FCC Prices Universal Broadband at $20B Minimum

Using speed of 768 Kbps or less as a baseline, a Federal Communications Commission task force developing the National Broadband Plan estimates it will take at least $20 billion in investments to achieve universal access. Take the speed to 100 Mbps or faster and the price tag jumps to $350 billion. Preliminary data also indicates that actual broadband speeds lag advertised speeds by as much as 50 percent and possibly more during busy hours.

Depending on the definition of broadband speed, providing universal broadband would cost between $20 billion and $350 billion, according to a preliminary report released Sept. 29 by Federal Communications Commission task force charged with delivering the National Broadband Plan to Congress. The wide-ranging report also noted that its initial findings show actual broadband speeds lag advertised speeds by at least 50 percent.
The task force said its early analysis indicates that approximately 3 million to 6 million people are unserved by basic broadband, defined as speeds of 768 Kbps or less, but the number of unserved increases as the definition of minimum broadband speed increases. The FCC estimated it would cost $20 billion to provide 768 Kbps or less universal broadband service and northwards of $350 billion for 100 Mbps or faster service.
"The cost of providing consumers with a choice of infrastructure providers, and/or ensuring that all consumers have access to both fixed and mobile broadband would be significantly higher than these initial estimates," the task force said in the preliminary report. "The cost to provide service in rural areas is significantly higher than in urban areas, and is driven not only by higher capital expenditures, but also significantly higher recurring operating expenses largely driven by transport and transit."
As part of the American Recovery and Reinvestment Act of 2009, Congress ordered the FCC to develop a broadband plan by February and the Sept. 29 report represents the halfway point of the extensive study. The report addresses broadband deployment, adoption affordability, and the use of broadband to advance solutions to national priorities. The Recovery Act also provides $7.2 billion for broadband deployment to rural and unserved areas.
To solicit input on the final plan, the FCC has conducted 26 workshops and hearings on key topics, with another six scheduled. More than 200 witnesses have testified during these sessions and nearly 41,000 pages of written comments have been filed with the agency in response to its National Broadband Plan Notice of Inquiry. Nearly 40 blogs have been posted on the FCC's new Blogband page, which have prompted more than 300 comments to date, all of which will be included in the official record.
The plan aims to provide concrete recommendations on how to successfully deliver on what the FCC calls the "infrastructure challenge of our time:" provision and adoption of universal broadband.
"Capturing all the external benefits of broadband to society and the economy is key to the analysis of the costs and benefits of universality. Benefits include consumer savings, health care improvements, educational and employment opportunities and more," the FCC wrote. "Subsidy mechanisms must also be considered as a means to universal adoption, but current mechanisms, such as Universal Service and stimulus grants, are insufficient to achieve national purposes. On the other side of the ledger, reducing the cost of key inputs, such as spectrum, rights of way, backhaul and fiber can extend the reach and performance of broadband."
The preliminary report is not likely to please broadband carriers.
"Different applications require different broadband speeds, with the most demanding being high-definition streamed video. But actual broadband speeds lag advertised speeds by as much as 50 percent and possibly more during busy hours," the FCC said. "Peak usage hours, typically 7 p.m. to 10 p.m., create network congestion and speed degradation. About 1 percent of users drive 20 percent of traffic, while 20 percent of users drive up to 80 percent of traffic. A constrained network dictates investment needs in infrastructure."
The report also found nearly two-thirds of Americans have adopted broadband at home, while 33 percent have access but have not adopted it and another 4 percent say they have no access where they live.
"But large segments of the population have much lower penetration rates, and adoption levels vary across demographic groups," the report states. "The cost of digital exclusion is large and growing for non-adopters, as resources for employment, education, news, health care and shopping for goods and services increasingly move on line."
The task force has commissioned its own survey to learn how three key factors affect adoption: attitudes toward broadband and technology, affordability and personal context (home environment, access to libraries, disabilities, etc.). Results are expected in November.