[RTC List] Broadband op-ed in NYT

[Sean McLaughlin]

http://select.nytimes.com/2007/07/23/opinion/23krugman.html?pagewanted=print 


July 23, 2007
Op-Ed Columnist
The French Connections
By PAUL KRUGMAN

There was a time when everyone thought that the Europeans and the 
Japanese were better at business than we were. In the early 1990s 
airport bookstores were full of volumes with samurai warriors on their 
covers, promising to teach you the secrets of Japanese business success. 
Lester Thurow’s 1992 book, “Head to Head: The Coming Economic Battle 
Among Japan, Europe and America,” which spent more than six months on 
the Times best-seller list, predicted that Europe would win.

Then it all changed, and American despondency turned into triumphalism. 
Partly this was because the Clinton boom contrasted so sharply with 
Europe’s slow growth and Japan’s decade-long slump. Above all, however, 
our new confidence reflected the rise of the Internet. Jacques Chirac 
complained that the Internet was an “Anglo-Saxon network,” and he had a 
point — France, like most of Europe except Scandinavia, lagged far 
behind the U.S. when it came to getting online.

What most Americans probably don’t know is that over the last few years 
the situation has totally reversed. As the Internet has evolved — in 
particular, as dial-up has given way to broadband connections using DSL, 
cable and other high-speed links — it’s the United States that has 
fallen behind.

The numbers are startling. As recently as 2001, the percentage of the 
population with high-speed access in Japan and Germany was only half 
that in the United States. In France it was less than a quarter. By the 
end of 2006, however, all three countries had more broadband subscribers 
per 100 people than we did.

Even more striking is the fact that our “high speed” connections are 
painfully slow by other countries’ standards. According to the 
Information Technology and Innovation Foundation, French broadband 
connections are, on average, more than three times as fast as ours. 
Japanese connections are a dozen times faster. Oh, and access is much 
cheaper in both countries than it is here.

As a result, we’re lagging in new applications of the Internet that 
depend on high speed. France leads the world in the number of 
subscribers to Internet TV; the United States isn’t even in the top 10.

What happened to America’s Internet lead? Bad policy. Specifically, the 
United States made the same mistake in Internet policy that California 
made in energy policy: it forgot — or was persuaded by special interests 
to ignore — the reality that sometimes you can’t have effective market 
competition without effective regulation.

You see, the world may look flat once you’re in cyberspace — but to get 
there you need to go through a narrow passageway, down your phone line 
or down your TV cable. And if the companies controlling these 
passageways can behave like the robber barons of yore, levying whatever 
tolls they like on those who pass by, commerce suffers.

America’s Internet flourished in the dial-up era because federal 
regulators didn’t let that happen — they forced local phone companies to 
act as common carriers, allowing competing service providers to use 
their lines. Clinton administration officials, including Al Gore and 
Reed Hundt, the chairman of the Federal Communications Commission, tried 
to ensure that this open competition would continue — but the 
telecommunications giants sabotaged their efforts, while The Wall Street 
Journal’s editorial page ridiculed them as people with the minds of 
French bureaucrats.

And when the Bush administration put Michael Powell in charge of the 
F.C.C., the digital robber barons were basically set free to do whatever 
they liked. As a result, there’s little competition in U.S. broadband — 
if you’re lucky, you have a choice between the services offered by the 
local cable monopoly and the local phone monopoly. The price is high and 
the service is poor, but there’s nowhere else to go.

Meanwhile, as a recent article in Business Week explains, the real 
French bureaucrats used judicious regulation to promote competition. As 
a result, French consumers get to choose from a variety of service 
providers who offer reasonably priced Internet access that’s much faster 
than anything I can get, and comes with free voice calls, TV and Wi-Fi.

It’s too early to say how much harm the broadband lag will do to the 
U.S. economy as a whole. But it’s interesting to learn that health care 
isn’t the only area in which the French, who can take a pragmatic 
approach because they aren’t prisoners of free-market ideology, simply 
do things better.