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Democracy & Technology Blog Networked Nation

Last week Commerce Secretary Carlos M. Gutierrez noted that the total number of broadband lines in the U.S. has grown by more than 1,100 percent from almost 6.8 million lines in December 2000, to 82.5 million in December 2006, according to the most recent FCC data which is cited in a report issued by the National Telecommunications and Information Administration. The NTIA report is entitled “Networked Nation: Broadband in America, 2007,” and is available here.
The report also contains the following graph which illustrates the dramatic increase in broadband investment — from $15.2 billion in 2003, to $24.4
billion in 2007 and projected to double in 2010:
This investment boom isn’t the result of a public works project which, according to Ludwig von Mises, would be counter-productive because:

The necessary resources for such projects must be withdrawn by taxes or loans from the application they would otherwise have found. Unemployment in one industry can, in this way, be mitigated only to the extent that it is increased in another.

We can thank the Bush administration for a deregulatory broadband policy which includes the following elements:

  • Improving the spectrum efficiency of Federal radio systems and operations.
  • Increasing the amount of spectrum available for advanced wireless services.
  • Facilitating unlicensed uses in bands with Federal operations.
  • Promoting the development of Broadband over Power Line (BPL) technology, a potential “third broadband wire into the home.”
  • Relieving telephone companies of the obligation to make their next generation broadband facilities (e.g., residential fiber-to- the-home (FTTH) and fiber-to-the-curb net- works, and FTTH networks serving residential multiunit buildings) available to competitors at discounted rates, terms, and conditions.
  • Ending the economic regulation of broadband services.*
  • Not imposing traditional economic regulation (such as rate regulation, tariffing, and entry and exit regulation) on “voice over Internet protocol” (VoIP) services.
  • Reforming video franchising to promote competition in the multi-channel video programming market.
  • Estending the moratorium on Internet taxation (President Bush has signed extensions of this ban into law three times (2001, 2004, and 2007) and has consistently urged that the moratorium be made permanent).)
  • Allowing companies to accelerate depreciation for capital expenditures (including those associated with broadband deployment) and permitting the depreciation of
    as much as 30 percent of the basis in certain property in the first year.

* Aside from the deregulation of fiber networks, the most important initiative by the Bush administration was to: (1) declare that cable modem services are “information services” and therefore are neither subject to regulation under Title II of the Communications Act nor to regulation by the states and (2) bring the regulation of DSL services into parity with that of cable modem service by removing legacy regulations from DSL providers that had required them to share their networks with competing Internet service providers (ISPs), tariff their DSL services, and comply with other traditional telephone regulations.
The issue is whether we need a broadband agenda based on new taxes and more regulation or whether the Bush administration has proved that we can have more investment in broadband by reducing taxes and regulation. The NTIA report provides the answer.

Hance Haney

Director and Senior Fellow of the Technology & Democracy Project
Hance Haney served as Director and Senior Fellow of the Technology & Democracy Project at the Discovery Institute, in Washington, D.C. Haney spent ten years as an aide to former Senator Bob Packwood (OR), and advised him in his capacity as chairman of the Senate Communications Subcommittee during the deliberations leading to the Telecommunications Act of 1996. He subsequently held various positions with the United States Telecom Association and Qwest Communications. He earned a B.A. in history from Willamette University and a J.D. from Lewis and Clark Law School in Portland, Oregon.