are currently drafting a bill that would make additional spectrum available for wireless broadband services.
National Cable & Telecommunications Association spokesman Marc Osgoode Smith said the group does not consider government subsidies for broadband deployment to be a priority.
"It's not something that we're actively supporting, because our fundamental belief is that broadband is delivering," he said. "We're comfortable with the market providing an answer."
States News Service