The FCC's visible hand

Sunday, March 21, 2010

BY THE Federal Communications Commission's own account, broadband use in the United States has exploded over the past decade: "Fueled primarily by private sector investment and innovation, the American broadband ecosystem has evolved rapidly. The number of Americans who have broadband at home has grown from eight million in 2000 to nearly 200 million last year."

So it is curious that the FCC's newly released National Broadband Plan faults the market for failing to "bring the power and promise of broadband to us all" -- in reality, some 7 million households unable to get broadband because it is not offered in their areas. Such an assessment -- and the call for government intervention to subsidize service for rural or poor communities -- is premature, at best. (Disclosure: The Washington Post Co. has interests in broadcast and cable television and businesses that depend on the Internet, all of which could be affected by FCC action.)

The FCC report, required under last year's stimulus package, equates the campaign for high-speed Internet with the government's earlier efforts to link all American households with telephone service and to subsidize service for the poor through user fees. Broadband has become for many an important staple of everyday life and business, but it is not a necessity akin to telephone service, which provides immediate access to emergency services such as police and fire.

The report also likens the need to build out the "broadband infrastructure" with the past century's push to advance commerce and mobility through creation of the nation's highway system. But broadband networks have been built with billions of dollars from companies in the private sector with a legitimate right to extract profit from well-placed investments. These initiatives -- and yes, the profit motive -- have resulted in remarkable leaps in a few short years. No one can reasonably predict what innovations lie ahead, including those that may make service to rural and poor communities more accessible -- without the need to entice companies with public dollars to service these markets.

To urge government caution is not the same as favoring complete inaction -- and the FCC plan is longer on aspiration than specific policy intentions, so in many areas it's hard to be sure what the agency has in mind. Certainly the FCC is right to monitor information about rates and accessibility and to explore how to make more efficient use of the airwaves. Government subsidies may become essential to fulfill public purposes, such as providing broadband to rural schools. It is useful to continue to mark America's standing in these matters in comparison to that of other nations. But it is hard to see in this field the signs of gross market failure.

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