WASHINGTON D.C. - Current trends in the broadband market illustrate little reason for widespread concern, explained Scott Wallsten in written testimony presented today to the U.S. Senate Committee on Small Business. Wallsten cautioned against Congressional intervention in the quickly evolving industry and instead urged the Committee to concentrate on better data collection regarding broadband deployment and to remove barriers to entry into the market.

In his testimony, Wallsten, PFF's Senior Fellow and Director of Communications Policy Studies, stated that both investment in high speed infrastructure and solid adoption rates show there is little evidence of a widespread broadband market problem. He also explained that demand is critical in determining both broadband penetration and speeds. "Few small businesses, for example, download multiple movies every day or engage in bandwidth-intensive online gaming. Many people and small businesses are simply unwilling to pay more for higher speeds. That's why not everyone signs up for the fastest speed they can get," he explained.

Wallsten also voiced his concern that current proposals to improve broadband penetration offer scant evidence that the policies would help small businesses or consumers. Wallsten explains that the unbundling of infrastructure which is often proposed has not been applied in a widespread fashion and has had mixed results. He also explains that some policies, such as the expansion of the universal service fund to include broadband, could actually harm small businesses because, "they, like all other consumers, pay for universal service expenditures through taxes on their own telecommunications services.

If Congress wishes implement policies to encourage further broadband penetration in order to assist small business, Wallsten suggests a two-fold approach. First, more accurate data is needed to better analyze both the state of the broadband market and proposed policies. With more complete data, policies could be better analyzed and targeted towards specific market failures. Wallsten also proposed the public sector should also focus on removing current barriers to entry and impediments to investment.

Wallsten concluded that, because of the increasing importance of the Internet for business and consumers, "Congress should be cautious and consider carefully interventions in this fast-changing industry to ensure that they do not unintentionally reduce incentives to invest in the very infrastructure we all believe is so important."

Wallsten's written testimony for the U.S. Senate Committee on Committee on Small Business & Entrepreneurship hearing "Improving Internet Access to Help Small Business Compete in a Global Economy" is available on the PFF website. PFF is also making available "Everything You Hear about Broadband in the U.S. is Wrong," an appendix to Wallsten's testimony.

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.