Obama Bailout Promises Hope and Hype

The layers of irony are thick.

Our new President, who ran the smartest, most tech-savvy campaign ever to win a sweeping public mandate, has now called for boosting broadband access as a major component of his economic recovery plan.

There's no doubt Barack Obama understands the Internet, even if, unlike Al Gore, he didn't invent it.

Obama mobilized the Web to engage social networking and other convergence platforms in brilliant fashion, winning over hordes of young, hip voters. But he also won because his troops on the ground brought lower-income supporters to the polls.

It's the latter group Obama appeared to be concerned about in a December video address outlining the role technology will play in his stimulus plan.

"Every child should have the chance to get online… because that's how we'll strengthen America's competitiveness in the world," he said.

He knows that during his predecessor's two terms the United States has fallen from fourth to 15th in broadband penetration, according to the Organization for Economic Cooperation and Development (OECD). Obama also realizes that when more than 40 percent of the nation's homes lack broadband connections, it impedes our ability to compete globally. Indeed, a 2007 study by MIT and the Brookings Institution calculated that each percentage point gain in broadband penetration would create 300,000 jobs.

In November, the U.S. economy experienced its worst unemployment increase in 34 years, shedding more than half a million jobs.


So Obama's call for "21st century schools" for our children certainly makes for "shovel-ready" projects, the term in vogue to describe infrastructure programs worthy of the proposed $400 billion stimulus. Throw in support for public libraries, and you've certainly taken giant steps toward addressing the digital divide.

It's the steps beyond those, however, that worry me, because they only set up a titanic clash between public and private interests.

Stimulating municipal wireless broadband, rolling out rural broadband, and ensuring net neutrality are all necessary elements to any 21st century American competitiveness.

All three areas faltered under the Bush administration, despite its lofty insistence on promoting broadband, because it mainly served the private interests—to which so many of its officials are now turning for industry and lobbying jobs.

Cable and telco operators—the primary broadband providers—lobbied successfully on issue after issue. In numerous state legislatures they won the right to statewide franchises, without making even the slightest concessions to the public interest (state lawmakers in Wisconsin, for example, allowed my local cable operator in Madison, Charter Communications, to push the city's public access channels so high up in its lineup no one will ever find them).

At the national level, they have pushed around the FCC, stalled on net neutrality and fought any type of accurate broadband penetration reporting.

It took major PR debacles, such as the Comcast rate throttling charges raised only after an Associated Press investigation more than a year ago, for the FCC to even issue a reprimand.

And now these very companies are wallowing in debt, while ranking among the worst in customer service in all industries, according to Forrester Research's recent annual Customer Experience Index.

The St. Louis-based Charter, the nation's fourth-largest operator with more than 5 million subscribers, makes an excellent Exhibit A.

Its stock is worth pennies, slowly crushed by a $20 billion debt load. Meanwhile, the 4,500 consumers Forrester surveyed rated Charter the absolute lowest of 114 companies in customer service.


But as abysmal as its performance has been, Charter and its peers, including telco providers, can claim they made the largest private infrastructure investment in U.S. history by spending tens of billions over the past two decades building out the nation's broadband plant.

They did so in a regulatory environment that ensured private sector stability with a minimum of public sector interference. In short, they built the pipes to make money and now they're almost broke, despite what they charged us (much of which, don't forget, went to media conglomerates as fees to carry their ESPNs, CNNs and MTVs).

So what's our audacious crusader to do with his public mandate and the precedent established by his predecessor's $70 billion public bailout of the financial sector?

Does he pull an FDR and publicly steamroll the problem, cutting into private sector profits, or does he try to collaborate with the broadband industry?

Silicon Valley big shots are holding Obama to his pledge to name the nation's first chief technology officer to coordinate investments and research, which means we may finally have something approximating a national broadband strategy.

Also, as this column went to press, lame-duck FCC Chairman Kevin Martin announced he is looking for two votes to join him at their final meeting Jan.15 to give free broadband a boost. The FCC's Advanced Wireless Services (AWS) plan would auction off frequencies to a bidder ensuring up to a quarter of the spectrum would be allotted to free broadband, with a 768 Kbps minimum download rate.

Hope or hype, Obama's broadband promises will soon be tested as he names his own FCC and readies his broadband shovel.

Will Workman is a former editor of telco industry publications Cable World and MediaView. He is now working on his Ph.D. in mass communications. He can be reached care of TV Technology.