Obama’s new New Deal: Plan to bring broadband to masses complex, but tech firms are hopeful

U.S. telecom and high-tech sectors, though suffering through the a job-killing economic crisis that apparently hasn’t yet bottomed out, are nonetheless audaciously hopeful – downright giddy even – about the future. What gives?
Industry is hanging its hopes on the Barack Broadband Promise, a vow enunciated during the presidential campaign and repeated in Saturday’s radio address (Click here to see the video) to improve the plight of high-speed Internet connections for students and the rest of us.
“As we renew our schools and highways, we’ll also renew our information superhighway,” stated president-elect Barack Obama over the weekend. “It is unacceptable that the United States ranks 15th in the world in broadband adoption. Here, in the country that invented the Internet, every child should have the chance to get online, and they’ll get that chance when I’m president – because that’s how we’ll strengthen America’s competitiveness in the world.”
In saying as much, Obama struck a chord.
“We applaud President-elect Barack Obama’s commitment to investing in Internet for everyone as a starting point for economic recovery. In our 21st-century society, having a connection to a fast and affordable Internet is no longer a luxury – it’s a public necessity,” said Josh Silver, executive director of Free Press and the organizer of InternetforEveryone.org. “But right now, more than 40% of American homes are not connected to broadband. This digital divide isn’t just costing us our ranking as global Internet leader – it’s costing us jobs and money at a time when both are urgently needed.
“Obama’s broadband stimulus must deliver Americans the infrastructure they need for economic growth and social opportunity. Just like President Eisenhower seized the moment in the 1950s to bring together public and private interests to build our interstate highway system, now is our moment to make sure the information superhighway reaches every home in America.”
Telecom and tech firms are savvy enough to know talk is cheap. But they suspect there could be something behind the lofty rhetoric about universal broadband in America. They see an incoming president surrounded by a transition team chock full of telecom-tech policy wonks from the Clinton-Gore years, folks who believe the information revolution lost its way during the past eight year years of the Bush administration. They also see a Congress, with larger Democratic majorities (though not filibuster proof) as a result of the November elections, that seems amenable to helping Obama make good on his broadband promise by setting aside billions of economic stimulus dollars to advance the state of broadband as part of a broader effort to rehabilitate the nation’s crumbling infrastructure.
Legislation has yet to surface, but already there is controversy about how a broadband stimulus would work. Would it come in the form of tax breaks, grants, low-interest loans, or a combination of all three? Who would be the beneficiaries?
Consumer groups assert taxpayer dollars should not being going to telecom and cable TV giants that dominate the broadband market. Instead, they recommend giving money to cash-strapped cities and states to invest in municipal broadband systems, including those employing wireless technologies.
“Our analysis shows that low-income consumers account for three-quarters of all households that do not have broadband,” said Mark Cooper, director of research at the Consumer Federation of America. “We need to use universal service funds to support broadband to increase the adoption among these households and close the digital divide.”
Cooper added: “The large U.S. telecom companies received billions of dollars in tax subsidies in the 1990s on the promise that they would fully upgrade their networks for Internet services. “But they failed to deliver fully upgraded networks. They left millions of consumers with inadequate high-speed Internet access and inflated prices, and they maintained above-average earnings for this period of time.”
The combination of an incoming president being big on Internet access and a Congress ready to spend billions of dollars to help the president-elect make good on his broadband promise has energized late-year lobbying by telecom and tech companies. Industry and interest groups are generously offering policy ideas to the incoming Obama administration.
But the campaign to achieve universal broadband is not happening in a vacuum. What would Obama’s broadband plan mean for existing programs? Would there be duplication?
Education, or E-rate, universal service funding for needy schools and libraries – totaling billions of dollars since 1996 – has given students high-speed Internet connections. Though the program has had its share of scandals and controversy, it appears to have helped thousands of schools around the country. The Department of Agriculture has its own broadband program to promote high-speed Internet access in rural areas. Meantime, the Federal Communications Commission is attempting to make broadband a component of a new-and-improved universal service regime. Moreover, FCC Chairman Martin is pushing a Dec. 18 vote on a plan that would offer free, family-friendly wireless broadband service throughout the country.
Silicon Valley-funded M2Z Networks Inc., a big proponent of Martin’s AWS-3 initiative, boasted that Obama has embraced the startup’s business plan. Indeed, the mere mention of ‘broadband’ by the president-elect has folks doing flips.
There’s a bit of a risk here for Obama and his tech advisors. The Bush administration has been consistently criticized by Democrats for lacking a national broadband strategy and ranking below other countries in broadband penetration. The truth is, there’s no silver bullet to change the latter situation in short order. Indeed, Republicans might decide its time to turn the tables in the broadband blame game.
Watch Obama’s Saturday radio address: