Bandwidth for the People

Abstract

President Bush recently called for "universal, affordable access to broadband technology by the year 2007." This paper examines the economic strengths and weaknesses of different policies for achieving that vision. We argue that removing price and "unbundling" regulations at the wholesale and retail levels would help increase the diffusion of broadband. Banning Internet access taxes would be beneficial, but we believe such a ban would be less effective than removing these regulatory barriers to competition. We argue against subsidizing broadband to increase penetration because subsidies are likely to result in economic inefficiencies. The study also examines state policies that could be used to enhance the rollout of broadband, including reducing the regulatory burden associated with right-of-way access and eliminating retail price regulation.