Stimulating Competitive Disadvantages in Broadband

[Commentary] Federal officials failed to determine whether targeted communities for broadband stimulus funding actually lack Internet service options. In a number of cases, in fact, the government subsidies will put existing private service providers at a competitive disadvantage. Some $2.2 billion has already been allocated by the Departments of Commerce and Agriculture to enhance broadband services in "unserved" and "underserved" areas. (The balance of $7.2 billion is scheduled to be awarded by September 30.) But according to a newly released report by the Government Accountability Office, program officials "lack detailed data on the availability of broadband service throughout the country, making it difficult to determine whether a proposed service area is unserved or underserved." This disregard for the private sector is all too reminiscent of the municipal broadband craze that swept the country earlier this decade. Dozens of local governments hatched plans to build and operate broadband networks or develop broadband infrastructure for wholesale lease to commercial service providers. But as they lacked the expertise and flexibility of the private sector, the results weren't pretty. Many of the projects were never completed, while others saddled taxpayers with unwelcome debt. Proponents contend that the broadband subsidies will stimulate economic growth, create jobs, and alleviate computer illiteracy. But that won't happen if, in the process, the subsidized services undermine private sector investment. If public officials are so intent on promoting broadband, the far better alternative is to reduce the tax and regulatory barriers that inhibit universal deployment.