The sorry state of American telecom

Thomas Bleha, recipient of an Abe Fellowship and a former Foreign Service officer in Japan for eight years, published an article in the May/June edition of Foreign Affairs where he warns America that its broadband and wireless technology failures could have high costs in the future due to lost opportunities for economic growth, increased productivity, and a better quality of life. (A recent News.com report details the conflicts between local governments and commercial carriers.) Bleha's warning is not surprising. Countries with advanced broadband and wireless networks will be the places where broadband and wireless product innovations will occur. This is less of a problem for large, international companies, but a big problem for small to medium-sized American companies, as Bleha explains:

Although many large U.S. firms, such as Cisco, IBM, and Microsoft, are closely following developments overseas and are unlikely to be left behind, the U.S.'s medium-sized and smaller firms, which tend to foster the most innovation, may well be.

The reasons for Japan's success, according to Bleha, were strong government financial incentives, such as tax credits and subsidies for network rollout, mandatory open access rules to regional telephone lines, and public enthusiasm for new technology. He considers America's de-emphasis of line-sharing rules in favor of relying on platform competition (cable versus phone line, as an example) a mistake because it is unlikely, in his opinion, to lead to rapid increases in broadband speed due to vested interests in the status quo:

Cheap, high-speed broadband would lead to widespread use of Internet telephones and thus threaten the phone companies' lucrative voice-telephone business, and more inexpensive broadband would multiply outside video and movie offerings and endanger the cable companies' profitablity.

I'm glad that more are starting to awaken to the fact that America's telecommunication situation is a mess that needs to be fixed. I had better broadband service when I moved to Lausanne, Switzerland, a quaint little city on the banks of lake Geneva, than I did in Boulder, Colorado, where it wasn't even available in 2000. Even more embarassing is the fact that Canada, a nation far more spread out than the U.S., is far ahead in the broadband race. We can't just blame it on our size.

I don't, however, agree completely with Bleha's identification of the nature of the problem, nor with his prescription for a solution. More on that tomorrow.