Monday, May 23, 2005

Incumbents Fight to Reward Market Failures

Louisiana has a Broadband Advisory Council which has a major flaw: the commission is dominated by interests that are the major reason that broadband (even by the ridiculously inadequate definition of the FCC — 256 Kbps) is either not available or not affordable in most of rural Louisiana.

The Washington Post has a story today indicating that the lack of broadband is a problem even in fast growing areas of northern Virginia. Leaders there recognize that this lack of broadband access is acting as a brake on economic growth there.

The big private sector companies (Verizon is specifically mentioned) claim they can't make money on the infrastructure investments they'd have to make there. This is prompting a closer look at the possibility of public sector network buildouts.

Naturally, the private sector companies are aghast at the idea.

No, they'd rather have network buildouts subsidized and are aggressively moving to keep other potential rivals (in this case, broadband over power lines via electric utilities) out of the market.

The recognition that abundant, affordable bandwidth is creating a clear divergence between the economic interests of communities and the interests of the traditional providers of bandwidth who clearly have neither the funds nor the business model to make the infrastructure investments necessary to bring that bandwidth to those communities. The incumbents' fight to kill the LUS fiber to the premises project is a hot-spot where the separation of interests has erupted into a major fight.

A similar problem existed around the delivery of electricity in the U.S. for much of the early 20th Century. Investor-owned utilities would not invest in rural America, thereby depriving those living there of the benefits of electricity. The Rural Electrification Administration (REA), now the Rural Utilities Service, was the institutional response created to respond to that electrical divide. It cleared the way for the creation of member-owned electric co-operatives that delivered bandwidth to places which 'the market' failed.

If Louisiana (and/or the federal government) is serious about pulling rural Louisiana (America) across the Digital Divide, the model to do that exists. The question is whether political leaders can learn to distinguish between the interests of their constituents from those of the incumbent providers. It's clear the incumbents are not having any trouble making that distinction.

No comments: