Down to the Wire

Thomas Bleha

From Foreign Affairs, May/June 2005

Summary:  Once a leader in Internet innovation, the United States has fallen far behind Japan and other Asian states in deploying broadband and the latest mobile-phone technology. This lag will cost it dearly. By outdoing the United States, Japan and its neighbors are positioning themselves to be the first states to reap the benefits of the broadband era: economic growth, increased productivity, and a better quality of life.

Thomas Bleha, the recipient of an Abe Fellowship, is completing a book on the race for Internet leadership. Previously, he was a Foreign Service officer in Japan for eight years.

GETTING BACK ON-LINE

The United States is losing considerable ground to Japan and its neighbors, and they will be the first to reap the economic benefits of these technologies. It is these countries, rather than the United States, that will benefit from the enhanced productivity, economic growth, and new jobs that high-speed broadband will bring. In 2001, Robert Crandall, an economist at the Brookings Institution, and Charles Jackson, a telecommunications consultant, estimated that "widespread" adoption of basic broadband in the United States could add $500 billion to the U.S. economy and produce 1.2 million new jobs. But Washington never promoted such a policy. Last year, another Brookings economist, Charles Ferguson, argued that perhaps as much as $1 trillion might be lost over the next decade due to present constraints on broadband development. These losses, moreover, are only the economic costs of the United States' indirection. They do not take into account the work that could have been done through telecommuting, the medical care or interactive long-distance education that might have been provided in remote areas, and unexploited entertainment possibilities.

The large broadband-user markets of Northeast Asia will attract the innovation the United States once enjoyed. Asians will have the first crack at developing the new commercial applications, products, services, and content of the high-speed-broadband era. 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 United States' medium-sized and smaller firms, which tend to foster the most innovation, may well be.

The Japanese and the South Koreans will also be the first to enjoy the quality-of-life benefits that the high-speed-broadband era will bring. These will include not only Internet telephones and videophones, but also easy teleconferencing, practical telecommuting, remote diagnosis and medical services, interactive distance education, rich multimedia entertainment, digitally controlled home appliances, and much more.

Given these costs and losses, it is clear that broadband is critically important to the U.S. economy and the United States' international competitiveness and that it must become a national priority. In the run-up to the election in November, President Bush finally addressed the issue, promising the electorate "universal, affordable access" to broadband technology by 2007 and "plenty" of carriers to choose from "as soon as possible thereafter." To reach these goals, he expressed confidence in new broadband service over power lines, promising wireless technologies, such as WiFi hotspots and longer-distance WiMax, and unspecified tax credits.

But real progress will require more than these measures. To move forward, the administration should quickly take two steps. First, it should explain clearly the profound ways in which broadband will change work, learning, and leisure in the United States. Identifying such substantial benefits would energize providers and encourage potential users to get the most from the Internet. It would also give the private sector confidence in the nation's direction and a degree of business certainty.

Second, the administration should push the President's Information Technology Advisory Committee (PITAC), a group of private-sector IT leaders and academics, to play a key leadership role in advancing broadband deployment. Involving the private sector and prominent academics in broadband leadership is essential given the pace of technological advance and today's dynamic business environment.

One of the PITAC's first tasks should be to set out bold long-term goals for the deployment of broadband in the United States, carefully distinguishing three different levels of service: basic broadband (at 1.5 to 3 megabits per second), for slow downloads from and uploads to the Internet and Internet telephones; high-speed broadband (at 10 to 30 megabits per second), for Internet reception of digital high-definition television and other video uses; and ultra-high-speed fiber broadband (at 100 megabits per second), for the highest-end applications.

The PITAC should consider how to redeem President Bush's pledge to provide, by 2007 (or 2010, at the latest), basic broadband access to all Americans at an affordable price ($20 to $25 per month should be the goal). To reach everyone, the effort would require developing a combination of technologies: wireline, wireless, and satellite. The United States' vastness no doubt complicates the task, but it is no excuse for not undertaking the job. (Canada, the world's second-largest state, also ranks second in global broadband connectivity.) If necessary, tax credits should be granted to companies that help reach rural and underserved areas.

By 2010, the PITAC should also aim to make available high-speed broadband access to two-thirds of all U.S. households for $30 to $35 per month. The key to reaching this goal is the government's taking the lead in creating a strongly competitive environment for DSL, cable, power line, and newer wireless broadband technologies. The more these technologies compete among themselves, the sooner Americans will have access to faster, cheaper broadband service. And with enough competition, there should be no need for government financial incentives.