Top 10 barriers to private investment in broadband infrastructure

By Barry Umansky and Dr. Robert Yadon, The Digital Policy Institute

Barry Umansky, Digital Policy Institute Bob Yadon, Digital Policy Institute



Members of the Digital Policy Institute traveled to Washington, D.C. this summer to join top government and industry economists for a discussion about the consumer and economic implications of private investment in an expanded, digital broadband infrastructure.  During the course of the conversations, an overriding theme emerged. Private investment is crucial to our country's ability to have a 21st Century digital infrastructure. The team at DPI began thinking about possible impediments to private industry's interest and ability to continue investing in building America's broadband infrastructure, and developed the following "Top-10" list.  DPI believes that tearing down these "innovation stifling" and "growth inhibiting" barriers should be top of mind when federal and state officials formulate their policies impacting broadband networks, creating jobs and boosting economic growth. 

1.      Regulatory Uncertainty. Quite simply, companies and private investors will be increasingly unwilling and even unable to commit new funds to expanding broadband infrastructure if the Federal Communications Commission applies analog policies to a digital world, or pursues spectrum policies that either constrain wireless operators' abilities to grow network capacity or stymie a quick and efficient secondary market that can provide the spectrum needed to upgrade wireless broadband networks from 3G to 4G.

2.      Limited Opportunities to Expand Wireless Network Capacity.  Digital communications over wireless networks, the newest frontier in broadband deployment, is becoming more congested. This is due to spikes in demand combined with unnecessary constraints placed on network capacity by the FCC's sluggish spectrum reallocation policies that are ill-suited for the digital age. Federal spectrum policies premised on a narrow view of the industry-wide need for more licensed spectrum deprive American consumers of access to dynamic wireless broadband networks available at affordable rates. Such policies also deprive investors of maximum opportunities to invest in expanding wireless capacity.

3.      Spectrum Scarcity. Popular demand for wireless video and data is poised to exhaust the supply of spectrum the U.S. government has made available to support consumer wireless broadband services. Absent the government making more spectrum available to support consumer demand for wireless broadband, there will fewer opportunities for private investment dollars to expand wireless broadband networks coverage and capacity.

4.      State of the Economy. The overall anemic condition of the economy has undoubtedly slowed private industry's ability to grow the broadband sector. Continued high levels of economic uncertainty could restrain investment in telecommunications generally, and in broadband and wireless broadband in particular.

5.  Government Failing to Join the IP Revolution. The ongoing convergence of our country's traditional media and telecommunications systems into an all-IP world is revolutionary. But, it's a revolution that can be thwarted if federal agencies like the FCC fail to take down barriers to investment in broadband and speeding up the process of making more spectrum available to the wireless broadband networks that need it.

6.  Overlapping and Arcane Anti-Trust Reviews. The convergence of telecommunications services has challenged federal anti-trust officials with complex assessments of "market definition" and "product lines." With paradigm-shattering levels of change and innovation in our digital economy, federal antitrust laws are in need of serious overhaul. These laws must be recast to foster the dynamic advances in services, to acknowledge the evolving nature of competition in broadband and to remove unneeded constraints on private capital finding its way into the broadband sector.   Duplicative FCC antitrust review simply adds delay and uncertainty to the process and should be eliminated.

7.  Regulatory Incrementalism. Investing in broadband infrastructure has been shown, time and again, to create jobs and economic opportunities across the entire US economy. To help our economic recovery, now is the time for bold and forward-looking policies. Rather than continue the kind of regulatory incrementalism that has plagued the FCC for decades, it's time to resolve spectrum allocation issues, jettison analog-based regulations, and consider wholesale revision to communications subsidy programs that no longer make sense. 

8.  Failing to Learn From Recent Experience. Now over two years after the FCC's unveiling of its National Broadband Plan and the federal expenditure of over $4 billion to fund a wide variety of programs aimed at broadband expansion, it's time to see what's worked and what hasn't.   Developing the metrics for assessing the relative effectiveness of myriad methods for deploying broadband is a high priority, followed by prompt creation of a new national broadband plan providing a coherent framework for expanding broadband speed and availability, encouraging private investment and fostering a wide range of communications and public service uses.

9. Outdated Regulatory Mission.  The FCC's application of the Congressionally-imposed "public interest standard" often ignores the interests of the public itself. The agency has employed that standard in an often inconsistent fashion, and frequently subject to shifts in political winds.  DPI believes the "public's interest" is in getting access to best and fastest broadband networks and services as possible, at the most affordable rates.  This interest is best served by government policies and regulations carefully calibrated to step in where there is demonstrated market failure to serve consumers, and to promote investment in the deployment and adoption of broadband technology, including a rapid transition to IP-based networks.

10.  Congressional Failure to Set a Clear Course for Broadband Policy.  Absent a bold vision coming from the highest levels in Washington, private investment will have fewer and fewer ways to find its way into broadband infrastructure. The Telecommunications Act of 1996 is incredibly out-of-date. The Congress again must take a leadership role. It must adopt a well-defined approach for what "serves the public interest," will best encourage private investment and will ensure that the promise of ubiquitous broadband and a converged IP communication world becomes a reality, not just remain a concept.

Barry Umansky and Dr. Robert Yadon are affiliated with The Digital Policy Institute, an independent, interdisciplinary research and policy development organization located at Ball State University in Muncie, IN. The DPI has served as a catalyst for research and education on digital media issues since 2004. Additionally, the DPI is also a member of the Consumer Advisory Committee at the Federal Communications Commission (FCC).