In seeking to formulate an economic policy for the technology sector, President Bush last spring identified a seminal goal: providing every American household not only broadband service by 2007, but also a choice of broadband provider.
"There's nothing like choice, by the way, if you're a consumer, to make sure that (broadband) stays reasonably priced," the president said at the time.
But right now, a handful of telecom titans are hard at work carving up the potential broadband marketplace.
Most consumers feel they have little, if any, choice in providers. As such, they are relatively disinclined to purchase pricy services from what they see as a monopoly or duopoly marketplace. In rival countries like Japan, by contrast, where 60 percent of the DSL (digital subscriber line) market is now controlled by competitors rather than the incumbent telephone monopoly, prices have dipped to the lowest anywhere in the world--ranging from $17 to $25 a month--and usage is near ubiquitous.
After massive lobbying assaults by the regional Bell companies, the Federal Communications Commission has left us on the wrong road.
Unfortunately, after massive lobbying assaults by the regional Bell companies, the Federal Communications Commission has left us on the wrong road--moving away from telephone competition and choice. It seems that years of political infighting at the FCC will likely only produce a new set of rules set to squelch telephone competition, ceding the markets essentially to those who own (or in the case of the telephone industry, were given) the networks.
But there is a ray of hope--at least for broadband competition--which should not fall victim to the FCC's intramural jockeying.
In late August, Chairman Michael Powell's FCC issued new interim rules that will all but end competition in the telephone marketplace. As his final coda, however, Powell left open a crack in the door with an invitation for the FCC to ameliorate the interim rules. In a letter to his fellow commissioners, Powell hinted at his interest in preserving line-sharing--a key to broadband competition. The commission should put aside internal squabbling and work together to ensure the survival of this critical broadband policy.
Line-sharing, in layman's terms, refers to a set of rules--near expiration--that allows broadband competitors to use the unused, "high-frequency" portions of the telephone lines to deliver high-speed services.
Line-sharing seems to have been one of the few tech policies that worked in the past five years. Originally implemented in 1999, the rules were instrumental in more than halving the average price of broadband service--from $70 a month to below $30 a month today. And, not unexpectedly, broadband usage by the public has skyrocketed, with the number of DSL subscribers jumping almost 2,000 percent between 1999 and 2002. Billions of dollars invested in these markets will be stranded if the policy does not continue.
This issue is a case study of how a sensible, bipartisan policy falls victim to Washington horse-trading.
So what's the rub? This issue is a case study of how a sensible, bipartisan policy falls victim to Washington horse-trading. Powell, having recently won a green light from the White House, now seems bent on writing rules to phase out local telephone competition. Democrats, upset at what they see as Powell's obeisance to the telephone monopolies, don't seem inclined to play ball.
Unfortunately, this division has brought the FCC to a standstill in making progress on other critical issues such as line-sharing. While there is near unanimous support for line-sharing within the FCC, it is now being used as a political pawn and proxy for other fights.
It's this kind of gamesmanship that turns so many people off politics. If this stalemate continues, the only winners will be telecom incumbents like the Bell companies, who will be free to carve up the broadband marketplace among themselves. Meanwhile, the FCC--already stung by the media concentration debacle and criticism over telephone rules--and the president's vision of ubiquitous broadband deployment, will be the big losers, along with consumer choice.
With the opportunity to promote this pro-broadband policy before them, the Democrats should seize the day on it, and without committing to other provisions that will hurt telephone competition, should readily embrace it. Powell, for his part, should seize the day by making line-sharing one of the few bipartisan telecom policy victories, and refrain from trying to barter it for other issues opposed by consumer groups.
The truth is that a significant bipartisan victory can be had if both sides simply stand down from their battle lines in the name of a policy on which they both agree. Now that would be refreshing.