Former Federal Communications Commission chairman Reed Hundt told the Senate
Commerce Committee Tuesday that the government needs to step in to subsidize the
broadband rollout. Just as Herbert Hoover stepped in to build roads to drive the
adoption of the automobile, the government needs to step in to help subsidize
the underlying broadband network.
Hundt, now a partner in Washington, D.C.-based consulting firm McKinsey & Co., said
that in the present economic climate, the private sector won't invest enough to
build the network. Hundt said you need to "throw money at it" in the form of a
subsidy that, he pointed out, would be a fraction of federal spending on roads.
Committee chairman Ernest Hollings (D-S.C.) asked Hundt if he would fund that
with spectrum auctions. Hundt was noncommittal, saying he would "defer" to
Also pitching a subsidy, but on the supply rather than build side, was
Michael Price of financial-services firm Evercore Capital Partners, who suggested a $6
billion subsidy to broadband-service providers -- $300 per home to keep the
price below $30 per month until a 20 million-home service threshold is