Incentives Still Remain the Issue

Nobody yet knows how much bandwidth typical consumer users will want, and be willing to pay for, in the future. Demand may prove less robust than many now believe. But if customers really want, and will pay for, 50 Mbps or 100 Mpbs access pipes, then a fiber direct to residence network is about the only thing that really works, if demand is strong enough that little sharing is possible.

So the problem is how to get such networks built, at a time when capital providers are skeptical, to say the least, about the wisdom of building such networks.

Perhaps we should simply acknowledge that some partisans in communications policy debates seem to prefer government solutions that remove profit motives entirely from broadband infrastructure efforts. There is a logic there. Some sorts of infrastructure might indeed be natural monopolies that simply can't be created by the private market. And if that is the case we are wasting our time thinking such sorts of networks can be created any way but sanctioned franchises and monopolies.

And that remains one of the issues at the heart of the network neutrality debate. To the extent that we honestly expect private capital to flow into infrastructure, we have to honestly confront the issue of whether profits can be made, and how they can be made, by entities trying to supply such infrastructure, especially when we haven't tackled the issue of how different regulatory regimes can be reconciled. Why, in the same market, do we regulate providers of similar services using entirely distinct frameworks? It's a rhetorical question, of course.

Some contestants come out of a broadcast mass media model with greater degrees of content freedom, while others come out of a common carrier model with drastically less freedom. But by universal agreement, all the services provided by all of these contestants will be the same. Because of the immense commercial interests in play, nothing signficant is going to be done about this growing inconsistency any time soon.

Nor is it likely private communications firms will simply be nationalized and operate as regulated utilities. That being the case, the issue of incentives will remain key if we are to have any hope at all at mass and robust broadband availability.