Monday, December 15, 2008

Another Bailout Industry Could be Created-- All in the Name of Free

Note: Setting the stage for a wireless czar?

FCC to Consider Next Entity for Taxpayer Bailout

/PRNewswire-USNewswire/ -- If the Federal Communications Commission (FCC) moves forward with plans to create a government-operated nationwide wireless network provider at an up-coming meeting scheduled for Dec. 18, it will create yet another government-mandated entity at risk for failure and future taxpayer bailout.

The FCC plans to use this week's meeting to vote on a proposal to auction 25 megahertz of spectrum to be used as a free national wireless network operated by a single provider, creating a new government sponsored enterprise in the tradition of Fannie Mae and Freddie Mac.

According to the IPI publication, "Should the U.S. Favor a Free Nationwide Wireless Network Provider?"

( 017C8D28CFB862574CE00596D98/$File/NationwideWireless.pdf?OpenElement)

Author and IPI adjunct fellow Solveig Singleton warns the plan is risky.

"This kind of company would not be allowed to fail and therefore sets up a future bailout at taxpayer expense," she says.

The risk of failure is substantial, says Singleton: "The entity will have little flexibility to change business models if it finds itself in trouble."

In the report, Singleton recalls how other failed municipal Wi-Fi plans, including one proposal for the city of Portland, Ore., found the deal uneconomical and unsuccessfully tried to bow out.

Furthermore, in the event the auction winner is headed for bankruptcy and collapse, Singleton warns supporters of the plan if they are prepared to allow the entity to fail.

"Policy makers should keep the federal thumb off the broadband competition scales and stay out of the business of designing broadband business models," Singleton concluded.

The Institute for Policy Innovation is an independent, non-profit public policy organization based in Dallas, Texas. Copies of the publication, "Should the U.S. Favor a Free Nationwide Wireless Network Provider?" are available by visiting .

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