Sunday, July 17, 2016

U.S. telecom infrastructure also needs a "public option"

Market forces have rendered telecommunications infrastructure in the United States a balkanized, crazy quilt patchwork. Investor-owned internet service providers naturally gravitate toward locations where there are high concentrations of households with healthy incomes that can afford their service offerings. Since those services are typically vertically integrated wherein the ISPs own the infrastructure, infrastructure is built only where it can generate robust profits over the short term. Everyplace else is left to twist in the wind, redlined off the internet because there is no infrastructure to deliver telecommunications services.

That has led to a deepening crisis as telecommunications continues its rapid shift to internet-based services as legacy telephone companies abandon their copper cable plants constructed many decades ago to support voice phone service.

A similar market dynamic exists in the payer side of health care. Like telecommunications infrastructure, it takes lots of capital to enter the market. Health plan issuers must have millions of dollars set aside to cover the cost of care of their members, particularly if costs exceed projections. They naturally will offer coverage in areas where there are plenty of premium paying members to generate those dollars. In less densely populated areas, those with fewer health care providers and lower population health status, health plan issuers have less incentive to offer a greater variety of plans.

President Barack Obama called out this circumstance in a recent article published in The Journal of the American Medicine Association (JAMA). The president noted that 12 percent of enrollees in states where the federal government operates state health benefit exchanges live in areas where they can choose from among only one or two health plan issuers. For such areas, Obama suggests policymakers revisit the concept of a government operated health plan – the so-called “public option” – that was jettisoned leading up to the enactment of the Patient Protection and Affordable Care Act in 2010. Obama’s call for taking another look at government-operated health plans serving the individual and small group markets comes as one of the law’s mechanisms designed to ensure greater access to coverage -- consumer operated and oriented (CO-OP) health plans – is faltering with most co-ops undercapitalized and deemed insolvent

Given that some 34 million Americans are unserved by modern, internet-based telecommunications infrastructure capable of delivering high-quality voice, data, graphics and video to their homes and small businesses  according to figures released by the U.S. Federal Communications Commission in early 2016, it’s also time for policymakers to seriously consider a public option for telecom infrastructure.

In my recent eBook, Service Unavailable: america’s Telecommunications Infrastructure Crisis, I propose the formation of a government chartered 501(c)(1) nonprofit, the National Telecommunications Infrastructure Agency, to engage in a crash program to build modern fiber to the premise telecommunications infrastructure connecting all American homes and businesses. That’s where America needs to be in the 21st century. Market forces are not up to fully accomplishing the job or as rapidly as needed.

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