Magazine

The FCC's Broadband Bobble


The U.S. is falling even further behind in high-speed Internet availability, speed, and cost

Federal Communications Commission Chairman Kevin Martin has suffered a number of setbacks in his increasingly lonely fight against the cable companies. Martin, of course, is determined to place tighter regulations on the industry by restricting the reach of companies and allowing subscribers to pay only for the channels they want.

Now, Democratic and Republican lawmakers—as well as Martin's fellow commissioners—are questioning his selective use of data to support his campaign; one congressman has even called for an investigation into whether Martin has abused his power. Meanwhile, a key FCC vote on cable regulation has been delayed. It looks to most everybody as if the chairman is fighting a losing battle. But he says he's not giving up—which has prompted analyst Craig Moffett of Sanford Bernstein & Co. to characterize Martin's persistence as a "Captain Ahab crusade."

The whole mess (I mean, Moby-Dick good-and-evil references?) raises questions about what Martin has achieved, besides provocative headlines, and what he otherwise might have achieved. Here's an idea: He could have taken a much larger role in helping the U.S. catch up with other countries when it comes to the all-important issue of broadband access. After all, it was his boss, President George W. Bush, who in 2004 called for universal broadband for all Americans by 2007. As 2007 draws to a close, the figure is only about 50%.

Martin's lack of a bold initiative hasn't gone unnoticed: On Nov. 15, Senator Daniel K. Inouye (D-Hawaii) encouraged lawmakers to support a bill he introduced that could end up dictating to the FCC how to implement a national broadband policy.

Let's face it: Broadband is likely to be the way most media, including television, are delivered in the future. When that comes to pass, there will be enough new competition that the cable guys will be forced to offer consumers more choices anyway.

When Martin was first named an FCC commissioner in 2001 at 34, he could already boast powerful connections, having worked at the influential Washington law firm Wiley, Rein & Fielding, then on Bush's 2000 Presidential campaign and his legal team for the Florida recount. Martin's wife, Catherine, was a domestic policy adviser at the White House. So it was no surprise that Bush appointed him FCC chairman in 2005 to succeed the highly ideological Michael Powell.

But Martin also brought his personal beliefs to the job. His efforts to clean up "indecency" on TV have been even more forceful than those of Powell, who fined CBS (CBS) $550,000 for Janet Jackson's infamous "wardrobe malfunction." Martin is battling all the broadcasters and cable companies as he seeks to make operators offer family tiers of programming to protect young viewers from the violence and smut he sees on the tube.

Speculation has long persisted that by building up his family-values bona fides, Martin hopes to make himself more attractive as a possible candidate for governor or senator in his native North Carolina. Meanwhile, the U.S. has fallen further behind in global broadband. The latest rankings by the Organization for Economic Cooperation & Development show the U.S. at 15 in terms of broadband penetration—down from 4 in 2000. Average speeds in Japan are 20 times faster than in the U.S., and South Koreans pay nine times less per megabit than Americans do.

MUCH BIGGER PICTURE

We all know improved broadband is crucial to staying competitive in the global economy. It can cut the cost of distributing digital content, improve the efficiency of public safety systems, even allow for more telecommuters, who are generally considered to be more productive than cubicle dwellers. Some public interest groups estimate that universal broadband could add $500 billion to the U.S. economy.

Before Congress jumped in, Martin should have started regularly collecting accurate data about penetration; speeds; and which communities, minority and rural, for example, lack affordable services. He may leave with the change of Administration next year. In January the FCC will conduct the biggest auction ever of wireless spectrum, which Martin says will transform broadband in the U.S. Even so, Bush's deadline will have come and gone.

Jon Fine will return next week. To read his blog on media and advertising, go to www.businessweek.com/innovate/FineOnMedia.


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