Broadband Seen as Catalyst

3Com, Palm chairman Benhamou says deployment could boost tech sector.

Illustrating the inextricable ties between the technology and telecommunications industries, Eric Benhamou, chairman of the board at 3Com Corp. and Palm Inc., urged policy-makers last week to stimulate broadband network deployment as a means of bolstering the tech sector. The best way to stimulate broadband deployment, Benhamou said, is to give incumbent telephone companies greater incentives and fewer regulatory requirements.

The telecom recommendations from the Silicon Valley stalwart come at a time when lawmakers, preoccupied with fighting terrorism, have shelved almost all other policy initiatives. Formulating new telecommunications policy is not a priority in Washington now. However, the interests of the telecom and technology sectors, like the interests of most of the countrys major industries, have found their way into debates on anti-terrorism measures and on the pending economic stimulus package.

In an address delivered last week at the New America Foundation, a nonpartisan think tank in Washington, Benhamou said that if there is one thing that can be done to re-energize the technology sector, it would be accelerating broadband access deployment.

The rate and quality of deployment since the Telecommunications Act of 1996 have been disappointing, said Benhamou, who is a member of the board of directors at New America. The CLEC (Competitive Local Exchange Carrier) model has failed, in his view, largely because service providers did not offer sufficiently differentiated services.

"The only potential difference is in the marketing of the service and perhaps the tone of voice of the person who answers when you call up the service number," he said.

In addition, ILECs (Incumbent Local Exchange Carriers) were not sufficiently motivated to build their own broadband facilities and offer innovative services, Benhamou said. Because the regional telcos are the only carriers with pockets deep enough to pursue widespread broadband build-out, the government should guarantee a market return on the investment, he said.

"At this point, theres not a lot of money going around," Benhamou said. "Theres only one group [ILECs] that has enough money to fund accelerated broadband deployment."

The surviving CLECs and long-distance carriers remain steadfast in their opposition to allowing incumbent telcos to expand into long-distance broadband services without first demonstrating competitive conditions in their local markets.

"Going back to remonopolization of the infrastructure is not the way to go," said Bonnie Van Fleet, spokeswoman for the Competitive Telecommunications Association, in Washington. "Whoever can throw the most money at the problem wins? I cant believe that is the way wed like to see things go."

Calling the ILECs track record "appalling," Benhamou said regulators would have to require complete transparency of their financial statements. "It is too easy right now for ILECs to come and whine to the [Federal Communications Commission] and their congressmen and say, Im not making any money," he said. He set forth several other principles to guide policy-makers in re-energizing broadband deployment, including technological neutrality and stronger copyright laws to encourage multimedia applications.