Analysis by James R. Hood

March 15, 2010

Talk about infrastructure and most of us think of bridges, roads and so forth. But for most of the past 100 years or so, the infrastructure that has budged the needle on the nation's econometer is the communications infrastructure. In an global information economy, after all, nations lacking a robust communications network are at a serious disadvantage.

It's popular to dismiss government regulation as something that holds back economic progress -- but sometimes it works the other way. Look back a century or so and the lack of a nationwide telephone network was a big problem not only for rural dwellers but for Sears, Roebuck & Co. and other budding etailers dreaming of the day when customers could order a new wheel barrow by placing a simple telephone call.

The ever-encroaching federal government and pointy-headed state bureaucrats got into the act and before you knew it, telephone companies had to provide a minimum level of service throughout the area they were licensed to serve -- and had to connect every caller to every other potential caller. We take that for granted now, but it's a lot more complex than it sounds.

As is customary in governmental circles, various fees and taxes were imposed on telephone service. Sure, some went to fight the Spanish-American War but others supported the Universal Service Fund which subsidized service in sparsely-populated and geographically-challenged regions.

Pretty soon, no one thought it remarkable that every wide spot in the road had a telephone booth. Some even had two.

Similar government "intrusions" helped establish radio and television broadcasting as sustainable businesses that provided news and entertainment but, equally important, kept the economy humming by whetting folks' appetites for shiny new cars and shiny big teeth.

And as everyone knows by now, the packet-switching that is at the heart of the Internet was dreamed up by the Pentagon agency known as DARPA.

Third World

And even though tea sippers and coffee gulpers alike are still suffering indigestion from the bail-out of the nation's financial services sector, the feds are up to their old tricks again. This week, the Federal Communications Commission (FCC) -- an agency with a past so checkered it could be used as a chess board -- is set to roll out a new broadband policy that's likely to be as far-reaching in its societal and economic impact as the telephone network, transcontinental railroad and Interstate highway system combined.

Simply put, the United States today is a Third World country when it comes to telecommunications. Those who live in hollers, on mountaintops or way out yonder on some wind-swept prairie probably have telephone service but it's not very likely they'll have broadband Internet service or a usable 3G cell phone signal. Dial-up was OK a decade or two ago but is woefully inadequate today, as the Web moves increasingly to video and other bandwidth-hungry applications that entertain, inform and employ us.

Even in densest Manhattan, Chicago or San Francisco, finding an available Wi-Fi connection can be tricky. It can get pretty dull sitting around the dentist's office with nothing to read but 1998 Road & Track magazines.

Although it's not being officially released until Tuesday, much of the FCC's plan has already leaked out, as things tend to do in Washington, regardless of the state of the infrastructure. The goal is to bring affordable broadband to the 93 million Americans who don't have it. Among the highlights:

• Raising Internet speeds to 100 megabits per second, 25 times the current average;

• Blanketing the country with wireless broadband; and

• Building a nationwide emergency communications system for police, fire and government;

One ox goared

Those familiar with the radio frequency spectrum will ask where all this wireless data fits into the already-crowded airwaves. The FCC's answer is to lop off a big chunk of spectrum now used by television broadcasters.

Television, after all, is so 20th Century. It's a one-way street. Nothing interactive about it. It's not the least bit sticky. This view, needless to say, doesn't go down too well over at Channel 5 but the writing is already on the wall for broadcasters, who no longer enjoy watching the dismal slide of newspapers into penury, now that radio and television advertisers are following print advertisers to the Web.

Chances are something will be worked out to comfort the broadcasters, a well-organized lobby if ever there was one. Most likely, the spectrum space will be auctioned off to telecom and broadband providers, with a sizeable slice of the proceeds going to the broadcasters.

With Congress and much of the electorate in a self-induced frenzy over health care legislation, it's likely the FCC's dream -- or pipe dream, if you prefer -- won't be widely noted. An optimist might say that would increase its chances of passing into reality. Given the enormous benefits that it could produce, that would be about the best outcome one could hope for.