 |
Telecom and Information Technology Reform
2005 will be a critical year in the areas of telecom and information technology reform. Congress has clearly indicated plans to update the 1996 Telecommunications Act and hearings are ongoing to formulate a legislative and regulatory policy roadmap to that end. In 2005, EIA will continue to advocate, develop consensus and build momentum for a domestic national broadband strategy. This could include support for tax incentives to encourage the expanded deployment of high speed broadband networks. EIA will work closely with our sector member association, TIA, to promote adoption of concrete national strategy as we move to effect rational congressional reform proposals.
Broadband Infrastructure
There is ongoing cause for concern over the U.S.’s declining position in broadband penetration and the resulting effect on our international competitiveness. EIA has for years warned that ubiquitous and robust broadband is essential to our nation’s ability to compete in the global marketplace. The President’s statement in March 2004 supporting a national goal of extending broadband to all Americans by 2007 was an important step in raising the level of U.S. commitment (see EIA press releases on topic, including EIA's June 24, 2004 press release). On the other hand, key destinations for business investment, including India, Malaysia and the Philippines, have been active in developing national broadband deployment plans, and that effort is beginning to bear fruit.
On the basis of the EIA membership experience as equipment suppliers and through our review of widely circulated studies and reports, we believe the U.S. still has a long way to go in providing ubiquitous broadband availability. A 2003 study, for example, indicated that rural areas still lag considerably behind urban and suburban areas in that regard. Clearly, as long as this situation persists, rural Americans will suffer a significant disadvantage in terms of the economic and social benefits that could be enjoyed through a wide range of broadband services.
The U.S. essentially invented Internet technology, but we must continue to invest in it if we want to ensure our citizens’ role in a competitive global economy. We’ve seen that countries that recognize technology as a critical part of their economic future and that designate broadband deployment a national priority make huge strides. According to the International Telecommunications Union, the U.S. fell in 2003 to 11th in the world in broadband penetration behind countries such as South Korea, Hong Kong and Canada. Two years earlier, we ranked third.
Some of the key factors in South Korea’s take rate include early adoption by the government of a comprehensive broadband policy, deregulation of market entry and pricing, and fierce competition. Support for making deployment a priority came from the top - from Korea’s president - and the government built the national broadband backbone, judging that widespread use of broadband was in the national interest.
In 1999, Canada connected all the schools and libraries in the entire country to the Internet - including the 10% who live in the most remote areas. The government made it clear that getting its citizens connected and keeping them competitive was a huge priority. In line with its goal of making Canada the most connected nation in the world, the government has offered tax incentives and said the key is public-private partnership where necessary.
A number of other countries are starting to jump ahead by deploying “next-generation” broadband - extremely fast networks that can deliver high-quality video, data and voice services. Japan, for example, set a national goal of serving 10 million residents with 100 megabits by the end of 2005. Fiber-to-the-home subscribers there grew from 12,000 in January 2002 to 200,000 at the end of that year - 1,700% growth in 12 months. By the end of 2003, the Japanese total had surged to 895,000. By contrast, only 20,000 Americans had a direct fiber connection at the end of 2002, and the growth of fiber-to-the-home is much lower here.
These comparisons are important because next-generation broadband could give other nations a significant economic advantage over the U.S. Their workers will be more efficient, and their companies will be able to develop new products such as software, web services and computer chips that we cannot.
The U.S. must take action and assume a front-running role in achieving widespread broadband deployment within a reasonable period of time. A national broadband policy and strategy for deployment should include technology-neutral incentives for investment, increased spectrum allocation for advanced wireless services and the prevention of barriers for new market entrants. In addition, the Federal Communications Commission’s (FCC) current policy of not regulating access to cable companies’ high-speed networks should be codified.
Recommendations
Development by the Administration of a national broadband policy and implementation strategy. The overriding objective of this public-private partnership should be to ensure that all Americans have access to current high-speed Internet access technologies in the immediate future and to next-generation broadband services by 2005.
