by Randolph T. Holhut
American Reporter Correspondent
January 30, 2009
STIMULUS FOR RURAL AREAS BEGINS WITH BROADBAND
DUMMERSTON, Vt. -- The future of rural economies, such as where I live in Vermont, is tied to increased high-speed broadband Internet access. However, it is clear that the dream of universal access in Vermont, and other rural areas of the United States, is just that - a dream.
Increased access to broadband in rural areas appears to be one of the priorities of President Barack Obama's economic stimulus plan. According to Business Week magazine, the Obama Administration apparently plans to spend up to $30 billion on increasing the speed of existing Internet lines and expanding broadband networks into areas without service. Tax credits could provide up to 60 percent reimbursement for these projects.
Intervention by the federal government is definitely needed. According to a recent analysis by the nonprofit media group Free Press, only 35 percent of U.S. homes with less than $50,000 annual income have a high-speed Internet connection.
That's because broadband access is in the hands of the cable and phone company duopoly, which controls access to 98 percent of the U.S. online market. It is why Americans pay more and get less than what is available in the rest of the developed world.
It should be a national embarrassment that the United States ranks 22nd in the world when it comes to affordable high-speed Internet, according to the Organization for Economic Cooperation and Development. It should be a national embarrassment that the United States has dropped from No. 4 in 2001 to No. 15 in 2007 for broadband penetration.
This imbalance is taking its toll economically. A Brookings Institution study found that nearly 300,000 new American jobs are created for every 1 percent increase in broadband penetration.
We are falling behind because of a conscious choice made by policymakers on both the state and federal levels - let the free market work its magic and everything will be fine. But there is no free market in telecommunications. The phone and cable companies control the market and vigorously lobby lawmakers at every level of government to force through regulations that protect their market position, close off access to new technology and competitors and increase control over the content that travels over the Internet.
The free marketeers, what's left of them, will cry that government shouldn't get involved in building and improving out our telecommunications infrastructure. Up to now, it has mostly been privately built and financed. Why should that change? The answer is simple - because the private sector has failed.
When you examine of the great projects in our nation's history, government has always had a hand in them. The transcontinental railroads of the 1860s were subsidized by massive land grants and other government giveaways. Rural electrification and the Eisenhower Defense Highway System (our Interstates) both saw the urban areas already electrified and already with highways subsidizing the buildout to the rest of the country. Both urban and rural areas benefitted.
The countries that have moved ahead of the United States in telecommunications have also made a conscious choice - to enact policies to encourage universal, open access.
For example, Japan in 2000 had the same problems as our nation - an Internet industry controlled by a handful of gatekeepers that blocked innovation. Japan's response was to create a highly competitive private sector that did away with proprietary networks. Every phone company had to open their residential lines to wholesale access by other companies. The result was broadband access went from 2.2 percent in 2001 to more than 80 percent by 2004 and nearly every resident today.
While Vermonters struggle to get 1 megabit services, other nations are busy building 100 megabit networks that will transport voice, video and other data at speeds unimaginable to current American Internet users. And both Free Press and the OECD found that countries that have universal and open access policies, like Japan's, have nearly twice the levels of broadband penetration than those who do not.
Only with federal subsidies will telecommunications providers reach all customers, just like it took federal subsidies to build the railroads and extend the power lines to every home in America.
From rural electrification to the construction of the Interstate Highway System, it has taken a combination of bold and creative political leadership and government money to create the public infrastructure needed for economic growth. The need for a fast, affordable and open Internet is clear. While our international competitors have created this infrastructure, America remains a digital backwater.
This is not acceptable. We need a national broadband policy that will erase the digital divide, foster innovation and create a telecommunication network that's second to none. It will take a combination of business and government, with plenty of public imput, to accomplish this job.
The Internet has become a necessity for creating economic growth, just like having electricity or good roads. The private sector has not, and will not, invest in universal access. The poor availability and quality of broadband and cell phone service in Vermont is Exhibit A of this fact. We hope the Obama Administration realizes this and works to make the United States an e-nation.
Randolph T. Holhut has been a journalist in New England for nearly 30 years. He edited "The George Seldes Reader" (Barricade Books). He can be reached at email@example.com.