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Fill Potholes on America's Info Highway

June 13, 2002|KAREN KORNBLUH | Karen Kornbluh, a fellow at the New America Foundation, was deputy chief of staff of the Treasury Department and worked in the Federal Communications Commission during the Clinton administration.

The Bush administration has largely ignored the nation's $700-billion telecommunications industry's free fall, a costly mistake for the U.S. economy. Stock prices are down 75%, and telecom companies are expected to reduce their capital spending for the second year in a row.

President Bush should use today's White House high-tech industry forum to announce a national broadband strategy.

U.S. broadband usage--the number of households that use high-speed Internet connections--is stalled at less than 10%. This delays the productivity-enhancing new applications that require faster connections and puts us well behind South Korea, where more than 50% of households use broadband.

The administration has yet to develop a broadband strategy and has slowly unraveled rules granting entrepreneurs access to the network. A House-passed bill would do more of the same. Democratic congressional leaders and some Republicans are calling for universal broadband; Sen. Joseph I. Lieberman (D-Conn.) has asked the president to submit a plan to Congress.

The U.S. government took a leading role in such productivity-enhancing infrastructure technologies as canals, railroads, highways, electricity and telephone service. Now it should create the conditions for the private sector to innovate and invest in this new highway. Here's how:

* Bush can create a more favorable investment climate by announcing a national goal--much as President Kennedy focused on getting a man to the moon--of universal, affordable broadband access by 2005 and extra-high-speed access by 2010. He should restore the government's commitment to competition and regulatory certainty by announcing his administration will enforce rather than dismantle current rules. Bush also should announce that he will bring together the various industries to resolve issues such as how to handle intellectual property to benefit consumers--and warn that the government will step in if they can't solve the problems on their own.

* State and local governments should be required to get out of the habit of protecting existing businesses by imposing fees and permits on newcomers. Michigan Gov. John Engler took the lead in overriding anti-competitive local measures. Federal standards must move quickly to sweep away such rules around the country.

* Regulators need to free the spectrum. During the last decade, investment in wireless skyrocketed and prices declined as competition thrived. This happened because in the mid-1990s, the Clinton-Gore administration auctioned off parts of the spectrum that established companies were warehousing to competitors eager to invest in new services.

Today, entrepreneurs have found new ways to provide wireless, broadband connections at minimal cost by sharing airwaves--but no spectrum is available for their new services. Broadcasters hold, for free, twice as much spectrum as they need because the transition to digital television is stalled. The president must insist on a hard deadline for the broadcasters to go digital. A chunk of the freed spectrum should be set aside for the new shared technology and the rest auctioned off to new entrants.

* The Bush administration should lead by example. Think of the difference that could have been made a year ago by an automated system that used artificial intelligence to follow up on FBI agents' hunches by checking flight school rosters. Intel Chairman Andy Grove once said that there are two kinds of companies: those that use e-mail and those that will. Government needs to move from the second category to the first. The sooner it starts using information technology in innovative ways, the sooner spillover benefits will begin.

* Government should issue high-tech vouchers. Today's system is anything but market-based; regulatory artifacts of the old Ma Bell system of big monopoly-big bureaucracy distort prices and hinder broad access. Far better would be a pro-competition broadband voucher for low-income users or those in sparsely populated regions of the country.

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