Dr. Larry Darby of ACI Shares Economic Side of Broadband Competition

In light of the upcoming FCC Broadband Workshop: Economic Issues in Broadband Competition, Senior Fellow of American Consumer Institute Dr. Larry Darby shared his perspectives on broadband competition and the economy this week.  Dr. Darby is not only a scholar with ACI, but also a trusted advisor to the technology sector, a former FCC bureau chief and a long time demand-side economist.

Dr. Darby began by stating that although the FCC maintains that there is not enough competition in the broadband space, this does not, in fact, translate into market power for broadband providers.  He believes that our growing wireless networks (3G, 4G, etc.) are leading to substantial competition and that the main constraint for wireless is in government, not the marketplace.

Particularly if the goal of the FCC is to improve entrants into the broadband market, Dr. Darby believes that FCC should not increase regulation.  He believes the best thing the FCC can do is to create a regulatory climate that will lead to an increase in risk capitol in technology and innovation.  Based on Pew data, he also noted that barriers to entry are computer ownership and digital literacy, and so attention should focus on maximizing consumer welfare, and not on broadband supply.

In the Q&A portion of the call, I asked Dr. Darby to share his thoughts on the role of broadband in improving our economy as a whole.  Dr. Darby was grateful for the question, as he believes that the government will need to look beyond traditional fiscal and monetary policy to fix our recession to broadband.  His response:

“The third path for the economy would be to make certain government policies spur growth of sectors that create wealth, income, and productivity – like broadband.  Lots of studies show that investing in broadband will create jobs, a better environment, and more efficiency.  Most [economic] gains in the past can be attributed to the growth of the communications industry.”

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