Economist Magazine: Poorly Managed Bailouts Could "Help Recreate the Monopolies"

We've put it on the ISP-Planet home page. The Economist magazine, which is no liberal rant haven, writes:

Perhaps the biggest risk of all these broadband plans is that incumbents will exploit the crisis to gain regulatory concessions limiting competition and open access to their networks in exchange for promises to invest. This could even help recreate the telecoms monopolies of old.

Governments around the world understand that broadband can bring wealth and can make it easier for the newly unemployed to obtain new jobs. A former classmate from high school, Steven Van Solkema, just left his Wall Street career and opened an online tea store at www.leafspa.com. Broadband gives you some interesting options!

But there's a real risk that any bailout money will go to existing projects or dividends. The intent of the bailout is not to help top executives at embattered companies, nor is to maintain the dividend rate of the S&P 500.

The current proposal [.pdf] (h/t OIA) gives companies a tax credit of 10 percent for broadband projects (20 percent if subscribers served by those projects had no access to broadband in the past). The vast majority of this money would go to the major phone companies, and they would get it for doing what they were going to do anyway.

Government could send the money to small businesses, but it's easier to send it to big ones.

Bruce Kushnick of TeleTruth is still asking for an accounting of all the tax breaks and other incentives that the phone companies have already received. With a track record like this, there is little likelihood that more cash would result in broadband for poor people.

He writes that the US would get more by giving to smaller companies: "Money given to small, innovative companies will be spent immediately at the local level in thousands of areas around the U.S."

So can Mr. Van Solkema get a tax credit for starting a new business in tough times? He deserves it.