Time for Broadband Barriers to Go

Posted February 21, 2003 at 9:32am

Each year America’s technology companies, large and small, dazzle consumers with innovative new products unveiled at the Consumer Electronics Show in Las Vegas. I’ve attended this technology showcase annually for the past two decades, first as a participant (as founder and CEO of Directed Electronics), then as host and chairman of the event’s sponsoring organization (the Consumer Electronics Association), and recently as a consumer and Member of Congress with an ongoing interest in technology.

CES always has a big “Wow!” factor, shining a spotlight on the latest devices and gadgets designed to enhance our everyday quality of life, from the most advanced digital cameras and hand-held devices to plasma screen televisions and MP3 players. A simple survey of this year’s show found a flood of products that rely on the proliferation of high-speed Internet service, generically referred to as “broadband.” The true benefit of the full deployment of broadband will be the driving up of the number of products that can be connected through the Internet and the drop in price that will follow. Consumers are eager to enjoy these new technologies, but regulatory uncertainty and other factors have caused the availability of broadband services to lag behind consumer demand.

While there may not appear to be a problem to those who currently enjoy access to broadband, there are many others who live outside the limited service areas where such access is now available. What appeared to be a simple task, providing a large Internet “pipe” to every home and business based on the 1996 Telecommunications Act, has turned into a monumental debate that continues both in the halls of Congress and at the Federal Communications Commission.

The number of broadband subscribers in the United States continues to grow annually, with hundreds of thousands of new subscribers paying for high-speed Internet access every year. The continued deployment of broadband is vital to accelerating services that affect us all and could help enhance our quality of life. Distance education and telecommuting are two of the many services that could be available to every American.

In addition, access to broadband for all homes and businesses has the potential to drive our economy. Recent studies suggest that broadband could create 1.2 million new and permanent high-tech jobs. Economists at the Brookings Institution have estimated that widespread, high-speed broadband access would increase our national gross domestic product by $500 billion annually by 2006 — a needed boost to an anemic economy.

High-speed Internet access can be delivered via cable, telephone, satellite, and radio-based-unlicensed networks (Wi-Fi). Cable has about 7.1 million cable-modem customers, telephone has 3.9 million digital subscriber line customers and satellite has more than 100,000 customers.

At the beginning of the 108th Congress, Rep. Tom Davis (R-Va.) and I introduced H.R. 340, the Jumpstart Broadband Act, which will greatly expand the amount of spectrum available for unlicensed uses. Under our legislation, the FCC would allocate 255 MHz of new spectrum for unlicensed use in the 5 GHz spectrum. This new allocation will significantly boost Wi-Fi deployment and will expedite the deployment of fast wireless data connections. Companies such as Intel are planning to include Wi-Fi connectivity for their mobile devices helping to expand the use of this new technology. [IMGCAP(1)]

H.R. 340 is a step in the right direction, but it is only a small solution to a large problem that plagues broadband deployment. I see the issue of deployment following one of two paths this Congress. If the FCC, which has an ambitious agenda to restart broadband deployment, can agree on new rules governing wire-line telephone services, we could see an end to the recent dearth of fiber installation. However, if the FCC renders a decision that is contentious or ambiguous, Congress may have no choice but to hold hearings and consider legislation that will advance the proliferation of broadband technology.

Last year, Congress engaged in the broadband rollout debate, passing H.R. 1542, the Tauzin-Dingell broadband bill. While the debate on this important legislation helped to push the need for broadband deployment into the public eye, Senate inaction derailed this legislative solution and left in place barriers to the rapid expansion of broadband technology.

Consumers were the ultimate victims of the legislative stalemate, with the Incumbent Local Exchange Carriers and Competitive Local Exchange Carriers suspending their plans for laying new fiber or planning any long-term investment until regulatory or legislative certainty is found. Over the past year, all of the ILECs have slashed their capital expenditure budgets by billions of dollars. In fact, one of the ILECs, Verizon, has slashed its capital budget by a third from $17.2 billion in 2001 to $12 billion in 2002. This sector needs certainty to spur investment, which means that the FCC must rise to the challenge and deliver a set of policies and recommendations this year for high-speed access technologies.

The telecommunications industry has been in such a glut that investors are certain to have more faith in an Elvis sighting than in the promise of revenues from this sector of the economy. As for the telecommunications companies that made vast capital expenditures, they have not come close to realizing a return on their investment in laying the fiber-optic cable necessary to expand the availability of broadband. Not surprisingly, with the lack of new revenue, Department of Labor statistics estimate the current number of telecom layoffs to be in the hundreds of thousands. The Wall Street Journal is a little more specific, reporting that companies have announced layoffs totaling more than 500,000 workers. The financial losses and employee layoffs that have occurred have had a ripple effect on the rest of the technology sector and our nation’s economy.

Many of my colleagues here in Washington have their own ideas on how we can continue to stimulate our economy and produce the growth that we were accustomed to just a few years ago. The 107th Congress made efforts last year by passing H.R. 1542, which would have stimulated this sector with deregulation-reform legislation. Unfortunately, our efforts fell short. Now, the FCC can do much to help the technology sector by rendering a decision that will provide regulatory certainty to a sector that is crying for help. If the FCC fails in this responsibility, then Congress will have to act again on an issue that is critical for consumers and the economy.

Rep. Darrell Issa (R-Calif.) is a member of the Energy and Commerce Committee.