A broadband solution to fiscal crises

By Reed Hundt and Blair Levin

After Congress and the White House close the gap between the Democratic and Republican approaches to the “fiscal cliff”, there is another gap that they need to bridge: the gap between how the worlds of technology and government approach the future. 

In the world of tech, the imperative is to deliver goods and services faster, cheaper and better.  In the current policy debate, the government is trying to figure out how to raise more money while also cutting the level of service.  If government were a business, this would be a strategy to expand margin. That’s not bad, but shrinking margins are usually lagging indicators of problems with the top line. For government, the analogy is that if the economy were growing steadily and strongly, then even without recession-inducing tax increases, spending could be more durably directed to commonly desired goals.

Our debate could then focus on whether and how to spend on an adequate safety net for the old, poor, and sick; sizeable research and development in multiple sectors; upgraded infrastructure; national security; deficit reduction. In short, we could have the sort of strategic investment discussion that any healthy business conducts annually, bearing in mind the resources available.

The opportunities for top-line, technologically driven growth – funded primarily by the private sector -- are huge.  According to Forbes Magazine, the $3.9 trillion education market -- $1.3 trillion in the United States alone -- is about to be radically transformed by a new breed of venture-backed disruptors. Almost half of the education venture deals in the last decade have closed in the last two years. Investments in digital healthcare start-ups in 2012 are up 73% from last year. Healthcare start-ups exceeded all other sectors, including software, as the largest recipient of angel investments. Our carriers have raced to deploy high-speed mobile and fixed broadband networks. On these new platforms, e-education, e-health ventures and all manner of e-services based on government data can proliferate.

The principal role of government in driving this growth is to remove obstacles to for-profit investment. That is the same as the role of government, memorialized in the bipartisan 1996 Telecommunications Act, when a trillion dollars of private investment built Internet 1.0 from the mid-90s through to the early 00’s. That investment was the primary reason that the Clinton Administration ended its second term with a surprising string of budget surpluses, even after a 1997 tax cut.

Obstacle removal then, as now, depends on:

  • a coordinated government support of Schumpeterian competition as a policy, practically the religion of Silicon Valley,
  • the creation of a toolkit comprising national deregulation of previously rate-regulated markets, as in the case of aviation, transportation, and telecommunications,
  • preservation of competition,
  • clear definitions of public interest outcomes,
  • sound tax policy,
  • flexible adoption of various public-private partnerships,
  • eschewing of big government management,
  • privatization of some public functions,
  • and very modest but innovative public spending.   

Using such tools, government should expedite the transmuting of education, health care, and all public services from analog to digital forms. It should reward states, municipalities, schools, clinics, doctors, and hospitals for winning the race to convert to secure data exchange platforms that enable personalized education and health care. Government, like any large business, should aggregate its purchases, and hasten its conversion to cloud-based service creation and delivery.

Similar goals, and methods, will permit investors to fund the rapid move from a carbon-intense power platform to a sustainable, efficient, and cheaper energy economy.

In their post-election lunch, President Obama and Governor Romney focused on “America’s leadership in the world and the importance of maintaining that leadership position in the future.”  For the two political parties that voters have joined in a forced and loveless marriage, common ground lies in deciding how to foster the economic growth that austerity measures alone cannot deliver.  High on the list of goals must be rapid progress in creating and delivering bandwidth-based services.

Reed Hundt was chairman of the Federal Communications Commission from 1993 to 1997. Blair Levin oversaw the creation of the National Broadband Plan and is now a fellow at the Aspen Institute Communications and Society Program. Their e-book, "The Politics of Abundance: How Technology Can Fix the Budget, Revive the American Dream, and Establish Obama's Legacy" details the plans in this article. See www.politicsofabundance.com for a slide presentation, or download the e-book from any major e-publishing site.

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