[Satellite News 09-01-09] A panel of economists and capital investment managers on a U.S. Federal Communications Commission (FCC) workshop panel to discuss a national broadband plan warned that there is insufficient research data to enable the U.S. government to accurately assess what type of national broadband plan would benefit the economy.
            University of Georgia economist Chris Forman told FCC moderators that economists are surprised that the process of handing out $7.2 billion in broadband stimulus funding through the NTIA and U.S. Department of Agriculture’s Rural Utilities Services (RUS) has been unorganized. “It is interesting that the government has conducted none of its own surveys to gauge how residents in unserved rural areas would use broadband to their economic advantage. The government is using data from the private sector [and] in some cases, from university surveys conducted by students,” said Forman. The government “cannot force demand with supply.”
           James Prieger, an economic studies professor from Pepperdine Univeristy, suggested that the government should use some of the broadband stimulus funding to conduct detailed surveys. “The NTIA should, and will probably be forced to, partner with outside agencies to have an idea of what other initiatives the government should take to compliment broadband implementation. Where will broadband be used to strengthen education services? Where will broadband strengthen the local job market? Where will broadband-enabled telecommuting benefit the local economy? They need to know the answers to these questions before they decide on which companies they should hand out money to,” said Prieger.
            Tom Wheeler, managing director at Core Capital Partners, said that too much attention is being focused on bringing broadband to households but not enough on bringing cost-reduced services to enterprises, which he believes will provide the intended economic boost. “We’re looking at the wrong thing. We’re looking at the pipe and how to build that pipe, but we’re not looking at the reason for the pipe, which is what investors like me need to know. What about providing data for enterprises at reasonable prices? Enterprise industries will provide more of a direct impact on the economy and neither the FCC nor NTIA or any government agency has collected data on enterprise prices, prices for virtual private networks or broadband options. Surely, the amount of applications the NTIA should tell them that the amount of providers is robust, but we have no data on pricing,” said Wheeler.
            Ryan McDevitt, an economics professor at Northwestern University, said that if the government does not do its homework, it would not see desired results. “What I would suggest, in that situation, is for the NTIA to roll out gradually to determine the winners and losers, but this scenario produces losers,” said McDevitt.
          Scott Wallsten, a director at the Omnibus Broadband Initiative and Brent Goldfarb, a professor of economics at the University of Maryland, said they were not even sure how the government would measure economic success after these solutions are rolled out, or if broadband to consumers alone would have any impact on rural economies. “How do we determine the value of broadband, when the term itself is so broad,” said Goldfarb. “The government and consumers do not even know how to separately value or identify the different types of broadband service.”

        The economists concluded that applicants for the broadband stimulus funds should be extremely specific about the long-term impacts of their proposals and that, since the government does not have the data, to produce their own reliable data. “Unfortunately, data provided by the private sector is selective,” said Forman. “I think the NTIA should also give more time for providers to apply for this funding, because there are so few specifics. Hopefully, we’ll see more of that data produced as the process continues.”

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