Obama to lead a broadband recovery
The election of Barack Obama to the US Presidency is expected to have a significant impact on the telecommunications industry in North America. For those who have been demanding more government involvement in the deployment of broadband access to underserved areas and for greater regulation of the power of incumbents to control internet traffic, the ascendancy of Barack Obama to the White House is being met with great optimism.
During his presidential campaign Barack Obama signalled his intention to implement a number of changes should he be elected. Most significantly, Obama promised to protect the openness of the Internet by reinstating net neutrality during his first year in office. This includes a pledge that the principle of net neutrality would be applied by FCC commissioners during his administration.
On the question of broadband, Obama has proposed to fund national broadband access by means of a combination of, amongst other things, reform of the Universal Services Fund and new tax and loan incentives. Thus the Obama administration is expected to take greater responsibility for the funding of the deployment of next-generation broadband access across the country. Another stated ambition is to lift the minimum broadband speeds to 20Mbps, many times higher than the 200kbps which the FCC defines as broadband. Accordingly, for those calling for universal broadband to be a national priority and those disappointed by the United States’ broadband track record in recent years (the US has slipped from 4th place amongst OECD countries in 2001 in terms of broadband penetration to 15th in 2007) the result of the US elections will be warmly welcomed.
In addition, Obama has pledged to ensure diversity in media ownership. Obama had been critical of the FCC’s legacy in recent years of rubber-stamping mergers and acquisitions, and of promoting the concept of telecommunications consolidation in general. Contrary to this approach, Obama has promised to encourage diversity in media ownership, to encourage the development of new mediums of expression, and to clarify any public interest obligations that broadcasters may have. As part of this promise, one can expect to see a more interventionist FCC chairman than the current Kevin Martin. Indeed, one of Obama’s telecom’s advisors is former FCC chairman William Kennard who, during the Clinton years, sponsored an aggressive policy of narrowing the digital divide.
Although some of the reforms are likely to meet staunch resistance from various constituents within big business and Congress, there are at least three important factors which will ensure President-elect Obama has a strong mandate to prosecute his communications agenda. The first is the US’s lacklustre broadband network performance mentioned above, in which the US has fallen well-behind developments in many countries like South Korea and Japan. The second is the convincing win Obama had in the election which provides him with the political comfort to implement policies that may be unpalatable with some powerful sectors of industry. Finally, the recent government intervention in financial markets has taken the sting out of the argument that markets necessarily perform best when unregulated.
Of course, working against these factors is the fact that Obama takes office of an ailing economy. Thus there will be many other sectors pressing for reform and competing for government assistance. In addition, Obama inherits what may be an unpopular analogue TV switch-off scheduled for February 2009, with an estimated 20% of households at risk of not being fully prepared in time and hence being potentially left without television. Despite these challenges, the Obama administration is likely to successfully implement several important reforms of US communications markets which may have long-term effects lasting well beyond his presidency.
For more information on developments in US telecommunications markets, see USA - North America
November 8th, 2008 at 12:41 am
While I’m for USF reform, I think the problem with big businesses who are using government assistance they no longer need should be addressed before raising or creating new USF taxes on current customers. A raise in the tax for consumers doesn’t necessarily guarantee an upgrade in the infrastructure of broadband if the monies collected are not distributed in a way that addresses the issue of getting broadband access to under served, or more rural areas of the country.
November 11th, 2008 at 9:52 am
Over the weekend I was involved in an email discussion on the request of the Obama Transition Team, the qs they posed was why has the USF failed to deliver good national BB. After more than 100 emails the conclusion was that open networks and structural reforms will be needed to progress BB in the US. I will write a separate blog on this. Re you qs without such reforms I would not make any tax payers money available.