Research Institute Questions State Broadband Plan

Access to Internet Should Be Driven By Consumers, Not by Central Planners, Say Scholars

FOR IMMEDIATE RELEASE

MIDLAND—The Mackinac Center for Public Policy today challenged the need for expanding state involvement in Michigan's broadband telecommunications infrastructure.

"The state's insistence on directing high-speed Internet hook-up to ensure access in all areas of the state is misguided on two levels," said Mackinac Center scholar and Western Michigan University associate professor Don Alexander. "First, it fails to recognize that broadband deployment is taking place in a reasonable manner based on consumer choice; and second, it mandates a particular type of delivery, one that may very well be outdated by the time Lansing's central planners have finished wiring every corner of the Great Lakes State."

Broadband is a new high-speed system for Internet access that typically requires the laying of cable much like that which is used for cable television. But other, even faster technologies are already "catching up" to the cable method of high-speed Internet access, a process Alexander and others believe may be supplanted or disrupted by state efforts to lay cable for the entire state.

According to Federal Communication Commission data, Michigan already ranks 11th among the 50 states in terms of the number of providers of such high-speed cable lines, with 15 providers. "The only states that have more providers than Michigan are, not coincidentally, those with larger populations needing service," Alexander pointed out. "Rural areas, it is true, are not as attractive to high-speed Internet service providers, but that is a lifestyle choice. People who choose to live in rural areas give up convenient access to the many things that individuals living in the city enjoy, in favor of a less congested lifestyle they may face a congested Internet. This voluntary tradeoff is simply evidence that the market is functioning in a reasonable manner," he said.

There are already more than 20 federal subsidy and loan programs aimed at deploying broadband-type services in schools, libraries and elsewhere, mostly in rural areas. "How much good will another state-based program really do?" asked Michael LaFaive, a policy analyst with the Mackinac Center. "At best, its effect will be neutral, at worst, it will delay or kill the growth of new, even faster telecommunications technologies such as satellite-based Internet connection, that could, and in some cases currently does, provide advanced broadband services to people in inner cities, suburbia, and rural communities. These `future providers' already are gaining ground on cable delivery and could very sell surpass cable broadband in popularity by the time government has wired the state."

LaFaive points out that government has "a terrible record of picking winners and losers" in the marketplace and is probably betting on the wrong horse again.

There are currently six major alternatives to cable-delivered broadband either being used today or being developed, and most offer faster, more flexible services. According to Alexander, the next generation of data transmission will likely come from satellite firms such as DirecTV. DirecPC, DirecTV's Internet service, can now transmit Internet data by satellite, at twice the speed necessary to qualify as "advanced" or broadband technology. Other options catching up to cable delivery include mobile wireless technology (Internet data sent to mobile phones); fixed terrestrial wireless (Internet data transmitted by cell phone towers to a computer); digital broadcast television (traditional television broadcasters using a portion of their spectrums to provide Internet access); and lastly, electricity providers. "Technology is now being developed that would allow data transmissions through the very power lines that bring electricity to the homes of Michigan citizens," Alexander points out.

"The state of Michigan is trying to substitute the wisdom of a few central planners for that of consumers as a whole," says LaFaive. "Entrepreneurs seeking a profit are in a much better position than the state to accommodate the broadband needs of Michigan citizens." LaFaive hopes that policy-makers will take a chapter from Michigan history regarding broadband technology. "Before the automobile completely replaced horse-drawn transportation, many people in Michigan still used horse-drawn transportation," he said. "That isn't a reason to call the government, it is a reason to call Henry Ford," LaFaive said.

Alexander and LaFaive have published an article this month entitled "State Should Mind Its Own E-Business," which is available on the Mackinac Center's web site at www.mackinac.org.

The Mackinac Center for Public Policy is a nonprofit, nonpartisan research and education organization in Midland, Michigan.