Internet regulatory policy and the “middle mile”

The notion of a government-subsidized Internet is enormously appealing to many, and nearly everyone in the media, so it always gets a lot of hype. There are, in fact, some programs to provide broadband subsidies, ranging from the limited U.S. rural subsidy program to the incredibly ambitious Australian new broadband network initiative.

We see few signs of any real trend toward general subsidization, however. Both the U.S and Australian programs are aimed primarily at dealing with the challenging economics of broadband where economic density is low. In the U.S., the FCC’s just-issued Notice of Inquiry (NOI) on the annual broadband report to Congress suggests that while the Commission is looking deeper into what broadband is and who has it, the changes are tiny steps not likely to generate revolutionary results any time soon.

We believe that in any event, the complexity of defining the real performance of broadband Internet services (which depend on access speed, oversubscription in the metro network and Internet peering performance, among many variables) will make it difficult to provide any meaningful subsidies. We wonder if either the U.S. or Australia has considered this “middle-mile” question adequately.