June 9, 2009

The American Consumer Institute Files Comments with FCC Regarding National Broadband Plan
Highlights the role of the private sector and consumers in achieving universal broadband access

WASHINGTON – The American Consumer Institute yesterday filed comments in response to the Federal Communications Commission’s notice of inquiry on the national broadband plan. In its filing, ACI focused on eight general areas including the role of the private sector, the tax burden on businesses and consumer welfare.

“While many emphasize a supply-side role for government, we believe its real advantages lie on the demand-side,” stated Steve Pociask, president of ACI. “We encourage a government wide focus on users through a variety of demand enabling initiatives.”

In its filing, ACI also suggested guidance for balancing market and government imperfections, and noted that comparative advantages of each must be fully assessed using consumer welfare analysis and a cost/benefit approach.

The filing also calls attention to current tax policies that conflict with stimulating broadband development.

“In our comments, we call attention to the extraordinary tax burdens imposed by state and local governments on broadband networks and services, and the effect these taxes have on the willingness and ability of firms to invest in broadband,” noted Joseph P. Fuhr Jr., senior fellow for ACI. “Such taxes are inconsistent with any reasonable construction of a national policy to promote broadband access.”

ACI’s filing also noted that the future of broadband will include an expanding role for mobile services and noted that a national broadband plan should ensure that the promise of and demand for mobile services are not inhibited by insufficient access to public airwaves and are free of regulatory barriers.

“We spell out the consumer welfare case for allowing operators to tailor service offerings and rate structures to reflect the diversity of consumer demands and preferences,” said Dr. Larry Darby, ACI board member and senior research fellow. “We find that reasonable price differentiation has a long history in the marketplace and that it is an indicator of rivalry, not market power. Poorly designed, if well intended, regulatory efforts to suppress price differentiation will diminish network investment and impose immeasurable costs on consumers,” concluded Darby.

To see ACI’s full FCC filing, click here.

The American Consumer Institute Center for Citizen Research is a 501(c)(3) nonprofit educational and research institute. For more information visit