Watching the Minnesota Broadband Task Force gets me wondering about the impact policy can and does have on broadband expansion. So I was delighted when someone sent me an article on the impact of policy on cable expansion (The Cable Guys Need to Come Up with a Better Argument). The article is interesting – but for me the most interesting was a graph that outlines potential cause and effect of policy on cable investment…
Here’s the author’s read of the chart…
This doesn’t reflect poorly on the cable guys at all. They’re spending a lot more money than they were in the 1990s, and seem to have gotten past the boom-bust ways of the early Internet to a steady investment plan. But neither does the chart back up any particular argument about the impact of regulation on capital spending. A 1992 cable law that the industry said would depress investment was followed by … a big increase in capital spending. That increase probably had a lot to do with the arrival on the scene in 1994 of satellite television purveyor DirectTV, the first direct competitor most cable companies had faced. The FCC’s 1998 ruling that broadband internet was a common-carrier “telecommunications service” did not visibly discourage spending by cable companies trying to get in on the broadband party. And then, when the FCC decided in 2002 that cable broadband wouldn’t be regulated like that, there was no discernible spending boom — at least not for quite a few years.
The chart is looking at investment in the billions. I also know AT&T invested $525 million in Minnesota from 2010-2013. So investment is happening. The question is – how can we create policy that encourages investment in un- and underserved areas? I’m over the moon about the $20 million investment Minnesota is willing to make in broadband. I know the providers worked hard for the tax break on telecom equipment. But those don’t seem like numbers big enough to make a splash. It seems that competition has a greater impact than policy. Would policy that helps to support competition have an impact? Or as the article indicates, is it time to start thinking of broadband as a utility?
UPDATE: TC Daily Planet has been contacted by DIRECTV, which pointed out that the Harvard Business Review blog post quoted in this article incorrectly spelled their name DirectTV.
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