There’s been a lot of discussion recently centered on the FCC’s proposed broadband plan.   Proponents hope it will finally bring universal broadband to rural Americans, while opponents claim it won’t do enough to increase competitive market forces.   However one decides to look at the existing proposal, its important to consider historically similar situations when predictively weighing the results of any potential plan.   So let’s attempt to broadly define the government’s role in the current telecom revolution by considering the past.

Almost a century ago, during the last telecommunications revolution, AT&T grew into a monopoly whose existence was ultimately challenged by the U.S. government under the Sherman Antitrust Act.  The company was denying small, local telephone companies access to its network – effectively limiting their ability to compete in the long-distance market.  In 1913, AT&T settled the government’s suit by agreeing to concessions that included a 10% cap on overall profits (after taxes), divestiture of its telegraph business interests, and connection of independent local telephone companies to its long-distance network.  By settling with AT&T, the government effectively sanctioned AT&T’s monopoly for decades to come.

But wait…aren’t monopolies bad?  Why did the government permit this?

Well, certainly when unregulated monopolies tend to mitigate the benefits of capitalism.  But the government didn’t let AT&T operate unregulated.   In fact, the terms of the agreement ultimately had several positive outcomes for both the public and AT&T.  Local telephone companies emerged and thrived.   Also, the company was forced to spend excess profits on infrastructure and research projects.   Ever hear of Bell Labs?   As AT&T’s primary research arm and recipient of much of the cash above that 10% threshhold, the facility was responsible for many of the 20th century’s greatest and most revolutionary discoveries in electronics and science – several resulting in Nobel prizes.   Without the invention of the transistor at Bell Labs in 1956, the entire computer revolution may never have happened.  Imagine that before second-guessing the government’s decision towards this monopoly.  And in exchange for its massive investment in national infrastructure, the government let AT&T monopolistically operate to recoup its costs via years of guaranteed profits due to lack of national competition.

Now let’s apply this historical example to today’s national broadband situation.   Just as was the case a century ago, Internet access, like telephone access before it, should be available to everyone.   And clearly the government agrees – having compiled the most recent revision of its national broadband plan.   In my mind it’s hard to justify the case where denial of this basic infrastructure service, like electricity or clean water, doesn’t negatively impact an individual’s access to upward socio-economic mobility.

But today, several companies (some of which grew from AT&T’s ultimate government induced break-up in the 1980′s), including Comcast, Verizon, and AT&T amongst others, have effectively garnered regional monopolies or dualopolies in which consumers seeking broadband services have little choice, if any, about the provider from which they buy Internet service.   And these companies, acting on behalf of shareholders, can’t justify the capital expenditure necessary to truly provide ubiquitous service, like that offered by the PSTN even in rural regions, to all Americans.   They continue to raise prices for services that, as technology advances and efficiencies increase, should get cheaper to provide – a clear sign of few competitive market forces.

This is where the government should open its historical play book.   Impose regulations on the largest monopolistic Internet service providers broadly similar to those imposed on AT&T during the last technological infrastructure revolution.   Don’t try to force competition or service expansion plans upon them.  Impose profit limits that force reinvestment in infrastructure and research – thus possibly enabling them to discover tomorrow’s world-changing technology.   Let them recoup the massive expense incurred in deploying their existing and future national networks without trying to fight off rivals seeking to piggyback on their nationally beneficial infrastructure investment.  Smaller potential rival network deployments won’t be able to profitably compete with the scalability and efficiency of these national companies.  Allow market forces under these regulations to dictate where and when these companies expand their networks until every home in America is connected to the Internet via a robust broadband connection.

Then, after our national broadband network exists, re-evaluate these regulations and act accordingly at that time.   By then, we may be in the midst of trying to figure out how to deal with the next technological revolution.