The Challenges Are Great and the Media Is Dense

Carl Weinschenk

Our nation's economic plight is crowding everything out of the news, with the possible exception of the tense situation in Gaza. With Barack Obama set to take over in less than two weeks, telecommunications organizations, individual executives and various analysts are voicing a variety of opinions on how wise a broadband stimulus package is and, if one is offered, the best way to go about it. I've written quite a bit on the topic, but it's difficult to stay ahead of the profusion of opinions.

 

It's possible to quibble about the details, but it's abundantly clear that a broadband stimulus package is a good idea. What's interesting is the mainstream media's ingrained need to present reports that are "balanced" -- even if that means going to great lengths to find the negatives.

 

This is one reason that much of the left-of-center blogosphere refer to the traditional media derisively as "the village" (which is at least partially a nod to The Prisoner, the greatest show in television history). Of course, it will be trickier to rebuild the broadband infrastructure if the telcos withhold data. Of course, Net neutrality issues will have to be dealt with. Of course, expanding broadband won't have the same impact as the birth of the automobile industry.

 

The reality is that the economy is tanking big time and significant investment in our broadband infrastructure is one key to saving it. Clearly, it is appropriate to raise troubling issues and potential problems. But it is another thing to go out of the way to find them.

 

The problems seem to be getting worse and are on the verge of choking the traditional telephone industry. The New York Times, via GigaOm, reports on a study by Pike & Fisher that says broadband growth will slow by 12 percent in the U.S., though subscriptions will rise by 8 percent. Three-fourths of the 5.7 million new broadband subscribers expected this year will opt for cable. Overall, landlines will drop a whopping 16 percent to 86 million. Try as they might to change things, the telcos are predominately landline businesses. Most people understand that both the total number of lines and per-line revenue are shrinking. The financial morass seems to be accelerating that decline.


 

Text messaging, wireless and Internet use are among the few areas that are bucking the trend (or downward spiral) and are on the rise. Earlier this week, BusinessWeek chief economist Michael Mandel offered his two cents. He concludes, as the Pike & Fisher report also suggests, that use is increasing but jobs are not. Mandel finds this "odd." He notes that cable companies and telcos are reducing their workforces and that content companies such as Google and Yahoo-with less than 100,000 workers-are small potatoes.

 

Mandel then cites a new report from think tank The Information Technology and Innovation Foundation that says a $10 billion broadband stimulus package can create about 510,000 new jobs, covering both those building the network and positions made possible by the new networks that are created.

 

At this point, Mandel's piece gets a little, well, strange. He compares the current question concerning investing in broadband with the automobile industry and offers various reasons why they differ. The question is why such a comparison matters. The entire column could have been encapsulated in a headline-length sentence near the bottom of the piece: "In the end, it's worth taking a shot."

 

There is little new in the Fortune piece, which describes the challenges and rewards of a broadband stimulus. The piece focuses-much like the counsel given by Craig Settles when we spoke last month-on the impact that the improved broadband infrastructure will have in creating new services and the businesses behind them. This is separate from the stimulus the economy would experience from the building of the network itself.

 

This piece, which reports suggestions from Massachusetts' Secretary of Housing and Economic Development, gets into specifics. The official, Daniel O'Connell, sent a letter to the Obama transition team saying that legislation should empower state-level mapping efforts. In other words, O'Connell wants the states to have a say in how the money is spent. The piece says Massachusetts is one of the leading states in the use of broadband to benefit its citizens and, along with several other states, is investing in a public/private model. The piece refers to other states-California and Maine are mentioned-that have established in-state universal service fund models.

 

A lot of people are doing their best to figure out how to spend Obama's money. This Public Knowledge writer has the advantage of having met the transition team, along with other folks. He points to themes running through all the proposed approaches to the issue. Infrastructure improvements should provide incentives for actually improving broadband-not maintaining it in its current form or sticking new management tools on the old system. The second theme is that new competitors should be encouraged. Finally, open and non-discriminatory access should be a requirement.



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