How the National Broadband Plan Will Encourage Investment

The National Broadband Plan will increase demand and impact supply in every part of the ecosystem in the long-term in a few ways.

First, the plan will accelerate the move of certain sectors from processes designed and optimized for the technology of the past to more efficient processes enabled by broadband.

Another way the plan could affect demand is by accelerating adoption. Right now, over 100 million Americans have not adopted broadband. About 14 million can't adopt because there is no affordable broadband available where they live. For these Americans, the universal service fund-the reform of which is discussed below-will play a critical role.

Another big issue affecting investment is spectrum. From the perspective of economic growth, the worst use of spectrum is to leave it unused. Spectrum that lies fallow is a drag on the economy and does not foster the public interest. And there is no upside to letting it sit: unlike, say, oil, spectrum is a natural resource whose use today does not diminish its usefulness tomorrow.

The plan will provide an opportunity for the Commission to, for the first time, articulate how it will meet the Congressional directive that all people in the United States should have access to broadband. As part of that, the plan will lay out a staged approach so that, over time, universal service support will go to broadband services that include voice, rather than voice-only services. Intercarrier compensation is another complicated policy in which carriers charge each other for origination, transport and termination of traffic. The current system has long been criticized for distorting investment.

The plan will also make a series of recommendations designed to eliminate those distortions and regulatory arbitrage. Like the universal service recommendations, the plan will provide an opportunity for the Commission--again, for the first time--to lay out a staged approach so that intercarrier compensation reflects how companies will exchange traffic in an IP-based broadband world.