11-10-2001

TELECOMMUNICATIONS: Bringing on Broadband-Slowly

With American companies clamoring for ever-faster Internet access, and
with the United States falling behind other countries in deploying the
broadband communications technology that provides such high-speed access,
many in the telecommunications industry have been criticizing the Bush
Administration's silence on the issue. "What happens in the broadband
area is very much key," said Intel Executive Vice President Les
Vadasz, arguing that, as the economy slides into recession, the telecom
industry could help lead the country out of its slump.


Today's high-speed Internet access over traditional phone lines and cable
wires "is nothing more than Scotch tape ... something never designed
for these uses," Vadasz said. He called for 100-megabyte capacity,
which would allow far greater data-transmission speeds than the
approximately 1 megabyte capacity that consumers get when they access the
Internet via their phone lines.


A recent report by the Organization for Economic Cooperation and
Development found that among its 30 member nations, the United States fell
from third place to fourth in terms of broadband availability. Korea is in
first place, Canada is second, and Sweden is now third. Vadasz said he was
pessimistic about broadband deployment in the United States because as the
country is falling behind, the national discussion is just
beginning.


An October 23 speech on broadband by Federal Communications Commission
Chairman Michael Powell "was the first serious statement I have heard
out of Washington," said Vadasz. He added, "It is nice to be for
broadband deployment, but the question is, what do you do?" Several
players in the industry say they can help the economy by bringing
broadband to more Americans, but they want something in return. Intel
Corp., the chipmaker, and the Bell telephone companies want regulatory
relief; the Bells' fledgling competitors want stricter enforcement of
existing rules governing access to the local Bell networks.


The Administration denies it has been remiss. "Several important
questions need to be answered-and have not been answered-before we jump in
with both feet and start restructuring markets," said Bruce Mehlman,
the assistant secretary for technology policy at the Commerce Department.
"We have been reaching out aggressively and will continue to do
so" to determine whether the pace of broadband deployment is fast
enough, he said.


According to an industry source, silence has reigned at the highest
government levels partly because it took several months to get the proper
officials in place and partly because the broadband discussion was
dominated earlier this year by H.R. 1542, the controversial bill
introduced by House Energy and Commerce Committee Chairman W.J.
"Billy" Tauzin, R-La., and ranking member John D. Dingell,
D-Mich.


Recently, Administration officials have made a point of stressing the
importance of broadband. Powell, Mehlman, and Nancy Victory, the assistant
secretary at the Commerce Department's National Telecommunications and
Information Administration, all addressed a national broadband summit in
late October. The message from the officials was that the nation should
commit to achieving universal availability of broadband and should keep
regulation to a minimum.


In the debate over broadband rollout, it is impossible to point to just
one problem or just one fix. For starters, the bursting of the Internet
bubble has depressed telecom investment, and the slowing economy and a
marketplace that is at best lukewarm to broadband have made policy makers'
jobs more difficult.


"I continue to find the broadband discussion hazy and muddled. I have
attended many conferences on the subject, and often the central conclusion
is nothing more than, Broadband is really great stuff, and we all want
it," Powell said at the recent summit. "What is lacking is what
role government should play in quenching our thirst."


But comments by Powell and Victory lead industry players to think that the
Administration is leaning toward a deregulatory approach for new
investments in the technology. "Broadband service should exist in a
minimally regulated space," Powell said in his October 23 speech,
adding that, to encourage investment, the FCC should "guard against
regulatory creep." An industry source said, "We interpreted
[Powell's comments] as, You shouldn't regulate the hell out of one service
and not the other." However, it is unlikely the FCC will completely
deregulate the telephone companies, in part because it is politically
untenable and statutorily difficult under the 1996 Telecommunications
Act.


Mehlman said the Administration has made no decisions on whether to
deregulate. "We are continuing to talk to all sides about whether the
many regulations and rule-makings issued by the FCC over the past five
years are supporting a robust and competitive marketplace that encourages
investment," he said.


Also complicating the debate is consumers' slowness to accept the new
technology. Powell noted the problem but said, "I am hesitant to let
adoption rates drive government responses, for a developing market needs
the cues provided by consumer free choice." By the end of the year,
about 85 percent of Americans should have access to some type of broadband
service, but only about 12 percent, according to estimates, will take
advantage of it. Even as the Administration confronts the broadband issue
and industry pushes officials to act, the American people seem less than
excited about getting on the high-speed Internet highway.


Teri Rucker is a senior writer for National Journal's
TechnologyDaily.


Teri Rucker

National Journal