Supply and Demand in Kansas City

[Commentary] Google’s system isn’t the answer to Universal Service.

The first network in a town or region generally has an obligation to serve everyone, and the government will subsidize telephone service to hard-to-reach areas where the cost exceeds the norm. The Federal Communications Commission is in the process of converting the Universal Service Fund from a vehicle for conventional telephone service to an up-to-date program that supports both cellular and broadband, but the conversion is just getting started. In the meantime, we certainly can’t expect that the newest and fastest networks built entirely with private financing will serve everyone. They will serve those who can be served in a financially sustainable manner, and the rest will depend on subsidies.

Creating demand for broadband is essential to creating competition to build better networks. Other essentials are making it easy to get access to Rights of Way, and subsidizing broadband service in remote areas until they have enough demand to support a private network in a sustainable way. We’re undergoing a once-a-century transformation in how telecom works, thanks to the Internet and the smart phone, so there’s bound to be some disruption of long-running programs along the way. That’s why it’s important to have a clear goal and to deal with the obstacles that come up along the way.