Any FCC Reliance on Harvard Study Would Damage the National Broadband Plan’s Credibility

November 16, 2009

The FCC’s non-competitive-bid, sole source contract with the Harvard Berkman Center to “conduct an independent review of broadband studies to assist the FCC” with the National Broadband Plan — appears to have been a near complete bust.

  • The quality of the Berkman study is so poor, so riddled with key factual errors, so devoid of balance or objectivity, and so dependent on fatally-flawed economic analysis, that the FCC should not risk dragging down the credibility of the entire National Broadband Plan by relying on it in any way.
  • The National Broadband Plan is too important a purpose, process, and effort to get right for the Nation to cut corners like the Berkman study routinely did.

A summary of some of the critical flaws/errors of the Harvard Berkman study follow:

NTT-Japan commented that the Berkman study was “seriously in error.” Specifically NTT said: First, facilities based competition, not unbundling, has been the key to broadband growth in Japan.” … “Second, the report mistates the importance of ‘government-subsidized loans’ to the success of broadband deployment in Japan.” … “Third, the Berkman Center’s draft study is internally contradictory.

France Telecom found the Berkman Center section on France to be “factually incorrect.” Specifically, France Telecom said: “There are numerous factual mistatements made in the study regarding broadband deployment and developments in France.”

Liberty Global, a leading international cable operator that serves customers in 14 countries concluded the following about the Berkman study: “A single ‘one-size-fits-all’ recommendation is not credible in respect of different market starting points and different investment and competition dynamics. Open access has been outperformed by Infrastructure Competition in the 1st generation broadband market in Europe. Leveraging open access experience from 1st generation broadband to the Next Generation Connectivity market is a big leap of faith.”

The comments of George Ford of the Phoenix Center exposed the Berkman study for committing the “grossest of econometric errors.” Moreover, in the Berkman analysis, “the supply curve is downward sloping! This result implies that as broadband prices rise network operators supply less broadband. Intuitively this result makes little sense, violates the law of supply, and muddles interpretation.” … The economic and econometric analysis in both are clumsily conducted and incorrectly interpreted, rendering them unsuitable for use in formulating public policy.

The comments of Randy May of the Free State Foundation state: “The Berkman study does not accomplish its intended purpose. It fails its purpose because it does not provide a complete and objective survey of the subject matter and because it does not accurately or comprehensively summarize the broadband experiences of other countries. … A principal failing of the Berkman study is… it simply ignores several studies by well-respected economists concluding that the U.S. experience with FCC-mandated network unbundling regulation resulted in diminished network investment by both incumbents and putative competitors…

The comments of Tom Lenard of the Technology Policy Institute state: ” the study is incomplete and not objective; therefore it does not accomplish its intended purpose. … Indeed, if the Commission acts on the study’s recommendations, it will adopt measures that are likely to inhibit broadband deployment.”

In sum, the Harvard Berkman broadband survey is like a makeshift raft thrown together with poor quality materials and sloppy craftsmanship; it simply can’t be counted on to carry the heavy weight of credibility required to get the FCC to the goal of producing a National Broadband Plan that actually meets the needs of Americans.

  • To the extent the FCC relies on the Berkman study to try and accomplish its broader purposes, the study could prove to be less of a vehicle of support for the plan, and more of an unnecessary anchor dragging down broad potential support for the FCC’s broadband recommendations.
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