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Source link: http://archive.mises.org/10409/how-not-to-bring-broadband-to-all/

How Not to Bring Broadband to All

August 6, 2009 by

European politicians want to achieve broadband access for all. They think that this is a panacea and could even drive Europe out of the current economic situation. In fact, the European Commission “considers it of the greatest importance that, within the European Union, key services such as e-communications are widely available to citizens and businesses, independently of their geographical location, and at an affordable price and specified quality.”

Current regulation is failing to achieve this goal. So, politicians are looking for new ideas to push forward their vision for society. There is one proposal that has been in the making for some time, but which has only recently gained momentum due to the impulse of the UK government. It consists of including broadband service as part of the scope of the universal service obligations.FULL ARTICLE


KP August 6, 2009 at 10:32 am

Great article but in the US, cable broadband is essentially very monopolistic. There is a limitation on entry, how do you combat this?

Mitch August 6, 2009 at 1:25 pm

Cable broadband in the U.S. is consequentially very monopolistic, not essentially. Austrians would argue that intervention into the free market is the cause.

“At around the same time the modern-day FCC was being erected, the nationalization of independent telecom networks was being implemented. [3]

Beginning in 1907 and under the rhetoric of “national security” as well as the fallacious belief that everyone should have a phone, AT&T was granted geographical monopolies by each state. This was done despite the fact that at the turn of 20th century more than 50% of local telephone service was controlled by rivals.[4][5]

This insulation from competition also took place under the auspices of federal legislation including the Mann-Elkins Act of 1910 and the calculating Kingsbury Commitment of 1913. These edicts effectively cemented AT&T’s role as the central telecom firm for the entire country.[6]”

From here: http://mises.org/daily/2806.

Many other “utility” companies here have enjoyed similar insulation.

Ohhh Henry August 6, 2009 at 2:01 pm

“In summary, the inclusion of broadband access in the universal service obligation will not only fail to achieve extension of broadband access, but will also fall short of the extension that would otherwise be attained under free market conditions”

I don’t think that universal broadband access is really the goal of the Eurocrats. Instead it’s a Trojan horse wherein if you provide everyone with broadband then you in effect own the broadband and it is yours to control, monitor, censor and proscribe. Sharing politically incorrect opinions (“hate speech”), unregulated (untaxed) commercial activity and spam of all kinds (whatever they define to be spam) are crimes against the People’s Broadband, which are therefore crimes against the People. The usual Road to Serfdom stuff.

(Obamacare proponents take note)

Jonathan Finegold Catalán August 6, 2009 at 2:19 pm


In Spain, broadband internet is monopolistic, as well. For example, I wanted to put in Orange broadband internet in my flat, but in order to get access I needed a phone line. Telefónica is the only company that is able to put in a phone line to your house, and their rates are insanely expensive (in Argentina, they are known as “Timofónica”). So, Herrera-Gonzalez’ article essentially operates under similar assumptions.

ShedPlant August 6, 2009 at 4:06 pm

The UK government isn’t “about to re-nationalize the telecommunication network”. BT is profitable.

KP August 7, 2009 at 11:52 am

To All:

Thank you for your responses.. but how would implement a free market response where a physical limitation is there.. that would mean individual cables to each house instead of bulk run into a community. This would drive up costs. (Currently we have bulk cable runs via telephone poles which includes 480V or 220VAC power, telephone cables and cable lines. Each pole then will have some sort of terminal box where you would feed from that. If we deregulate and open up the market for individuals to chose a company. They would have to draw an independent cable or telephone line, maintain that line, and install any upgrades in that small area.)

I am all for free markets, but I’m trying to understand a realistic solution.

Bergfeld August 7, 2009 at 1:20 pm

Although I definitely agrees with the conclusions of this essay, I think the author gives free markets a little too much credit. Free markets do not necessarily ensure that all demand is satisfied. But they do ensure, through the efforts of entrepreneurs, that the economy is always moving in that direction in response to changes in external factors.

That said, free markets are still clearly the best method for allocating resources available to mankind.

Fernando August 10, 2009 at 5:46 am

Thanks for your comments.

KP, the good thing about letting the market free is that it will solve those problems your are depicting. At this moment, this is not the case with telecom markets.

Jonathan Finegold Catalan,
In Spain, any company can provide you with a phone line, not only Telefónica. Of course, it is cheaper for Orange to use Telefónica’s lines (at regulated prices) than to install its own line.
So, as Mitch stated, it is a “consequently monopollistic” market.

Iranian Centrifuge October 4, 2009 at 8:03 am


“A long-awaited US report studying access to online information was released Friday. One of its recommendations is that the government radically step up its efforts to ensure broadband access to all.

The report, Informing Communities: Sustaining Democracy in the Digital Age, was developed in a partnership of the John S. and James L. Knight Foundation and the Aspen Institute, and written by a 16-member panel co-chaired by Marissa Mayer, Google’s VP for seach products and user experience, and Theodore B. Olson, a partner in the Gibson, Dunn & Crutcher law firm and former US Solicitor General.”

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