NCTA Executive Laments 'Distortions' of Government Subsidies, Seeks Change

“The glacial pace of our progress is something that is frustrating for an industry that continues to put private capital into building and improving its own networks,” Assey said of having to compete against companies receiving government subsidies. “The cable industry in particular, we’ve built out to 93 percent of all households in America, largely without any government financing, DOCSIS speeds are hitting a gigabit and the next generation will have multi-gigabit speeds.” He blasted the “distortions” in the regulatory regime and urged policymakers to work to “unleash” private investment more. “I fear that we’re moving too slow on a lot of these areas,” he said. “We need to take a more sobering assessment of how we promote efficiency in the system and really redouble our efforts in that regard.”

Assey pointed to how NCTA members, naming Comcast and Cox, engage in serious work to increase broadband adoption. The focus “is to really try to work outside of the idea of a government program,” he said. This government involvement is “only one factor” and for broadband-focused programs to be effective, there’s need for “holistic” approach, “to show there is value in a broadband connection and really moving the needle in that regard,” he said. “We have to get more participation.” He criticized the “regulatory barnacles of requirements” -- such as the eligible telecom carrier certification that companies need to provide Lifeline -- “that really make no sense to me in this modern age.” He also urged fiscal prudence and wants the debate of a Lifeline budget cap “sooner rather than later.”

“We’re going to spend a huge amount of political capital” on that debate now and it would be revisited in 2017 anyway, Gig.U Executive Director Blair Levin countered. He called for work now on the Lifeline program’s efficiency and waste, fraud and abuse, and then a focus on budget discipline in 2017 and work to “right-size” the program.

Assey also criticized what he sees as “continuing problems over time” at the Rural Utilities Service. “It really goes to underscore the problem of essentially in a competitive space deciding you are going to provide a loan to one party and not another. Not only are we loaning to one carrier over another but that is essentially going to prevent us from incenting more capital in that area.” He blasted the “vicious cycle” between RUS and USF. There’s need for “trying to impose some discipline on RUS” to remove it from the business of “trying to subsidize competition,” he said.

Panelists, including Levin and FCC Commissioner Mignon Clyburn, lauded the experimentation underway to improve people’s broadband connection. “It’s a bit risky for a regulator to talk about experiments,” Clyburn said, referring to the headlines that appear when experiments fail. “But those are risks we need to be increasingly willing to take.”

Gregory Rosston, deputy director of the Stanford Institute for Economic Policy Research, and Bradley Wimmer, economics professor at the University of Nevada-Las Vegas Lee Business School, emphasized ways to make Lifeline more effective. The program has “really been an effective income transfer program,” Rosston said: The logical conclusion “is to try to institute a voucher program based on income.” Wimmer agreed on Lifeline. “What I worry about is it becomes a straight income transfer program,” he said. “There are other programs that are better suited for income transfers.”

“The big thing that everybody misses is how much more efficient would government be if it knew that everyone was online,” Levin said. “The savings to the government in its own role as enterprise in the billions and billions if not tens of billions of dollars.”