The Bush Administration’s Broadband Policy Record

November 11, 2002 • TechKnowledge No. 43

Almost two years into its term, it is difficult to draw any definitive conclusions about the Bush Administration’s broadband policy record for a simple reason: there isn’t much of one. Although the administration has supported a handful of minor technology initiatives, its first 20 months have been characterized by a lot of talk but very little action.

Of course, it should be noted that technology policy in general was never going to be a top priority of this administration. The current team came into office with other concerns (i.e., education, Social Security, and tax reform), and after September 11, 2001, combating terrorism became an all‐​consuming task. Although those goals are laudable, their execution remains riddled with problems. Moreover, in the wake of the Enron and WorldCom fiascos, the White House is likely to be concerned about seeming too close to industry in general and has gradually disengaged from specific regulatory policy debates.

Nonetheless, as the tech and telecom meltdown lead the broader economy into a recession, the administration’s lack of leadership has been surprising. The administration’s response to this accusation could be two‐​fold. On one hand, they might argue that the current telecom downturn has more to do with market factors than regulatory causes and that there is, therefore, little or no “leadership” role for the government to play.

That would be a weak argument, given that we’re not starting with a blank slate. The telecom sector remains one of the most heavily regulated segments of the American economy. As Greg Sidak of the American Enterprise Institute has pointed out in an eye‐​opening new study, the past six years have seen a steady increase in regulatory spending and rulemaking at the Federal Communications Commission as agency spending has risen 37 percent and the number of pages in the FCC Record has tripled in the wake of the supposed deregulatory Telecommunications Act of 1996. To make matters worse, the number of telecom lawyers‐​as measured by membership in the Federal Communications Bar Association‐​grew by 73 percent in the late 1990s.

There is no denying that those statistics illustrate a continued and growing role for regulators in the telecom sector. And unless the Bush administration is prepared to make an argument that this increased regulatory activity is beneficial to this sector and the broader economy, the only logical conclusion is that something needs to be done to address the growing regulatory burden the industry faces. In fact, Jeff Eisenach, president of the Progress and Freedom Foundation, has argued that the administration’s “no policy is good policy” approach to this problem threatens to delay the recovery. “The Bush administration’s actions will determine how quickly the tech sector gets back on its feet,” Eisenach argues, but he fears that no one appears to be listening.

To counter that accusation, the administration would likely acknowledge that there is a public policy problem but claim to be addressing it. As proof of their leadership, they would likely cite a handful of speeches or other statements such as the June 13 release of the president’s long‐​awaited technology agenda, entitled Promoting Innovation and Competitiveness. Regrettably, that agenda is long on rhetoric and short on substance. To be fair, the Bush tech agenda does outline some objectives or accomplishments that are important to the high‐​tech sector, including tax relief, modernization of technology export controls, new trade promotion authority, accelerated depreciation schedules for capital investment, and the extension of the moratorium on Internet access taxes. But although these priorities might have some tangential impact on industry recovery, the administration appears to be dancing around the much more important issue of how the telecom sector and broadband technologies will be governed in the future. On this matter the administration’s technology agenda is largely silent.

Instead, industry leaders who had hoped the administration would articulate a clear and bold agenda for reform have instead been offered a continued string of platitudes about the importance of broadband. “This country must be aggressive about the expansion of broadband; we have to,” noted Bush when announcing the agenda. And in a February 21 speech to tech leaders in San Jose, California, Vice President Richard Cheney told the crowd, “As this technology progresses, we’re committed to keeping America the world’s leader in developing new broadband technology and applications.” Well that’s all very nice, but to borrow Wendy’s advertising slogan from the 80s, “Where’s the beef?” The administration’s broadband policy is tantamount to a “no‐​risk non‐​policy” in the words of Competitive Enterprise Institute senior fellow James DeLong. Apparently taking a page out of the old Bill Clinton playbook, the Bush crew seems to think that if they say they “feel our (broadband) pain” enough, we’ll think that counts as legitimate leadership.

The vacuous rhetoric and the leadership vacuum at the top must be getting awfully embarrassing for those people throughout the administration who really understand what’s at stake, especially FCC chairman Michael Powell. Powell has set forth some fairly bold policy initiatives that have big‐​government types inside the Beltway apoplectic. Some of the proposals could radically alter the face of modern telecommunications policy for the better but are encountering stiff resistance from the typical cast of characters in industry and on Capitol Hill who consistently oppose any form of telecom reform.

What’s worse is that Powell’s reform agenda is now also being opposed by forces within other independent regulatory agencies. For example, the Small Business Administration’s Office of Advocacy sent Powell a letter on August 27 informing him that it opposed the current FCC liberalization efforts on the grounds that it might hurt small Internet service providers. In addition, earlier this year, the General Services Administration filed comments with the FCC notifying Powell that they did not agree with the deregulatory thrust of his telecom policies. Apparently officials at the SBA and GSA think the answer to America’s telecom and broadband problems is more regulation, not less.

Here’s where genuine leadership is needed from high up in the Bush administration. The president should invite Powell to the White House, stand next to him on the podium, and declare his across‐​the‐​board support for the deregulatory proposals that Powell has been willing to put on the FCC’s agenda. With hostile forces on Capitol Hill, throughout industry, and even within his own administration threatening to derail this agenda, Powell has likely been wary of proceeding without some substantive show of support from at least his boss. And so the question remains: Will President Bush leave Chairman Powell hanging in the wind, or will he get behind the long overdue effort to liberalize the telecom marketplace?

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