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https://ssrn.com/abstract=728569
 
 

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Bandwidth for the People


Robert W. Crandall


Brookings Institution; AEI-Brookings Joint Center for Regulatory Studies

Robert W. Hahn


University of Oxford, Smith School; Georgetown University

Robert E. Litan


Ewing Marion Kauffman Foundation; AEI-Brookings Joint Center for Regulatory Studies

Scott Wallsten


Technology Policy Institute


Policy Review, No. 127, October-November 2004
AEI-Brookings Joint Center Regulatory Analysis 04-01

Abstract:     
High-speed access to the Internet, or broadband, could be a tremendous boon to economic growth. In March 2004, the Bush administration made rapid deployment of broadband a national priority. The president asserted, We ought to have universal, affordable access to broadband technology by the year 2007. As state and national policies develop in response to this vision, it is important for policymakers to understand the costs and benefits of different approaches aimed at promoting the diffusion of higher-speed Internet connections.

Over the past few years, the broadband market has grown dramatically: The number of subscribers has increased by nearly 300 percent since 2000, prices have declined, and the speed of some services has increased. Nonetheless, there is room for further growth and improvement. Public policies can greatly affect how this market develops - for better or worse. The choices policymakers have before them include taxes and subsidies, incentives and price controls.

Policies should focus on the incentives for broadband suppliers to invest in network upgrades that extend service and improve quality and speed. State and federal regulators can help increase broadband penetration by eliminating any regulation of wholesale and retail prices and any policies that deter entry into these markets. Subsidies, meanwhile, should not generally be used to promote universal broadband service. They are likely to hurt the average consumer. If subsidies are required for political reasons, they should be offered only as one-time inducements to extend broadband into underserved areas. Likewise, a tax on access to broadband or on services delivered over broadband, such as Internet telephony, is likely to slow the spread of broadband and is also an economically wasteful way of raising revenues. Internet access or applications, therefore, should not be taxed. In short, the right set of policies will foster competition among suppliers and lower barriers to entry to the benefit of consumers in terms of both access and prices. Poor policy choices, on the other hand, though intended to improve access to broadband, could have the just the opposite effect.

Number of Pages in PDF File: 10

Keywords: broadband, universal, March 2004, Bush

JEL Classification: H00


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Date posted: May 24, 2005  

Suggested Citation

Crandall, Robert W. and Hahn, Robert W. and Litan, Robert E. and Wallsten, Scott, Bandwidth for the People. Policy Review, No. 127, October-November 2004; AEI-Brookings Joint Center Regulatory Analysis 04-01. Available at SSRN: https://ssrn.com/abstract=728569

Contact Information

Robert Crandall
Brookings Institution ( email )
1775 Massachusetts Ave. NW
Washington, DC 20036-2188
United States
202-797-6291 (Phone)
202-797-6181 (Fax)
AEI-Brookings Joint Center for Regulatory Studies
1150 17th Street, N.W.
Washington, DC 20036
United States
Robert W. Hahn (Contact Author)
University of Oxford, Smith School ( email )
Oxford
United Kingdom
Georgetown University
Georgetown Center for Business and Public Policy
Washington, DC 20057
United States
Robert E. Litan
Ewing Marion Kauffman Foundation ( email )
4801 Rockhill Road
Kansas City, MO 64110
United States
AEI-Brookings Joint Center for Regulatory Studies
1150 17th Street, N.W.
Washington, DC 20036
United States
Scott Wallsten
Technology Policy Institute ( email )
1099 New York Ave., NW
Suite 520
Washington, DC 20001
United States
HOME PAGE: http://www.wallsten.net
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