Courtesy Reuters

Which Broadband Nation?

The FCC's Real Wrongs

PHILIP J. WEISER

Like monetary policy and antitrust regulation, telecommunications policy is a major driver of economic growth rarely debated in public. During the last presidential campaign, for example, issues related to the United States' technological leadership were either marginalized or ignored altogether. By highlighting the importance of this overlooked topic, Thomas Bleha ("Down to the Wire," May/June 2005) performs an important public service. Unfortunately, in criticizing Washington's approach to the issue, he misidentifies the challenge and offers a problematic solution.

TOKYO STORY

The essence of Bleha's argument is that under President George W. Bush, the United States dropped "the Internet leadership baton," allowing Japan to "pick it up" and guide broadband innovation. Bleha cites Japan's progress in spurring high-speed Internet access connections via both wires (using digital subscriber line [DSL] and fiber-optic technology) and wireless spectrum. He predicts that Japan and other technology-savvy countries, such as South Korea, will reap "the benefits of the broadband era" while the United States will be left behind.

It is beyond dispute that Japan has succeeded wildly in stimulating the rollout of DSL connections. Japan's recent regulatory policies, along with the entrepreneurial gusto of the venture-capital firm Softbank (which underwrote the investments made by Yahoo! BB), have brought faster, cheaper, and more innovative broadband services. The number of DSL connections in Japan surged from 100,000 in 2001 to more than 9 million just three years later, with the established providers offering only 40 percent of these. Regardless of whether this success owes more to government regulations or to Softbank's risky investments, Japan's experience is worth examining.

Bleha argues that the day of reckoning will come for Washington, not only because Japan's success has eclipsed U.S. progress but also because of what he describes as U.S. policy failures. Unfortunately, he misstates the record. Bleha blames Michael Powell, the former chair of the Federal Communications Commission (FCC), for making a series of convoluted regulatory decisions and for failing to encourage broadband deployment by requiring

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