New Democrat Update

GETTING COLORADO MORE BANDWIDTH

Providing greater low-cost, high-speed Internet access (otherwise known as broadband) to more people has become a critical factor in a state's prospects for economic growth and a better quality of life. Broadband boosts productivity by moving data faster between businesses and consumers, as well as between and within companies.

In fact, according to one estimate, information technology has 3-5 times the impact on productivity than more traditional sources of capital - like buildings and equipment. Organizations will be better able to automate more of their internal operations, as well as collect more data to improve services and reduce costs. Between 1998 and 2002, communities with access to broadband services generated more employment, a higher number of businesses and more economic activity in the information technology industry - which pays 84 percent more than other jobs.

More Coloradans will be able to work from home, reducing traffic congestion and decreasing pollution. It will transform distance learning with rich multimedia content, on-line testing and other powerful tools, especially for children in remote locations and those with physical and mental disabilities. Doctors will be more able to effectively treat patients in isolated areas of the state. It will also strengthen homeland security through better and faster data connections between government agencies and the private sector.

Unfortunately, broadband is too expensive or not even available in many parts of the state. Those areas are clearly falling short of their full economic potential.

A more vibrant marketplace will introduce a whole host of new products and services that can be offered to businesses and homes. The benefits to the economy and society could be similar to those obtained when the nation was wired for electricity and the Interstate Highway System was built.

Achieving greater availability and lower prices for broadband requires public policies that recognize the realities of today's telecommunications marketplace. State government must set new market rules that create more competition and choice from service providers. To get that done, the cable franchising processes must be overhauled.

Colorado's current process assumes that cable service is a natural government-sanctioned monopoly. Like other infrastructure-dependent products (telephone, water and electricity), policymakers believed that allowing more service providers to build additional competitive networks was economically redundant and unnecessary.

A service provider receives the exclusive right to offer cable TV services to all residents within the town. In return, the service provider pays a percentage of revenues to the local franchising authority, usually a municipality.

Satellite television (for example, DirecTV and Dish Network), which is not subject to these legal requirements, and other new technologies have made these franchising laws obsolete. Clearly, if Colorado is to realize more of its full economic potential, its legal and regulatory regime must catch up with today's marketplace.

What once may have been a “natural” monopoly has turned into an unnecessarily government-protected one. Requiring service providers to go through the time-consuming process of getting franchise agreements, community-by-community, results in something much different than a dynamic and competitive marketplace.

Promoting more competition will benefit consumers of cable, the Internet and telephone services. The evidence indicates that, because high-speed Internet services are often bundled with video and phone service, increased competition in the cable television market will stimulate broadband deployment and subscription.

To move Colorado's telecommunications infrastructure into the 21st century, as recommended by the National Conference of State Legislatures, cable franchises should be available from state government, as well as from local governments. The results in other states have been impressive.

In Texas, where statewide franchising was first made available, video services grew eight times faster than the rest of the country. It has also helped smaller phone companies bring service to rural areas of the state. For example, Southwest Texas Telephone Company of Rocksprings deployed 125 miles of new cable in six rural counties.

Statewide franchising has also been beneficial for small towns. In Virginia, a municipality of only 12,000 residents is getting local and long distance telephone service, high-speed Internet service and over 150 digital channels from a new competitor at a price that is $50 less than the existing service provider.

Of course, more competition will also drive down rates for cable television service, which has risen by 93 percent from 1995 to 2005, according to the Federal Communications Commission. The congressional Government Accountability Office estimates that rates are almost 16 percent lower where competition exists.

The level of economic activity that will be generated from opening up this market is considerable. If implemented in Colorado, economists Robert Shapiro and Kevin Hassett estimate that the state will experience between $700 million and $1.2 billion in new telecommunications infrastructure investment over the next ten years. Shapiro and Hassett write:

“These new systems will create a “virtuous cycle” in which everyone should benefit: By increasing the number of video channels available to consumers, these new systems will increase demand for the services; the telcos' new competition for established cable television and broadband providers will drive down the prices consumers pay, increasing their use of these services; and the higher revenues produced by increased demand and usage will raise the franchise fees collected by local governments.”

Colorado's policymakers cannot pass up that deal.

MAKING GOVERNMENT WORK SMARTER

Voters want real public policy solutions but deeply fear government will only make the problems worse. Progressives must realize that building more support for activist government requires reinventing the public sector so that it is more responsive to those it serves and more accountable to taxpayers.

Governor Bill Ritter has launched a top-to-bottom examination of how state government can more efficiently and cost-effectively deliver services. Wisely, the initiative, known as the Government Efficiency and Management (GEM) project, will embrace innovation and involve state employees in the process. All members of the public and every state worker will be invited to participate and offer suggestions.

“Employees will be our partners,” Ritter said. “Front-line employees understand better than anyone how government works, and how it can work better. We need their good ideas, and then we need to make sure those ideas see the light of day and get put into action.

“GEM is about improving quality, streamlining services and eliminating redundant programs. It's about finding new, innovative and smarter ways of delivering essential service so that we are more efficient and effective in how we manage state government. It's about making sure the people of Colorado have an efficient government that serves them, not a government that serves itself.”