[1st-mile-nm] US Broadband Policy: AU Blog Recommendation

[Richard Lowenberg]

Here's a fairly intelligent recommendation for US Broadband Policy, from an
Australian consulting firm.   Australia would do well to follow this advice, as
well, as their new national broadband plan does not go far enough in this
direction, either.
rl
--------

Pressure mounts in the USA for a national broadband infrastructure policy

www.buddeblog.com.au/pressure-mounts-in-the-usa-for-a-national-broadband-infrastructure-policy/

Many years of unrealised fibre projects have left the USA trailing far behind
Asia in the deployment of FttH networks. Despite having very a high total
number of broadband subscribers, in terms of penetration (based on subscribers
per 100 inhabitants), the USA dropped from 4th place in 2001 to 12th place in
2004 where it remained through 2005 and 2006. By 2007 the USA had dropped a
further three places to 15th.

Back in 2006, BuddeComm published an analysis of the US broadband infrastructure
market predicting that also here structural changes will be needed to take this
market forwards.

Moreover, a country comparison of broadband penetration indicates little about
speeds, bandwidth, service levels and value. For instance, although data show
Japan and the US to have similar broadband penetration rates, OECD figures
indicate that Japan has nearly ten times faster broadband speeds than the US,
based on average advertised download speeds. According to the OECD measure, the
US ranks 14th in the OECD in terms of average broadband speeds.

The US has fallen so badly off the pace in broadband development that many in
the US are now calling for government to treat broadband as significant
national infrastructure.

Perhaps the most significant reason for the lacklustre broadband market includes
the lack of a federal broadband plan setting specific broadband goals. Having
left broadband development largely to the private sector, the US market has
been typified by a cosy cable-DSL duopoly which has been slow to embrace the
latest technologies. In this regard, the US could learn from the national
broadband initiatives of Japan, South Korea and Canada.

Similarly, only some US state governments have started treating broadband as an
infrastructure issue rather than merely a communication issue. To date, the
focus of the US federal and state governments has been on providing broadband
to underserved rural and regional areas. However, this tends to be low speed
broadband, rather than the 100Mbps speeds we see in Japan. Thus there are
increasing calls for US federal and state governments to commit significant
public funds to broadband infrastructure as has been successfully done by the
Japanese, South Korean, Canadian and Swedish governments.

Another reason for limited private sector investment in fibre networks is the
fact that the US has not required open access to, or unbundling of, fibre
networks. In contrast Japan has imposed unbundling on NTT?s fibre facilities
whilst EU nations are debating whether to impose unbundling on fibre
facilities. France and the UK have moved to the top of the G7 in terms of
broadband adoption, largely due to the unbundling of their local loops.

It is envisaged that a national broadband policy would focus on high bandwidth
fibre networks that can deliver 100Mbps speeds. Such a policy would foster
investment by both the public and the private sectors, so as to capture the
benefits that broadband can bring to, for example, education, health and public
safety, whilst harnessing the capital and expertise of the private sector. The
policy would aim for universality i.e. all communities, institutions,
businesses, houses and individuals would have equitable and affordable access
to high speed broadband services and to a wide range of content and service
providers.

The federal policy should also embrace sufficient flexibility to allow local and
state governments to target the funding dollars as appropriate within their
jurisdiction. While a number of US cities have already built or are building
fibre networks, federal and state governments could do more to encourage
municipalities to deploy fibre networks.

In addition to public-private-partnerships, another means by which to encourage
private sector investment in fibre networks is to offer tax incentives. This
was done with much success in 1986 when the US Congress passed legislation
offering tax incentives for investment in long distance infrastructure
upgrades.

Based on Verizon?s $800 per house FttH deployment costs, it is estimated that
the total costs to provide FttH to every home in the country would amount to
around $80-100 billion. The policy should include funding to improve research
into broadband technology and to enhance consumer education about broadband
services.  It has been proposed that a new fund be established using a marching
grant format such as that used in some Canadian provinces, where the federal
government, the state government and the network owner each contribute
one-third of the funding for each broadband project.  To administer the policy
and the fund, it has been suggested that there be established a council of
government officials, co-chaired by the Secretary of Commerce and the Chairman
of the FCC, together with officials from federal, state and local government
agencies.

The policy should set an aggressive timeframe, such as providing minimum 100Mbps
access to all homes, businesses and institutions within 5 years. Currently, even
Verizon?s FttH deployment, which is by far the most aggressive in the country
(Verizon currently accounts for approximately 60% of all FttH subscriptions and
nearly 90% of homes passed by fibre), is aiming to cover only half of
Verizon?s footprint.

Given the Regional Bell Operating Companies? success in the past to ensure
that their fibre networks are not made subject to third party access regimes,
it is unlikely that the envisaged national fibre networks would be subject to
interconnection regulation, at least not within the 5-year horizon. Critically,
however, to ensure that the full economic and social benefits of the national
broadband network are properly realised, it is essential that the policy
enshrines network neutrality in legislation.

Lawrence Baker - BuddeComm Senior Analyst North America


-- 
Richard Lowenberg
1st-Mile Institute
P.O. Box 8001, Santa Fe, NM 87504
505-989-9110;   505-603-5200 cell
rl at 1st-mile.com  www.1st-mile.com

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