Originally published: May 6, 2009
Last updated: May 6, 2009 - 6:16pm
The National Cable and Telecommunications Association thinks broadband stimulus funding should focus on creating new users over new competition. You create new users by making broadband available to people who can't currently get it, and by getting more people subscribed to broadband. Both of these goals are core to what the broadband stimulus wants to support. Of course, if these increases in take-rates end up leading to nothing more than greater profits for incumbents without spurring them to increase their investment in capacity, then we've got a problem. But at the same time I'd hate for us to worry so much about enriching incumbents that we don't push all in on trying to enrich the country by getting more people online.
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The problem with broadband stimulus plan is it fails to explain spending on broadband is necessary. Why isn't private demand eliciting private responses?
Market power cannot explain lack of coverage, though it *may* explain a failure to deliver higher bandwidths. Lack of coverage implies demand is not sufficient to cover the costs of supply, even when a monopolist expects to be able to charge high prices.
In this respect, Daily is getting closer to the heart of the problem---demand. But still no problem has been identified. If I don't value apples enough to cover their cost, which is what the prices of apples signal, I don't buy them & that is a good thing. So why is it that when demand for broadband does not cover its costs it should be subsidized?
One can think of complex reasons, but those arguments are rarely made & when they are they typically have both poor empirical and analytical support.
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This is clearly a Chicken or Egg scenario – and we all know the Chicken came first (otherwise how would we know what it was?)
Broadband begets more users and services – if the cable or any other industry understood that delivery of 1gpbs or higher to every home and business would generate more profits not the limitations that currently exist today.