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Summary

Broadband network deployment projects represent large scale, long term investments that affect the overall productivity of economic activity in the geographic areas in which they are built, and thus fit the conventional definition of infrastructure. But they also have several characteristics that distinguish them from traditional infrastructure projects. These unique characteristics may dictate that government programs in support of broadband deployment be structured differently than conventional infrastructure programs. Virtually all broadband networks in the United States are privately owned and financed through private capital markets. In most geographic markets, there are two or more broadband networks offering competing services over their own facilities, rather than a single provider. The competing broadband networks generally employ different technologies. Currently, each of these technologies has somewhat different capabilities. But each also is experiencing rapid technological progress, so it is not possible to predict which technology will prove most successful from a technical or commercial perspective. Because the capabilities of these technologies are at various stages of development, some broadband network technologies may be better able than others to meet a stimulus package requirement to be quickly deployable, though perhaps at the expense of long term productivity and innovation. Most broadband network providers are vertically integrated into the production of downstream services (applications) that they provide to customers over their own networks. These applications compete with the offerings of independent applications providers that also must ride over the broadband networks to reach customers and therefore are dependent on access to those networks. In some rural areas, a combination of limited demand and high costs preclude private capital markets from funding broadband network infrastructure absent government intervention. In these areas, where even a single network provider might not be able to achieve sufficient scale economies to be able to offer ?affordable? service, it would be inefficient to subsidize multiple providers. Not to do so, however, might leave residents with inferior broadband service choices relative to urban residents. While upgrades to traditional infrastructure tend to have a quantitative impact on the services that ride over that infrastructure (for example, increasing the number of cars that can ride over a highway or the speed of a train riding over a rail bed), upgrades to broadband infrastructure also potentially have a transformative impact on the services that ride over that infrastructure, by allowing for the creation of entirely new applications. The leadership in both houses of Congress as well as the Obama administration have announced plans to include a broadband component in the infrastructure portion of any economic stimulus package. At the least, the unique characteristics of broadband infrastructure impose very complex policy objectives for any broadband infrastructure program ? to foster infrastructure investment that would not otherwise be made and to create additional jobs and spending, without distorting competition among the different broadband network technologies, without discouraging investment and innovation by independent applications providers that need access to broadband networks, and without subsidizing multiple inefficient providers unnecessarily.

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