Posts by Scott Wallsten
71 economists explain why the National Telecommunications and Information Administration and The Rural Utilities Service should use competitive procurement auctions to allocate the broadband stimulus grants. The economists, in comments submitted to the NTIA and RUS, explain “why procurement auctions are more efficient and more consistent with the stimulus goals of allocating funds quickly than a traditional grant review process.”
The signatories are economists who have studied telecommunications, auctions, and competition policy and include two Nobel Laureates and three winners of the John Bates Clark medal for the best economist under 40. The comments were coordinated by Paul Milgrom, Gregory Rosston, and Andrzej Skrzypacz of Stanford University, and Scott Wallsten of the Technology Policy Institute. Thomas Lenard of TPI is one of the signers of the comments.
The newly enacted economic stimulus package includes $7.2 billion in grants, loans, and loan guarantees to bring broadband to rural areas lacking high-speed Internet services. The American Recovery and Reinvestment Act of 2009 charges government agencies not only with choosing grant recipients and setting performance benchmarks, but also with measuring results. Only a carefully preplanned evaluation strategy will enable them to accurately assess the effectiveness of the broadband stimulus.
TPI vice president for research and senior fellow Scott Wallsten finds that the government’s DTV coupon program has increased the price of digital-to-analog converter boxes by $21-$34, meaning that the subsidy is primarily benefiting retailers rather than consumers. The $40 coupons made available to all households means that consumers pay $0 for any retail price less than $40 for eligible boxes, thus diminishing price competition among retailers.
Thank you for inviting me to testify today. I will make the following points. Broadband deployment and growth in the United States is strong, and we compare favorably to the rest of the world, despite conventional wisdom. There is no crisis and no apparent market failure. We can take the time to come up with an intelligent national broadband policy to ensure continued investment and innovation in this critical infrastructure.