Broadband Battle Balloons

Posted: 05/2002

Broadband Battle Balloons
Bush Administration Begins to Take Notice, Seeks Avenues of Increased National Deployment

By Kim Sunderland

AFTER MONTHS OF INTERNAL DELIBERATION, the executive branch is beginning to stake out a position on broadband regulation. How and when it finally does will be a critical factor in the outcome of the broadband battle, sources say.

“The silence from the White House has been resounding,” says James Gattuso, research fellow in regulatory policy at the Heritage Foundation and adjunct scholar at the Competitive Enterprise Institute, two Washington policy think tanks. “For months, there has been talk of a detailed broadband policy soon to come out.”

While the policy has yet to appear, the telecommunications industry remains hopeful.

In early March, U.S. Commerce Department Secretary Donald L. Evans released the first comments by a Bush Administration official that focused exclusively on broadband. He discussed America’s broadband future and its role in the nation’s economy. “An issue vital to America’s economic security [is] high-speed access to the Internet-broadband,” according to Evans. “The president understands the need to make broadband available to every American, from every walk of life.”

Evans says that innovations such as broadband “are absolutely vital to U.S. economic security.” He adds, technology advances are credited with 50 percent of U.S. growth since World War II, and IT alone accounts for two-thirds of productivity growth. In turn, productivity growth reduces price inflation. “IT accounts for one-quarter of U.S. economic growth, so it will help speed economic recovery,” Evans points out. “Over the next 10 years, broadband is expected to add half a trillion dollars — $50 billion a year — to the economy. And building the national broadband network will create over 1 million new jobs.

“Broadband is the next step in the Internet revolution,” Evans says. “It makes Internet surfing seem like riding on a super-fast bullet train, unlike today’s slower connections.”

In late March, the Commerce Department convened numerous experts to look at broadband strategies, models and examples that currently and will in the future enable business productivity. The department’s Technology Administration examined questions such as:

  • How are broadband and high-speed applications impacting business productivity?

  • What must businesses do/invest in to take advantage of broadband-based opportunities?

  • What barriers prevent businesses from using broadband technologies to improve operations?

TA’s Office of Technology Policy now is working closely with the technology community and policy makers to improve the business environment for innovation. The March round table was set up to aid in that endeavor and to help the Bush Administration form its broadband policy. So while no date is set yet on when that policy might emerge, the ball is rolling.

But it may not be moving fast enough, which has forced many industry folks to focus on the FCC, which has five proceedings under way that promise regulatory relief of one kind or another for broadband, and the U.S. Senate, where pro-Bell deregulatory legislation fights for survival.

At the FCC, no final actions have been taken and Gattuso says many deregulation supporters are worried, asking, “why isn’t [FCC] Chairman Powell moving faster?”

One theory, he says, is that Michael Powell is a follower of the “Powell Doctrine,” the military credo developed by his father, former Director of the Joint Chiefs of Staff and current Secretary of State Colin Powell: Do not begin action against the enemy until your forces have overwhelming superiority.

“Just as Colin Powell waited until he had enough firepower to ensure a swift victory over entrenched Iraqi military forces, perhaps Michael Powell is waiting for the political firepower to ensure victory over entrenched telecom lobbying forces,” Gattuso surmises.

It is a cautious strategy that may not fit well with telecom policy realities. Nevertheless, it seems clear the FCC won’t move far on broadband without considerable outside support, according to

In the Senate, the controversial Internet Freedom and Broadband Deployment Act (Tauzin-Dingell bill, H.R. 1542), appears dead. Referred to by its supporters as a “blueprint for economic and broadband growth,” the bill would allow the Bell companies to offer broadband Internet access over their existing long-distance lines without requiring them to open their local lines to outside competition.

Senate Commerce Committee Chairman Ernest F. Hollings (D-S.C.) says he shares the same goal of boosting broadband access, especially in rural or underserved areas. But he wants to forego Tauzin-Dingell’s deregulatory approach and promote bills that would give tax breaks and low-interest loans to some broadband providers. “I think we can bring these up and pass them,” Hollings says.

These converging forces — the administration, the Senate and the FCC — must find common ground, and fast.

“As Sen. Hollings correctly points out, the problem with broadband is not on the supply side, as the Bells would have you believe,” says Roscoe C. Young II, KMC Telecom’s president and COO. “Rather it is on the demand side, and Congress is already looking at several proposals to address this issue.”

“Anything is possible,” adds Gattuso. But remember, “the policy-setting process in any administration makes sausage-making look pleasant.”


Competitive Enterprise Institute

Federal Communications Commission

Heritage Foundation

KMC Telecom

U.S. Department of Commerce

U.D. Department of Commerce Technology Administration

U.S. Senate


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