Affordable, highly advanced and secure communications services should be available to all Americans. Competitive market forces, not regulation, should be the principal means of achieving this goal.
Governments should intervene only where such intervention (1) is necessary to effectively address a specific, critical problem and (2) is targeted and otherwise designed to minimize disruption to competitive market forces. Governments should make available the necessary radio spectrum for the deployment of advanced communications services.
Implementation of tax credits or expensing to encourage broadband providers to extend and upgrade their networks. A 10% tax credit for current-generation broadband investment in rural and underserved areas and a 20% credit for next-generation investment, or an equivalent tax expensing option, would make a positive contribution to the economy, improve workplace efficiency and bring new services to communities.
In 2005, EIA will be working diligently to educate and advocate these principles and policies to lawmakers and regulators alike. In addition, EIA will be working closely with sector partner TIA to draft sensible policies for the future that will enable manufacturers and high tech firms to thrive as we move to high speed next-generation networks.
Broadband
The debut of the Internet for the masses more than a decade ago ushered in a new era in communications, leading companies and industries to retool many operations and, in some cases, rewrite their business models or completely reinvent themselves. The next giant step in this revolutionary market is broadband, or high-speed Internet.
The concept of broadband captures the notions of greatly increased transmission speed (throughput) and capacity (bandwidth). It means being able to send larger amounts of data at quicker speeds than you can in a narrowband environment. Critically, it also means interactive services. While the first incarnation of the Internet certainly expanded research capability and knowledge sharing, and sped business and personal transactions, broadband takes communication to another level.
Broadband reduces concerns about file sizes, allowing users to take advantage of the processing speed of computers and make the Internet more a part of everyday life. It makes e-commerce more viable. It makes teleworking and distance learning practical and efficient practices. It narrows the disadvantage gap for low-population or physically remote areas. Through broadband, users will be able to take advantage of a host of data-intensive services such as interactive television, digital music and video on demand. The most exciting part, though, is that many applications that will fully utilize the technological capabilities of broadband have yet to be developed or even imagined.
Economically, the benefits of broadband also look to be substantial, with several studies indicating that GDP could grow $500 billion annually if true broadband becomes widely available.
The successful deployment of broadband access solutions is vital to the entire high-tech industry, which is building the next generation of the Internet backbone with optical switches and lightning-fast routers. Users' capability to process data is being enhanced with advances in computing - through desktop PCs, mobile phones, personal digital assistants, cable set-top boxes and TVs. As companies continue to develop new technologies and products, broadband access will be the common link.
In this regard, EIA calls on Congress and the Federal Communications Commission (FCC) to address the great disparity that exists in the availability of high speed Internet services. While urban businesses and consumers are generally able to subscribe to broadband service - and often have a choice of providers and technologies - many Americans do not. EIA supports legislation to offer tax credits to telecommunications companies that provide high-speed Internet access to underserved areas, including rural and low-income urban locales.
The current regulatory landscape is fraught with investment disincentives for both incumbent communications providers and new market entrants. These regulatory hurdles stand in the way of economic and technological growth in the U.S., and specifically in the telecom sector. Other countries have managed to develop smart broadband strategies that encourage intense growth and address both the supply and demand sides of the equation.
EIA believes broadband public policy, legislation and market incentives must a) be technology neutral, b) allow industry to compete fairly and c) increase competition in the most appropriate manner to accelerate broadband deployment. The Alliance's core set of broadband policy principles is as follows:
- Affordable, advanced and secure communications services should be available to all Americans.
- Competitive market forces, not regulation, should be the means of achieving this goal.
- Governments should intervene only when such intervention is necessary to effectively address a specific, critical problem and designed to minimize disruption to competitive, market forces.
- Governments should make available the necessary radio spectrum for the deployment of advanced communications services.
For more information about the importance of broadband to the electronics industry, please contact Doug Wiley.
