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THE MORNING BUZZ: The Politics of Broadband

5 Feb, 2002 By: Holly J. Wagner

There are those in the video industry who are quick to pooh-pooh the threat of video-on-demand. They say my colleague Bruce Apar and I make too much of it, that it's years away and will never be a real threat to packaged media. They say the smoke we see is a fire that will burn itself out before it ever gets close to our video village. But the political landscape is shifting and some new players are coming onto the field.

President Bush is supporting a bill that will funnel millions into broadband buildout in rural areas. It passed quietly as a rider on an innocuous agriculture bill, but the implications are staggering.

Here's a little slice of the Broadband Competition and Incentives Act of 2001: "The attorney General of the United States may make direct loans or loan guarantees to eligible broadband service providers …to finance the deployment of broadband services to eligible rural communities and to underserved areas."

Does anyone else smell pork? Because I do. This is broadband redevelopment, in which almost any area without Last Mile infrastructure could be labeled "underserved." That would open the doors for declarations that companies should get benefits for installing infrastructure in almost any neighborhood.

Right now there are no fewer than 25 bills (50 if you count that most are matched sets of House and Senate versions) before Congress to provide tax breaks or other incentives for companies to build broadband infrastructure. If you're a rentailer, that's picking your pocket twice: once as a taxpayer and again because your tax money is funding the infrastructure for a competing technology. We're all subsidizing the last miles now and the results will not be a public utility.

Those bills should offend rentailers, who have little political representation to challenge the powerhouses that are backing the legislation. The lobbying muscle behind most of the bills are telcos and a less obvious source, the computer makers. There's a group called TechNet making a lot of noise on Capitol Hill, but most people can't hear it over the din of Enron imploding.

TechNet, a coalition of 300 tech company CEOs and senior executives, is lobbying hard for a "National Broadband Policy." Companies on the list include Microsoft, Intel, Cisco Systems, Hewlett Packard, 3com and more. Among the group's stated goals is "developing the industry partnerships that provide all Americans with the tools and skills to participate in the New Economy." The slogan they've attached to their drive is "100 Megabytes to 100 Million Homes By 2010 (no kidding, check out their Web site at TechNet.org). Translated, they want political support for wiring every home in America with the lowest possible corporate expenditure.

Now factor in the tough financial times that tech companies and telcos are facing these days. Slack earnings at Worldcom, trouble at Global Crossing, inventory gluts at the computer manufacturers – these are companies with a whole lot at stake and they're already on the hill. Their agenda is going virtually unchallenged and gaining bipartisan support.

In itself, broadband is not evil. In fact, I'd wager that a number of folks are using fat pipe connections to read this column. The question is whether taxpayers, including you, should be shelling out to accelerate its nationwide penetration. After all, it's unlikely that anyone is passing the hat on Capitol Hill so you can build another store.

If VOD is to remain smoke on the distant horizon, the packaged media folks need to start some grassroots efforts to present another point of view and maybe throw a little water on this wildfire.

Do you think legislators should back incentives like subsidies and tax breaks for companies to build broadband infrastructure? Tell us here.

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