Arnold Kling

Broadband Wants to be Subsidized?

Arnold Kling, Great Questions of Economics
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When a lobbying group called TechNet made a splash recently by calling for government to set a goal to have broadband in every home, my initial reaction was similar to that of Business Week's Howard Gleckman.

Why in the world should all taxpayers subsidize those who purchase one particular telecommunications service? Why not a subsidy for dialup? Or for an old-fashioned telephone? How about cable TV? Or people who raise homing pigeons?

However, none of the stories that I have read show TechNet focusing on a handout per se. In Network World Fusion, for example, the group is reported as recommending

  1. Exercise regulatory restraint.
  2. Encourage investment in broadband by removing regulatory disincentives.
  3. Use a purely market-based approach when allocating wireless spectrum.
  4. Allow tax incentives for broadband deployment in underserved communities.

Only the last item is the kind of handout that might be considered objectionable.

Does the third item mean that the group would like to toss all of the spectrum back into the air (so to speak) and let it be re-allocated by the market? If so, then they seem to be as radical as DeWayne Hendricks (post 35, below).

Discussion Question. Consider point 2, to "encourage investment in broadband by removing regulatory disincentives." Would putting more pressure on the Baby Bells to enable other carriers to offer DSL at a profit be consistent or inconsistent with this principle?

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