Obama adviser eyes government-built broadband system

by David Hatch, Congress Daily

Officials have released an historic government plan to spend tens of billions of dollars constructing a nationwide, state-of-the-art broadband network featuring speeds 100 times faster than today's technology.

The new infrastructure would reach every citizen, delivering affordable connections at taxpayer-subsidized rates, boosting access to education and telemedicine. Proponents promise myriad opportunities for online businesses and enhancements to energy efficiency, media distribution and public safety.

Haven't heard about this yet? That's because the announcement was made last month in Australia.

Before you dismiss the approach as a radical idea that could never be implemented here, consider this: it's being touted by a high-level White House official who reports directly to President Obama.

Susan Crawford, special assistant to the president for science, technology and innovation policy and a member of the National Economic Council, recently said she is "personally intrigued" by Australian Prime Minister Kevin Rudd's ambitious goal.

Even with this year's $7.2 billion cash infusion from Congress to stimulate domestic broadband investment, experts acknowledge that gaps in availability and bandwidth will remain, with pockets of the United States left with no service or antiquated technology.

While a public broadband network in all or part of the nation could help bridge the divide, the thought of Uncle Sam so heavily involved with the Internet has some telecommunications industry representatives worried.

"No company can compete with the federal government or city hall in a commercial enterprise," warned Scott Cleland, chairman of NetCompetition.org, whose members include AT&T, Comcast, Qwest, Sprint, Time Warner Cable and Verizon. "The federal government has unlimited resources and regulatory control."

As the FCC prepares a national broadband strategy to be presented to Congress by Feb. 17, 2010, there's already speculation that the agency -- at the prodding of the White House -- will give serious thought to adapting Australia's model for the U.S.

In the Mix?

Crawford raised eyebrows when she discussed Rudd's plan during an April policy forum sponsored by the Media Access Project, a public-interest law firm that has long fought for an accessible Internet.

Australia has proposed a public-private partnership that would invest up to $33 billion over eight years to build and operate a fiber-optic broadband network reaching 90 percent of homes and workplaces. Wireless and satellite technology would be used to reach the remaining 10 percent deep in the outback.

"Simply put, a digital economy requires fiber, and Australia is making the determination that for that to work it will require a utility approach," Crawford said, noting that Singapore is making a similar investment and Britain and the Netherlands are exploring the concept.

"These governments understand that a wholesale network can deliver massive social and economic benefits," she said, referring to capacity that would be made available to carriers at reduced rates.

Last year, the tiny city-state of Singapore selected a consortium to design, construct and run a broadband network to be deployed to 60 percent of homes and offices by the end of 2010, with nationwide coverage in 2012. One of the main goals is to dramatically boost Internet speeds throughout the island nation.

Despite Crawford's interest, skeptics abound. "I think it's a pipe dream at this point," an industry source said of a domestic nationwide build-out, adding "Good luck finding the money in this fiscal environment."

But a smaller scale project, perhaps focusing on unserved or low-income regions, would be cheaper and more viable, this and other sources agreed.

During an April business trip to Australia, Reed Hundt, who served as FCC chairman during the Clinton administration and is now a senior adviser to McKinsey & Co. and board member with Intel Corp. and other technology companies, discussed the Aussie proposal with the prime minister.

Given that the United States has nearly 15 times Australia's population, "I don't know anyone who thinks that's a practical solution [here]," said Hundt, who has championed a public-private wireless broadband solution.

If the Obama administration decides to create a high-speed network, it would likely commence the project after the national broadband plan has been issued, statewide "maps" of Internet availability are complete and federal broadband stimulus dollars have been distributed, sources said. That means it could be a few years before construction might begin.

'NIMBY' vs. Maybe

Not-in-my-backyard sums up industry reaction to the notion of a government-funded broadband system, with executives insisting it could leave consumers and Washington with a technological boondoggle. "To some degree, what they're talking about in Australia is something that's already being rolled out in the United States," said David Gross, referring to investments domestic carriers are now making.

Gross, who served as U.S. coordinator for international communications and information policy at the State Department during the Bush administration, is now a partner at Wiley Rein representing telecom and cable companies, among other clients.

Singapore's plan is difficult to replicate, he added, because the nation is small in population and geography, has a state-owned telecom company and already is technologically advanced.

"The private sector is going to achieve this before the government could ever get it done," echoed NetCompetition's Cleland, who has dubbed Australia's plan "Fiber Mae" -- a not-so-subtle reference to the beleaguered Fannie Mae. "Why would you want to overbuild and waste money in the 90 percent of the country where competition works?" he asked rhetorically.

Another concern is that a U.S.-built network would be costly -- upwards of $430 billion. While consumers would benefit from the increased competition and lower monthly rates, they would be footing the bill through tax dollars. Sources also cautioned that a government-subsidized network might dissuade private sector investment, leaving Americans with fewer options down the road.

"You can't just build it and you're done," a critic cautioned, emphasizing that the government would have to spend billions on upgrades and would be saddled with customer service responsibilities -- not one of its strong points. "The government's continually going to have this 'white whale' it's going to have to keep pouring money into," the source said.

The nonprofit Open Internet Coalition, whose members include Amazon, eBay, Free Press, Google, Public Knowledge and Sony, "is strongly supportive," though it hasn't adopted a formal position and sees significant cost impediments, spokesman Eric London said. The group envisions a government-sponsored network delivering speeds and bandwidth exceeding even the most advanced private-sector offerings.

"We have huge parts of the U.S. that are unserved by incumbent providers," he said, adding, "Those who reject the Australian model are the same people who deny we are even facing a crisis in broadband in the first place."

article originally published at Congress Daily.

The media's job is to interest the public in the public interest. -John Dewey