It seems as if bailouts for Wall Street and Detroit automakers aren’t enough. According to the Washington Post, “President-elect Barack Obama has said getting affordable high-speed Internet service to every American home would create jobs, fuel economic growth and spark innovation.” So the telecommunications industry is taking advantage of this by joining the trek to Washington looking for some bailout help to make universal broadband a reality.
Bailouts for any industry are a bad idea for two reasons. Either bailouts are called for to deal with problems that they won’t solve, as is the case with the auto industry; or they are called for to solve problems that don’t exist, as is the case with broadband.
The United States is near the top of the list in broadband accessibility and speeds. Statistics to the contrary are either skewed or don’t take into account the geographic diversity of our country. To the extent we need to improve in this area, what the government needs to do is eliminate and prevent regulations like net neutrality, which hurt investment in our fiber and wireless infrastructure.
Subsidies and tax breaks always hurt consumers because they are designed to thwart the collective will of consumers. When people say the market has failed and it needs more regulations or subsidies, what they are really saying is that they don’t like the decisions that consumers are making. And that they are going to do something about it.
In this case, if broadband access isn’t universal, it is because consumers have chosen not to make it so. Either they don’t want it at the current price, or they don’t want it at all. Subsidizing broadband doesn’t make it any cheaper; it just shifts the costs from consumers to taxpayers, which happen to be the same group of people. So even though consumers don’t want universal broadband at its current price, they would be forced by the government to pay for it through subsidies as taxpayers.
– Bill Peacock