The Right Signal on Broadband

High-speed Internet businesses have not exactly been rousing successes. Excite@home and dozens of smaller broadband providers went bust last year, while Global Crossing Ltd., which spent $15 billion building a worldwide network of high-speed lines, filed for bankruptcy Jan 28.

Such flops haven’t stopped broadband providers from spamming Congress and the Bush administration with requests for special favors. The tabling of the economic stimulus bill last week sank the industry’s immediate hopes, but lobbyists are still pitching for government to subsidize wiring every home, hospital and school for high-speed Internet.

So far, the Bush administration is resisting nicely. As Nancy Victory, head of the National Telecommunications and Information Administration, recently said, “Whenever possible, the market, not the government, should drive this deployment.” That’s the right signal. No need to repeat the mistakes of the 1990s, when Congress and the Clinton administration arguably wasted hundreds of millions of dollars subsidizing broadband technologies that were greeted with public apathy. Nearly 80% of households now have potential access to broadband via satellite, cable or telephone lines, but only about 10% have signed up.

Government’s challenge is to steer public investments smartly, not to puff hot air into another Internet bubble.