Originally published: April 29, 2009
Last updated: April 30, 2009 - 8:27am
National Economic Council member and special assistant to President Barack Obama Susan Crawford said rural communications networks that connect to major Internet arteries will be key investments that will come from the $7.2 billion in broadband stimulus money. Telephone carriers and cable operators have said Obama's goal of blanketing the country with high-speed Internet can't be accomplished without significant investment in so-called "backhaul" networks that stretch to hard-to-reach communities. There is some debate, however, about whether those networks should be financed with government money or private-sector investments. Extending cable to rural communities can be prohibitively expensive for Internet carriers, which is why those areas tend to have few connectivity options.
Speaking at a briefing sponsored by the Media Access Project, Crawford suggested that government investment in backhaul networks would allow "a variety of service providers" to offer Internet access in the "last mile" of connectivity in rural areas. Crawford said she is "fascinated" by Australia's recent announcement (see http://benton.org/node/24949) that it will spend some $30 billion to bring fiber networks to every home. Similar plans are being considered by the Netherlands and Singapore. "These governments understand that a wholesale network can deliver massive economic benefits," she said. "A digital economy requires fiber." A similar investment by the United States would cost several times more than the government has committed thus far.
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Fascinated is the right word, but it should be preceded by "horrifiedly". $30 billion is roughly $1,500 per Australian. Worse, the approach is to create a new government majority owned monopolist to supply the service, as if the experience of the old government owned monopolist that was eventually deregulated and privatized was not lesson enough. Quite how negative the effect this will have on private sector investment that otherwise would have been undertaken is hard to gauge.