Inouye Says U.S. Needs Legislation to Deal with Broadband Lag

Senate Commerce Committee Chmn. Inouye (D-Hawaii) said he will introduce a broadband development bill aimed at improving federal and state collection of information on high-speed access, and an advanced information and communications technology bill to promote basic research. Inouye said during a hearing Tues. on broadband deployment that he hopes for bipartisan support, especially after OECD data showing that the U.S. has slipped to 15th in the world from 12th in broadband adoption rates (CD April 24 p1).

Telecom Subcommittee Chmn. Markey (D-Mass.) and other House Democrats pushed for a broadband policy during a House hearing occurring at the same time as Inouye’s meeting. (See separate story in this issue.)

Senators express skepticism when 2 experts told the Committee that the OECD numbers don’t indicate a crisis. The members asked repeatedly whether the rankings show that federal action is needed. “In some Asian and European countries, households have high-speed connections that are 20 times faster than ours for 1/2 the cost,” Inouye said: “While some will debate what in fact these rankings measure, one thing that cannot be debated is the fact that we continue to fall further down the list. In the year 2000, the U.S. ranked 4th. Last year we dropped to 12th. Just yesterday we found that we have slipped further.”

Inouye wondered whether the U.S. is paying a heavy price for falling behind other countries. “The broadband bottom line is that too many of our international counterparts are passing us,” he said: “Some experts estimate that universal broadband adoption would add $500 billion to the U.S. economy and create more than a million new jobs.” Inouye also wondered whether declining research spending will hurt the U.S. long term, as companies refocus research on “short term returns” instead of the basic research once done by Bell Labs: “While this strategy may be good for the bottom line, it sacrifices any chance our nation has to operate as the test bed for new technologies.”

“Very clearly, this is something we have to explore,” said Sen. Stevens (R-Alaska), ranking Republican on the committee: “We have situations where some portions of our state can be reached only by satellite.” Stevens said he hopes future hearings by the committee would cover satellite broadband, and using Universal Service Fund money to improve penetration. “This is a very difficult area for us to come to an agreement on, but I will do everything I can to work with you to get an agreement,” Stevens told Inouye.

Sen. Dorgan (D-N.D.) said the FCC is doing an inadequate job keeping track of broadband deployment: “We have an FCC that considers speeds of 200 kilobits per second broadband, and of course it’s not, and they consider areas with one person in an entire zip code having broadband that that whole area is being served, and of course it isn’t.”

But the OECD numbers that cause “consternation” are largely meaningless, said Scott Wallsten, the Progress & Freedom Foundation’s dir.-communications policy studies. “Notwithstanding the international rankings, the evidence indicates that the U.S. does not have a broadband problem,” he said: “The remarkable investment in broadband infrastructure and rapid increases in subscribership that have taken place suggest the market is working well.”

“The OECD and ITU do not explain how they derive their estimates,” Wallsten said: “More importantly, many factors differ across countries that affect both the costs of supplying broadband, such as population density, and the demand for broadband -- such as the ability or inability to subscribe to television services over broadband lines.”

The OECD rankings are a “modern version of the 1957 Sputnik launch -- an indicator to some that the U.S. has fallen behind in a key technology,” said Jeffrey Eisenach, Criterion Economics chmn.: “Happily, it turned out our fears about losing the space race to the Russians were to say the least exaggerated, and I suspect the fears are the same with respect to our fears about broadband.”

But Eisenach agreed the govt. should do a better job of collecting data on broadband deployment. “The current FCC data on broadband availability is not very useful in assessing rule deployment,” he said: “The data collected through Form 477 and reported by the FCC tells us whether one or more providers have customers in each zip code, but it does not tell us how many households or businesses in that zip code actually have broadband availability. Nor does it tell us anything about the quality or price of service.”

Eisenach said the last time the Commerce Dept. released data on broadband adoption -- looking at such issues as adoption in urban versus rural areas, by age, and by households with children -- was in 2005, based on 2003 data. “Given the dynamic nature of broadband deployment it might as well have been collected in 1903,” he said. Similarly, he said, the govt. data on small business broadband penetration were collected in late 2003.

Ben Scott, policy dir. at consumer group Free Press, called the broadband market broken. “Roughly 10% of households still do not have a wireless broadband provider,” he said. “The market is not competitive. It remains a rigid duopoly at the residential level. Ninety-six percent of residential advanced-service lines are either cable or DSL, and there is no viable 3rd technology that can compete head to head on price and speed.”

New broadband capable cellphones remain “expensive, slow and are seldom used as a substitute for a wireline connection at home,” Scott said. U.S. population density doesn’t explain the decline in OECD rankings, he said: “It’s not that broadband isn’t available to most Americans -- we're just not buying it… We need more competitive, affordable services with attractive features to make it worth the family’s hard earned dollars.”