Framing a National Broadband Policy

Robert D. Atkinson January 18, 2008
January 18, 2008
An article in "CommLaw Conspectus" outlines the economic rationale for a national broadband strategy, showing why the market alone will not generate the societally optimal level of broadband in the foreseeable future.

This article appeared in the Fall 2007 issue of Commlaw Conspectus, a telecommunications law journal.

It is difficult to pick up a business or technology magazine without reading that the United States is falling behind other nations in broadband telecommunications. The real question is not whether the United States is falling behind-it is, as will be demonstrated-but whether the country should have a national broadband policy in response and, if so, what it should look like.

The answer to this question is not obvious. After all, a host of other exciting digital technologies have recently been introduced, and there is no talk of an Xbox gap or a national MP3 player strategy. On the other hand, broadband is unique in that the social returns of broadband investment exceed the private returns to companies and consumers. Therefore, market forces alone will not generate the societally optimal level of broadband in the foreseeable future.

Part II of this article assesses how far and why the United States has fallen behind in broadband. Part III then discusses why leaving broadband to the market alone will likely lead to adoption of broadband at a less than societally optimal rate. These reasons, laid out in Part IV, are: (1) network externalities; (2) “prosumer” investment externalities; (3) competitiveness externalities; and (4) regional externalities. Part V considers the trade-offs between various broadband goals, including universal deployment to all places, universal take-up by all individuals, faster broadband speeds, and increased competition. Fi-nally, Part VI concludes that the reasons discussed necessitate a national broadband policy, and suggests that crafting such a policy must involve sig-nificant analysis, debate, and consideration.