All Commentary
Monday, September 25, 2017

Uncle Sam Is Crippling Internet Access and Affordability

Markets will get broadband Internet access to rural areas, not government mandates.

Debating access to deemed “public goods” is always a messy, dogmatic, and stinky mess. From healthcare to education to retirement, there has never been a dull moment.

Of interest to libertarians should be the debate surrounding broadband internet access. This discussion is not of the net neutrality flavor. Rather, it is more foundational and dated: dealing mainly with internet access in rural communities.

Many politicians, including John McCain and Barack Obama, have been discussing this problem over the past 20 years. The problem is that there are over 34 million Americans who do not have access to broadband internet from home. Since politicians and private organizations agree that high-speed internet is a tool that breaks down boundaries and elevates communities, it begs the question why the problem persists. The simple answer is that much of the problem is due to bureaucratic interference.

The internet, which works like Bluetooth and radio, carries data through frequencies in the air, or through wires like cable, Ethernet, or fiber. Why not just extend these frequencies to rural communities?

As it stands, it is more expensive to install than it’s worth — that is, it was until recently.

Television Will Expand Internet Broadband

Innovative private companies like Microsoft have developed technologies that can utilize unused television frequencies to transmit internet signals. Using a special antenna, internet signals can reach any community for a relatively tiny price tag.

Microsoft has had much success in Kenya, and other nations that have given it the opportunity to test its product.

Yet, why does the United States not see this tech in its market? The cause is regulation.

The white space channels are sitting there, ready to be used. Currently, the broadband internet industry is regulated by the Federal Communications Commission (FCC). The regulation, updated most recently in 2015, prohibits and limits private access to certain frequencies labeled as low power television providers. In simple terms, the FCC has carved out a list of frequencies designated for non-commercial use.

But, similarly to the problem of many public access programs, there is a significant amount of inefficiency with this regulation. Many frequencies are not being used, causing certain channels to be “white spaces” — channel-less and wasted. According to research, there is a notable range — the 600 megahertz bandwidth — that offers three spaces for this new television to internet signal conversion.

The white space channels are sitting there, ready to be used. According to research by Microsoft, there would be no negative effect on current TV broadcasts. Additionally, these new networks would reach low-income and generally isolated communities, opening avenues for education, development, and research.

Government Regulation and the FTC’s Mistake

The government wouldn’t need to tax more or worry about legislating in every community. Individual companies will take the entrepreneurial risk of investment and enter communities at their own discretion. There is no doubt that there will be a monetary incentive for companies to start investing in broadband internet, nationwide.

In poor judgment, the FTC regulated the railroad industry, controlling prices, and controlling all freight across the U.S. Additionally, the FCC should be aware of a classic and historic economic problem — the failure of regulation of railroads by the FTC.

In the 1900s, the government faced a problem with railroads, which were allegedly price-gouging rural communities. According to “research,” these communities were being charged much more than well-traveled and developed tracks. In poor judgment, the FTC regulated the railroad industry, controlling prices, and controlling all freight across the U.S.

Not only did the railroads create an artificial monopoly, but they managed to hurt other related industries. The FTC began to create quotas on how many trucks could be owned by a company, and where and when certain routes should be taken.  

Like the FCC with television frequency access, the FTC required private companies to get special licenses to travel.

Across the board, economists have repeatedly shown that regulatory licensing and price-controls not only made it more expensive for freight to rural areas, but it made shipping in general more expensive. The policy hurt rural communities and put more money into Big Railroad’s pockets.

And to top it all off: rural companies were paying more for shipping because the track was less developed and less traveled. Additionally, individuals lobbying for FTC price controls were not rural farmers, but rather the large farmers who wanted to reduce shipping prices to more developed regions. In the end, the FTC only exacerbated the problem.

History Says To Free The Market

Private companies will make investments while also bearing the risk. Using history as a tool, the FCC should attempt to incentivize the market not by offering loans and special tax breaks, but by allowing the marketplace to make the decisions. Additionally, the FCC should stay away from further regulating the broadband internet industry.

Private companies will make investments while also bearing the risk. By preserving three channels in every market across the nation and opening these “white space” television frequencies, the FCC would be opening hundreds of opportunities to rural communities.

A decision is in the works, and the FCC must opt to deregulate.

  • Jonathan Lee is a filmmaker and freelance political journalist.​