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Perspective: A high price for broadband

CNET Washington watcher Declan McCullagh says the politicians may finally succeed in funneling billions of dollars into subsidizing high-speed connections next year--but only through new tax-and-spend schemes.

WASHINGTON--Why doesn't everyone in the United States have a high-speed Internet connection at home?

The most obvious answer--that broadband connections remain unavailable--is not the correct one. The truth is that at least three-quarters of American homes have cable modems or DSL service available to them.

The real answer is that most people still choose not to subscribe. They feel that $40 or $50 a month is too high for the benefits they receive, and they're happy to sip bandwidth through a straw or forgo Internet access at home completely.

This brings us to Washington's political class, which doesn't care much for the choices that Americans have made. Politicians have been busy for the last few years concocting new tax-and-spend schemes that would funnel billions of dollars into subsidizing high-speed connections. So far, none of these dubious proposals has become law, but that could change when the new Congress convenes in January.

Sen. Fritz Hollings, D-S.C., reviled among geeks for his expansive copy-protection dreams, itches to create a federal bureaucracy to hand out cash grants and low-interest broadband loans.

None of these dubious proposals has become law, but that could change when the new Congress convenes in January.
A bipartisan proposal in the House of Representatives would let Attorney General John Ashcroft give out $3 billion in loans and loan guarantees. And the Department of Agriculture would hand out billions more to boost technology in rural areas, according to a third bill.

Don't get me wrong. I love my home DSL connection. I'll give it up only when they pry this keyboard from my cold dead fingers, to paraphrase Charlton Heston. And I'll be the first in my neighborhood to sign up for a fiber optic link, which may be arriving sooner than you think.

But I worry about what happens when politicians begin to concoct new spending programs and invent new bureaucracies, even if they sound good on paper. One near-inevitable outcome, in my experience, is increased government meddling in technical standards and more regulations aimed at an industry that may not be able to easily afford to comply.

Another outcome of new spending is, of course, higher taxes or a bigger deficit.

A 123-page report just released by the Pacific Research Institute warns: "New spending initiatives or subsidization efforts are unlikely to prove productive. What companies, innovators, and investors really need are legal clarity and an uncluttered, level playing field that does not attempt to micromanage this complicated sector and its many technologies. That will stimulate all the broadband deployment America wants and needs."

The regulatory situation is a pretty big mess right now.
But lack of action isn't enough, since it's Congress that gave us the buggy 1996 Telecommunications Act in the first place. That law was hailed as a victory for deregulation at the time, but the structure it set up (and blame Capitol Hill for this, not the Federal Communications Commission) has instead given new life to a creaky old regulatory apparatus that dates back to the Eisenhower administration.

An example: Half a year after President Clinton signed the 1996 law, the FCC released its "Local Competition Order," which was 737 pages long and sported more than 3,200 footnotes. So much for reducing regulation.

Unfortunately, the Supreme Court in the recent Verizon vs. FCC decision, signed by the court's so-called conservatives, gave the FCC even more authority and hindered any transition to a less-regulated marketplace. In a scathing dissent, Justice Stephen Breyer dubbed the FCC's regulations relating to what local telephone companies can charge new competitors "unlawful" and bereft of any rational analysis.

In other words, the regulatory situation is a pretty big mess right now. The best way out of it is for Congress to fix what went wrong with the 1996 act and gradually ease--not increase--Washington's role in broadband. The new report from the Pacific Research Institute offers an excellent starting point.

Sadly, though, I don't see that happening. Politicians seem compelled to find reasons to create new government programs. And if that means inventing a national broadband crisis when none truly exists, Washington appears more than up to the task.