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CONTACT: Amy Smorodin
September 9, 2008
(202) 289-8928
U.S. Has Right Approach to Broadband
Eisenach Says Infrastructure Competition Key to Next Generation Infrastructure

WASHINGTON D.C. - The U.S. is rapidly taking the lead in deployment of next generation broadband networks, thanks to its relatively deregulatory policies. That is the conclusion reached by PFF Board Member Jeffrey A. Eisenach in "Broadband Policy: Does the U.S. Have It Right After All?" released today by The Progress & Freedom Foundation. Eisenach points to high levels of investment, rapid innovation, high penetration rates and falling prices as evidence that the U.S. decision to forebear from mandatory of unbundling of next generation networks is working, and urges other nations to abandon mandatory unbundling of "last-mile" infrastructure.

In the paper, Eisenach, Chairman of Criterion Economics, contrasts U.S. policies towards regulation of broadband infrastructure, including specifically the U.S. decision in 2003-2005 to relax of unbundling requirements for facilities-based infrastructure. He concludes this approach has led to intense infrastructure-based competition and, as a result, that "U.S. broadband providers are investing tens of billions annually to build out what is rapidly becoming - and in many respects already is - the most capable and competitive broadband infrastructure in the world."

Eisenach directly addresses claims by critics of current policies that the U.S. is "falling behind" in broadband deployment, demonstrating that the statistics, including the OECD "broadband rankings," relied upon to support such claims, do not present an accurate picture. He cites a number of alternative indicators that show the U.S. is outperforming other nations when it comes to the availability, speed and prices of broadband services.

Eisenach also tackles flaws in justifications for access regulation of next generation networks. He notes that the presence of multiple competing infrastructures in the United States demonstrates that the "natural monopoly" rationale for regulating access to next generation networks is invalid, and also that there is no evidence that "ladder of investment" regulation approach (mandating access in order to promote last-mile competition with the hope it will lead to infrastructure competition) has worked. He also explains that next generation networks are different from traditional networks to which mandatory unbundling was first applied. Since broadband networks are multipurpose, as opposed to single purpose traditional networks, providers can recoup infrastructure investment through multiple service offerings.

The author concludes that by not applying access regulation to next generation networks, U.S. policymakers have created an environment for continued investment and innovation. "Regulators elsewhere would do well to take notice," Eisenach states, "as their continued pursuit of mandated access regulation is likely to result in the perpetuation of infrastructure monopolies and their attendant economic disadvantages."

"Broadband Policy: Does the U.S. Have It Right After All?" is available on the PFF website.

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.



The Progress & Freedom Foundation