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AppRising delivers insight into new broadband applications, exploring their impact on networks and their implications for public policy.

AppRising is written by Geoff Daily, who covers broadband applications and the business of online video. Based in Washington, DC, Geoff regularly advises applications developers, network operators, community leaders, and public officials on how to maximize adoption and use of the Internet.

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October 10, 2007 2:53 PM

The Impossible Dream of Competitive Broadband Marketplaces In Unserved Areas

One of the biggest issues discussed at last week’s KMB Conference was how best to get broadband to areas that are underserved—where there’s no real competition in broadband—and in particular unserved—where there’s simply no broadband at all.

With representatives of Kansas, Iowa, Idaho, and Vermont all in attendance, there was strong interest in this subject.

There seemed to be universal agreement on the need for some reform of how the Universal Service Fund and the USDA’s RUS program work (or don’t work, depending on who you ask). But not necessarily a detailed consensus on what needs to be done and how those changes should be made.

One area where I sensed a general understanding is that more focus needs to be put on incentivizing the deployment of broadband in areas that are unserved, where no broadband provider exists unless you count satellite, which I do only as an option of last resort, not a true competitive force, as the latency in satellite “broadband” is too great for real-time two-way Internet communications like VoIP and videocalling.

But there are many thorny issues within all this, like whether the government should only subsidize the first provider to a market, or if they need to continue subsidizing new entrants to ensure a level playing field, or if they shouldn’t be subsidizing anything at all.

The most common argument for how to spur the deployment and improve the economics of broadband is that if the government stays out of the way competitive market forces will ensure the deployment of faster networks at a lower cost.

But where this theory comes up short is in situations where a competitive marketplace is impossible as there aren’t any competitors to compete.

When I spoke with state legislators and regulators from the aforementioned rural states, they couldn’t comprehend how competition is the answer when they can’t get one provider to deploy, let alone multiple competing entities, in many of their communities.

I think it’s important that we recognize this as we go about crafting our national broadband policy. Competition is great and should be encouraged, but it’s simply not the answer for every community if our ultimate goal is the speedy deployment of broadband connectivity to every home in America.

There’s just no way around the fact that in pockets and across wide swathes of America, a broadband monopoly is the best many communities can hope for, especially in rural areas, where even a monopoly can seem like an impossible dream.

The key thing to note is that competition is not the silver bullet for broadband deployment in the US. It is most certainly one of the most powerful tools to spur faster speeds and lower prices in well-served areas, but a purely competition-based regulatory approach is impractical for many other areas.

So as we draft legislation and set regulations, we must ensure that we maintain enough flexibility to accommodate both ends of the competitive spectrum, from encouraging fair competition in competitive markets to monitoring the actions of natural monopolies in areas where they’re unavoidable.


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