America’s Internet — Falling Behind

This article by New York Times Columnist Paul Krugman makes a case for why one of the government’s biggest blunders during the Bush Adminstration might be that it allowed the country to fall behind in the race for internet connectivity by letting telecommunications companies run rampant.

        Of course, congress and federal regulators played their part, too.

     The article (which requires TimesSelect registration, unfortunately, making it non-blogger friendly) essentially argues that after the United States led the way in getting its citizens on the internet throughout the Clinton years of the 1990s, the Bush administration slept at the wheel as telecoms infiltrated key decision makers in our government. In addition, though the Bush administration’s philosophy of less government interference in business is generally a good one (I think that; can’t speak for Krugman), it missed the mark with telecoms because they are a unique case. In actuality, as countries like France and Japan have been able to show, when it comes to telecommunications, more regulation – not less – can spawn true competition.

      Some key excerpts from Krugman:       “You see, the world may look flat once you’re in cyberspace – but to get there you need to go through a narrow passageway, down your phone line or down your TV cable. And if the companies controlling these passageways can behave like the robber barons of yore, levying whatever tolls they like on those who pass by, commerce suffers.

      America’s Internet flourished in the dial-up era because federal regulators didn’t let that happen – they forced local phone companies to act as common carriers, allowing competing service providers to use their lines. Clinton administration officials tried to ensure that this open competition would continue – but the telecommunications giants sabotaged their efforts, while The Wall Street Journal’s editorial page ridiculed them as people with the minds of French bureaucrats. 

      And when the Bush administration put Michael Powell in charge of the FCC, the digital robber barons were basically set free to do whatever they liked. As a result, there’s little competition in U.S. broadband – if you’re lucky, you have a choice between the services offered by the local cable monopoly and the local phone monopoly. The price is high and the service is poor, but there’s nowhere else to go.”       As this Slashdot post pointed out, this argument is by no means new but it’s significant in that it made its way into the Times (and, thus, was viewed by a more mainstream audience). The argument also seems very relevant as we gear up for Google and other internet companies to butt heads (and pocketbooks) with the telecoms over things like Net Neutrality and other internet issues.

Just last week, Google promised it would commit $4.6 billion for the 700 MHz spectrum auction if the FCC meets its criteria for how the winner would behave, which drew a belligerent response from telecoms who were enraged anyone would disturb business as usual.

      Here are couple other pieces of reading that came to mind over this issue of America falling behind.

      This Foreign Affairs article from 2005 still makes it into blogs frequently as it talks about how Japan has positioned its economy to grow as a result of internet connectivity — and it did so by spurring competition through regulation between “mom and pop” telecoms. 

This Businessweek article showed how France did it.

      This piece, one of my favorites CIO has ever done, focuses less on the telecom issue and instead looks into how China’s adoption of IPv6 shows how they have an edge on the United States for the future.

      The question of “are we falling behind?” seems to be over at this point. It’s certainly not too late for our government or this adminstration to change its course. The question is, will they?