Turning a Blind Eye to Wi-Fi

Two decades ago, the chattering classes fretted about economic upheaval rising from Japan and the Asian Tigers. They feared an invasion of cars, microchips, and karaoke that would take away American jobs, take over U.S.-dominated industries, and shift cultural norms. In the 1990s, America responded with a boom in high technology and Hollywood exports. But a revolution is again brewing in places like Japan and South Korea. This time it's about "broadband" -- a technology that, in terms of powering economies, could be the 21st century equivalent of electricity. But rather than relive the jingoism of the 1980s, American policy makers would be wise to take a cue from the Asian innovators and implement new policies to close the digital divide at home and with the rest of the world.

Most people know broadband as an alternative to their old, slow dial-up Internet connection. These high-capacity data networks made of fiber-optic cables provide a constant, unbroken connection to the Internet. But broadband is about much more than checking your email or browsing on eBay. In the near future, telephone, television, radio and the web all will be delivered to your home via a single broadband connection. In the not-so-distant-future, broadband will be an indispensable part of economic, personal, and public life. Those countries that achieve universal broadband are going to hold significant advantages over those who don't. And so far, the United States is poised to be a follower -- not a leader -- in the broadband economy.

American residents and businesses now pay two to three times as much for slower and poorer quality service than countries like South Korea or Japan. Since 2001, according to the International Telecommunications Union, the United States has fallen from fourth to 16th in the world in broadband penetration. Thomas Bleha recently argued in Foreign Affairs that what passes for broadband in the United States is "the slowest, most expensive and least reliable in the developed world." While about 60 percent of U.S. households do not subscribe to broadband because it is either unavailable where they live or they cannot afford it, most Japanese citizens can access a high-speed connection that's more than 10 times faster than what's available here for just $22 a month. (Japan is now rolling out ultra-high speed access at more than 500 times what the Federal Communications Commission considers to be "broadband" in this country.)

The economic ramifications are profound. "Asians will have the first crack at developing the new commercial applications, products, services, and content of the high-speed-broadband era," writes Bleha. Already, South Korea, which leads the world in the percentage of its businesses and homes with broadband, is the number one developer of online video games -- perhaps the fastest-growing industry today. What's more, societies in which broadband use is near-universal will adapt to its uses much more quickly than those where access is available only to the well-to-do few.

The countries surpassing the United States in broadband deployment did so by using a combination of public entities and private firms. The Japanese built their world-class system by ensuring "open access" to residential telephone lines, meaning competitors paid the same wholesale price to use the wires. The country is also establishing a super-fast, nationwide fiber system via a combination of tax breaks, debt guarantees and subsidies. But of particular note, the Japanese government also encouraged municipalities to build their own networks, especially in rural areas. Towns and villages willing to set up their own ultra-high-speed fiber networks received government subsidies covering approximately one-third of their costs.