This, too, shall pass

The worse things get, the better an idea it sounds. An increasing number of people in the telecom industry and in government want the federal government subsidize a broadband buildout, just as it subsidized the construction of the nation’s interstate system more than 50 years ago.

It is not such a far-fetched idea, especially when you consider that the federal government already at least partially subsidizes operations for hundreds of carriers around the country. The Rural Utility Service initiative gives carriers in sparsely populated, rural markets a financial incentive to consistently and progressively invest in their networks in order to provide customers with the same quality of service that the biggest regional telco’s give their customers in urban areas.

It’s no accident that the rural carrier market is one of telecom’s healthiest markets financially. Vendors are increasingly seeking RUS certification and chasing the smaller independent telco business they didn’t give a second look to a few years ago. The rural carriers have to keep spending RUS money if they want to keep getting it.

In the world of non-rural operators, there are no such special programs. Network investment has ground to a halt with the capital spending spigots of most large telcos offering not so much as a drip to the thirsty vendor community. What’s the harm in giving the big boys a little financial help on the way to building out our broadband society?

Well, here’s a good reason: They don’t need it. Broadband is a wonderful inevitability for our nation and society, but it will happen in due time. Although broadband penetration in the U.S. is less than many countries, the overwhelming reason has to do with the cyclical nature of the national economy.

There is no reason to believe that bad economic conditions will last forever, just like there is no reason to believe that broadband will not come about without help from the federal government. After the bad days are over, network investment will pick up again because it will have to.

The rural carriers are in a different situation entirely. They serve customer bases that are costly to serve because they are so spread out, and they provide service to customers that bigger telcos, for the most part, want absolutely nothing to do with. Though some people may see the RUS program as subsidizing this country’s rural infrastructures, it’s really not much more than an incentive that--effectively or not--is designed to keep rural users in the game.

In any case, while there has been a recent groundswell of support for a federal broadband subsidy program, the movement may not get further, at least in Congress. With this week’s midterm elections, control of Congress has swung from a virtual tie to the Republicans. With that swing, control of the influential Senate Commerce Committee moves from broadband subsidy proponent Sen. Ernest Hollings, D-S.C., to a hardball-playing broadband bill opponent, Sen. John McCain of Arizona.

It’s just as well because the last thing the federal government needs to do right now is rescue the telecom industry’s biggest service providers from an economic dust storm that, while detrimental to everyone in the industry, will eventually blow by.

Certain industry interests will continue to fight for the broadband subsidy, but it is only in the interests of saving themselves from their own financial problems. A debate will also only serve to complicate and draw attention away from the real issues affecting telecom regulation. The temptation is there, and increasingly harder to resist, but we must resist it if we want to have a balanced, non-monopolistic industry. Subsidizing a broadband buildout for the biggest companies will effectively put them that much further ahead of their potential competitors when the dust of the downturn dissipates.

E-mail me at doshea@primediabusiness.com