Lieberman's broadband plan draws fire
Sen. Joe Lieberman says he's got a national broadband strategy aimed at sparking economic growth. Analysts aren't completely convinced.
"We in government can't let this potentially fertile field of technology lie fallow," said Lieberman, who plans to introduce legislation next week on speeding broadband deployment. "The high-speed Internet is on the cusp of catalyzing a quantum leap in our economy."
Under his plan, the government would provide tax credits for companies that build broadband infrastructure and conduct research and development on broadband applications, and would require the FCC (Federal Communications Commission) to develop a new regulatory framework.
"This is not a step in the right direction, because it spends more time worrying about subsidies than cleaning up the mess the government has already created in this industry," said Adam Thierer, director of telecom studies for public policy research foundation The Cato Institute. He said the piecemeal implementation of regulations and tax subsidies would slow the broadband industry down.
Lieberman's bill follows an array of other legislative efforts on broadband, from the Tauzin-Dingell bill to tax credits for rural broadband providers being included in farm bills. And while Lieberman's proposal has a better chance of passing because it is benign, its vagueness may work against it, analysts say.
Instead, several analysts pointed to consumers shying away from broadband because of the way the services are packaged, priced and delivered. Recently, several cable companies have started moving toward tiered pricing plans to streamline the process and make it more palatable for customers.
The main regulatory issue at stake is the "open access" debate, which questions whether DSL (digital subscriber line) should be regulated in the same manner as cable. Though both provide broadband access to the Internet, DSL has been regulated differently, since it runs over phone lines. DSL companies have therefore been forced to share their lines in the past with competitors, while cable companies have not. That gives cable companies an advantage, DSL providers charge. Their claims are backed up by adoption statistics.
But following the recent appeals court decision that overturned an FCC ruling that requires local phone companies to share lines with competitors, analyst Blair Levin at equity research firm Legg Mason suggested that FCC Chairman Michael Powell is already leaning toward a position more favorable for the Baby Bells.