Should Rep Eshoo’s broadband bill be a regulatory shoo-in?

[Commentary] Rumor has it that Rep Anna Eshoo (D-CA) is preparing to reintroduce the Broadband Conduit Deployment Act, a bill which requires the inclusion of “pipes” capable of carrying multiple broadband infrastructures in new federal highway projects. How does this idea jive with the economics of telecommunications networks?

Arguably, if governments wish to subsidize infrastructures and reduce divides between communities, then building “holes” with options for multiple current and future uses seems to have few downsides. Somewhat fortuitously, one type of infrastructure commonly owned by governments that require such conduits to be dug are highways. As the marginal costs of adding ducts in a new highway are typically smaller than the costs of digging even one new parallel duct, then Rep Eshoo’s bill appears to both reduce costs and promote the competitive supply of all cable-based infrastructures. Of course, it also opens up the question of the appropriate price to set for access to the conduit, which will not be a simple matter to address. But it is a very different matter to argue over the price of access to a lower-cost conduit that already exists than over a higher-cost one that might never be built.

[Bronwyn Howell is general manager for the New Zealand Institute for the Study of Competition and Regulation and a faculty member of Victoria Business School, Victoria University of Wellington, New Zealand.]