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Broadband dearth harms recovery

Will wireless come to the rescue? 02/01/28 ReleVents hed: Broadband dearth harms recovery dek: Will wireless come to the rescue? by James Mathewson

A couple of years ago, I coordinated a technology conference whose keynote speaker was a noted tech entrepreneur who shall remain nameless. Suffice to say that this guy had started several successful tech ventures, got them up and running, and sold them at top market prices. His new pitch was an application service provider business, and his talk related to how the new model would be the next big thing in the technology sector. His engaging style had the crowd on the edge of their seats as he explained how businesses would abandon their legacy client/server systems and rent applications from service providers. It all depended on one key assumption: Internet bandwidth would soon become a non-issue.

Had he known that bandwidth would still be a big issue two years after he started his business, I’m sure he would not have done so. In the meantime, he has had to completely revamp the business in an effort to survive until the bandwidth crunch eases, if it ever eases. He has already been at the helm of this company longer than he owned most of his other start-ups, and it’s not getting any better. In some respects, it’s getting worse. For two years straight, survival is his primary business goal.

His story echoes throughout the industry. The key source of friction for a recovery in the tech sector is bandwidth. It doesn’t only hurt service providers. Why upgrade your PC if it won’t improve Internet speeds? Why use the Web if traditional channels for content and commerce are more convenient? Why use data for telecom when phones are cheap and clear? CEOs from every corner of the tech sector are calling for the government to do something, anything, to improve the situation. Last week a news item on our site underscored the latest in a long line of lobbying efforts by major tech CEOs to get the government to commit to a plan to address the issue. Neither Congress nor the White House has a plan. What they have instead is a few scattered attempts to improve their constituents’ positions in the market.

The so-called Tauzin/Dingell bill is supposed to enable Baby Bells to provide more broadband. What it will do instead is slow broadband build-out by reducing competition for low-margin DSL business. The FCC’s position on cable infrastructure has caused more consolidation in that sector, which again reduces its incentive to build out broadband. The NextWave wireless spectrum debacle leaves a critical chunk of spectrum in limbo. That spectrum could be used for wireless broadband. And the FCC has not been able to make headway on new sources of spectrum, such as the vast unused military swaths. Nowhere in any of the stimulus packages do we see broadband stimulus, let alone New Deal-style telecom infrastructure investments.

The CEOs are right. We need a plan that will make broadband available to most if not all Americans by 2007. If something is not done soon, the entire tech sector will continue to slow the rest of the economy down rather than spurring it on.

James Mathewson is editor of ComputerUser magazine and ComputerUser.com.

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