BuddeBlog

Broadband stimulus package holding fast

Along with a lot of other people BuddeComm has put considerable effort into the broadband element of the American Stimulus Package. We have created several BigThink reports: http://tinyurl.com/bc2rbd\

We argued very much along the lines of open networks, more competition and supporting grassroots initiatives, as opposed to the closed telecoms and cable TV systems that have led to a rather poor broadband penetration in the USA.

To take an approach of this kind would require a monumental shift in government policies, away from hands-off policies and towards assuming an active policy role in this industry.

So it is good to see that so far the broadband policies in the stimulus package have survived the onslaught of political scrutiny. Despite strong lobbying from the pro-incumbent lobby those companies have for the most part been bypassed, at least in this stage.

The original amount of the broadband stimulus – which is rather low in the overall scheme of the package – has largely survived: US$7bn for broadband and US$1.5bn for Rural Utility Services (RUS). The tax credits that were proposed for the incumbents have been taken out, a further indication that the new Administration is serious about change.

The Administration has also made good on Obama’s promise to honour network neutrality.

Infrastructure in conjunction with digital economy

But further details are now starting to emerge, and these are just as important:

• Grants will be allocated for state/local government or non-profit organisations.
• They can only be allocated to for-profit entities if it can be shown that it would serve the public interest.

The list of possible expenditures under the package includes not merely building infrastructure but a wide range of ‘digital inclusion’ goals that recognise that using broadband to alter the nature of the economy means more than just building fibre and putting up towers. This is very much along the lines that BuddeComm has been advocating – that (FttH) infrastructure and the digital economy (e-applications) need to be developed side by side.

There are also strict requirements to ensure significant accountability and the inclusion of transparency mechanisms.

National blueprint

You also might recall my oft-repeated request for a proper national blueprints for countries that are embarking on government funded infrastructure developments and a mapping of available infrastructure. The American Broadband Stimulus Package requires the creation of a national broadband plan, with meaningful requirements for what the plan must contain, as well as the necessity of creating a national broadband inventory.

The plan will be underpinned by requirements for the policymakers and regulators to make it all happen. This also indicates a change in the role of the FCC, who under the previous Administration had more of a hands-off approach.

Cultural change of massive proportions

Six months ago most of these developments could not have been envisaged in the USA. It was such a refreshing change that the Transition Team was open to the new ideas and fresh approaches (details of these included in our reports, available through the link above).

Even when I was in Washington in September last year ideas such as open networks, structural changes, new regulations towards competition and innovations were barely discussable – they were seen as heretical. It is totally amazing to see such rapid change.

A long road ahead

Like most other countries America still has a long way to go, but they have started on the right track and they are doing it at a cracking pace.

Australia has (at least since 2005) taken a far more progressive approach towards broadband infrastructure, but to date little has happened. Yet in the USA this change is happening within a six-month period. If this process is carried through – which is, by the way, far from certain – it could propel the USA right to the front of global telecoms developments. However, most American decision makers in this field have not yet caught up with the thinking process in Europe and Asia pacific so there is a need for a fast learning curve here.

It is most unlikely that the incumbent telcos and cablecos are going to embrace these changes readily and if we look at Telstra during the regime of Sol Trujillo (ex-USWest) a disastrous couple of years could lie ahead for the Americans.

But if we are optimistic, and manage to take the incumbents with us towards change, a very vibrant USA may lead the world into the new age of the digital economy.

Trans-sectoral investments

As is happening with broadband, multibillion dollar investments are also being made in smart grids and e-health and it could well be that the transformation will originate in this area of the market. Trans-sectoral thinking could lead to new e-applications, implemented on open networks. The trans-sectoral model may not have been formulated as such, but at least these trans-sectoral developments will take place in parallel.

The road ahead is treacherous and at this stage one would have to say that the chance of a rapid change towards open networks is still slight. However for the first time in more than a decade people with a different view – people looking at the national interest rather than at short-term profits – are being heard and, as we can see in the package, they are being taken seriously, which gives this group of ‘rebels’ renewed impetus to forge ahead.

The first cracks in the old systems are appearing and these will lead to the changes that are also emerging around the world.

What we are seeing here is an enormous cultural change in US government policies. The argument is no longer whether the government has a role to play in broadband; they now have taken on that responsibility and are exploring the best way to implement such a policy.

Paul Budde

See also:

• Global – Analysis – Government Infrastructure Policies as Economic Stimulus
• Global – Analysis – Government telco policies to kick-start the economy
• Global – Infrastructure – Open Networks
• Global – Investing in the Communications Revolution
• Global – Infrastructure – Functional and Structural Separation

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This entry was posted on Tuesday, February 17th, 2009 at 9:00 am and is filed under From Paul's Desk. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.