This article from the London Times is useful both for its substance and for what it says about the sorry state of the debate in the U.S. While the U.K. has much higher available penetration and speed than the U.S., it is considered rather pokey and slow for Europe. As the article observes, the problem is that private companies don’t want to invest in upgrades of infrastructure.
More below . . .
At this point in the U.S., the discussion then becomes about how and whether to provide incentive for private companies to invest. The “regulation is death” crowd will observe that while structural separation (separating the ownership of the broadband lines from the sale of retail services) may have brought the U.K. higher speeds, lower prices, more competitive offerings, and all around better services than in the U.S., it has discouraged infrastructure investment and therefore is inherently unsustainable and a real bad idea. We then get caught up in the debate about producer incentives, past occasions when the carriers promised investment in exchange for deregulation and failed to deliver, yadda yadda yadda. Because, of course, we only have on possible business model and one role for government policy in broadband.
The Times article is noteworthy because it takes the discussion in an entirely different direction. It begins by noting that a public/private cooperative in a town in the Netherlands built itself a 100 mbps network that turns a tidy profit even after major upgrades, and that its structure as a cooperative keeps it accountable to the residents — who are voting shareholders. The article contrasts this with the UK’s “do nothing” recommendation. But rather than calling for the end of structural separation and a “hands off” government approach, the piece concludes by urging a debate around the diverse models of public private partnership and a call for greater public investment.
Compare this to the paucity of the debate here in the U.S., where the Chicago School — which equates a deregulated market with a competitive market and sees no role for government in economic policy beyond enforcing contract — continues to set the agenda and our broadband policy debates remain relegated to debating tweaks around the edges. In Europe, they can actually talk intelligently about a wide variety of possible approaches. Whereas here, we cannot even get past the underlying question of whether government has a role at all — let alone recognize the possible diversity of public/private approaches. Abroad, the debate is “what should we have as a broadband policy.” Here, it is “how dare we have the hubris to imagine we could have a broadband policy other than deregulation — don’t you know that government screws everything up and you should be ashamed at the notion of having an industrial policy.” Our spectrum “debates” are reduced to relentless chanting about not “picking winners” or “favoring business models” in the face of the most timid proposals to the contrary. Efforts by local governments to find their own solution face implacable hostility and insistent demands that localities outsource to the private sector or prove success by operating like a private sector company.
The refusal of relevant members of Congress or regulatory agencies to even question the underlying validity of the Chicago School, the insistence on accepting the basic frame that government has no role but to get out of the way and that advocates of any approach to the contrary bear a heavy burden of proof, has trapped our national debate like a fly in amber. Meanwhile, we fall further and further behind, losing our edge to nations having substantially different debates. Yet rather than question the Chicago School frame, we endless debate the validity of the metrics tracking our decline. Or, to paraphrase Thomas Jefferson: It is easier in Washington to believe that the OECD rankings lie than to believe there is value in having an industrial policy.
I don’t know which is worse. That folks in the U.K. are complaining about the kind of broadband access I can only dream about as being inadequate, or that they are apparently capable of having the more sophisticated policy debate that I can only dream about. Still, if I may be audacious enough to hope, perhaps we will see better times ahead. The economic consequences of the Chicago School’s deregulatory approach do eventually change people’s attitudes. Just ask the financial services industry what they think of the virtues of deregulation these days.
Stay tune . . . .