Watchdogs: Broadband policy a bust

In a report released Tuesday, the Consumers Union and the Consumer Federation of America found that the big local phone companies and cable TV companies have increasing control of broadband business. The groups said the policies behind this trend have failed to provide benefits for consumers and do not create enough competition.

"Allowing cable and telephone companies to squeeze out competition is a double-barreled failure," said Mark Cooper, director of research for the Consumer Federation of America. "Americans pay 10 to 20 times as much as consumers in Korea and Japan for broadband, and...the percentage of households that have the Internet at home has stagnated."

Both President Bush and Democratic challenger Sen. John Kerry have made access to broadband services an issue in the upcoming presidential election, though neither has given it a high profile. Both candidates have bemoaned the fact that the United States has fallen behind other countries in broadband penetration.

The Bush administration has said that it wants to reach universal access to broadband service--if not necessarily universal adoption--by the year 2007. It has said that holding off on taxing access and providing more wireless spectrum for high-speed data will help reach this goal.

In late summer, administration officials touted successes they had had with broadband, noting that the adoption rate for high-speed Net services was higher than for color TV or VCRs at the same point in their growth. A recent study said that about 51 percent of U.S. Internet users were broadband subscribers, up from 38 percent last year.

The consumer groups cite a recent report from the International Telecommunications Union that said the U.S. has fallen to 13th in the world, measured by broadband penetration rates.

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The report also warns that the Universal Service program, which helps support telephone service for low-income citizens, is in danger of being undermined by reliance on Internet voice calling (VoIP, or Voice over Internet Protocol).

Some VoIP boosters, including Federal Communications Commission Chairman Michael Powell, have said that Internet-based phone service can cost less than $25 a month for unlimited calling, making it a good complement to or even substitute for a government-mandated universal service program. But the report says that figure fails to take into account the cost of the broadband account needed for the service, which often pushes the true cost close to $60 or $70 a month.