Comcast recently failed in its bid for Disney but succeeded in raising the issue of media concentration. Critics worry that free speech and diversity of entertainment are at risk if content providers and distributors become one. The way to avoid any such problems when other similar would-be mergers appear is to unleash powerful competition from broadband competitors.
Cable providers like Comcast can deliver television, Internet, and even voiceover-Internet telephone services, but they are not the only ones with this capability. Satellite providers offer competition and so do Digital Subscriber Lines (DSL) from the phone companies. The problem, however, is that these competing technologies are not treated equally by regulators.
While cable is subject to practically no regulations on broadband deployment, phone companies are strangled with red tape at both the federal and state levels, scaring away investors who run from the uncertainty of the patch-worked regulatory regime.
No wonder, then, that cable is beating DSL in broadband deployment by a two-to-one ratio. But it’s not only the phone companies that are losing out–it’s also America’s economy and competitive position in the world. Companies that supply telecommunications providers such as Cisco, Intel, Motorola, and others can’t hire workers and maintain a competitive edge if they don’t have demand for their products.
The gravity of the country’s disjointed broadband policy was the focus of a number of letters written to the White House over the last few months. At least 36 Members of Congress have written to President Bush regarding what they see as destructive broadband policy coming from the Federal Communications Commission (FCC).
Congressman Jeb Bradley (R-NH) wrote that “the US is sorely lagging behind other industrial nations” on broadband access. He’s right. The US ranks 11th in high-speed Internet use per capita, behind countries like Italy and Canada.
House Budget Committee Chairman Jim Nussle (R-Iowa) wrote “old rules for traditional phone service have little relevance to the developing broadband market and need clarification if the entire nation is to enjoy broadband service.” Phone companies have been saying this for awhile now, but it seems federal regulators are slow to see that convergence of technologies means that the phone company (or cable or satellite company) can also be your Internet company and your entertainment company.
Ten other members of Congress told President Bush that “US investors are staying out of telecom because the FCC refuses to set the playing field.” They also said that US regulators are essentially picking “winners and losers, a role that is not for government to take–especially in the fast-changing world of telecommunications and high technology.” Unless the FCC acknowledges that this is a problem, the US will continue to fall by the wayside in this area.
Even Hilary Clinton weighed in, an interesting twist given that the harmful legacy rules hampering broadband were instituted on President Clinton’s watch. The letter she signed pointed out that without important capital investment, the US will “continue to lose data sharing, educational, and numerous other opportunities critical to maintaining our traditional competitive advantage in today’s global, information-driven economy.”
A hands-off regulatory approach has let the cable industry get ahead and create jobs, and the same environment should be permitted for its competitors. A recent study showed that greater broadband deployment would result in 1.2 million new jobs over the next 20 years–a glimmer of hope for those who are worried about the nation’s “jobless recovery.”
With all these reasons for the Bush administration to encourage the FCC to embrace a free-market broadband policy, it’s surprising it hasn’t happened yet. Creating more competition in the broadband space is a winning issue for an administration supportive of smaller government and a stronger economy. Perhaps there have been too many other issues or maybe some long-standing telecommunications politics are blocking the proper path.
Either way, the time has come for President Bush to pay attention to this policy problem that is costing jobs and hampering American competitiveness. The proposed Comcast-Disney merger was one more reminder why his administration needs to act without delay.
–Sonia Arrison is director of Technology Studies at the California-based Pacific Research Institute.