Connected Research

Union policy research in the 21st century

America’s National Broadband Plan

with 2 comments

After 11 months of work, extensive public consultation and heavy recent trailing of proposals, the American Federal Communications Commission released Connecting America, its National Broadband Plan, on Tuesday this week (Connecting America; press release). Not all the five Commissioners agree with the Plan so, instead of a formal vote, an agreed joint statement has been issued focusing on the principles at stake. More information is available at a specific broadband website.

Running to some 360 pages, the Plan is not a light read and I’ve as yet got only as far as the executive summary. However, it’s useful to compare and contrast policy approaches to the development of broadband; policy-making doesn’t exist within a vacuum created by geographical borders.

The Plan exists on the basis of a four-pronged approach to policy-making in what it calls the ‘broadband ecosystem’, each of which it has a series of recommendations numbering 200 overall, and the six long-term goals the FCC thinks can serve as a ‘compass’ for the development of broadband over the decade-long lifetime of the Plan.

Starting with the latter – the vision thing – the six goals are these:

1: At least 100 million U.S. homes should have affordable access to actual download speeds of at least 100 megabits per second and actual upload speeds of at least 50 megabits per second.

2: The United States should lead the world in mobile innovation, with the fastest and most extensive wireless networks of any nation.

3: Every American should have affordable access to robust broadband service, and the means and skills to subscribe if they so choose.

4: Every American community should have affordable access to at least 1 gigabit per second broadband service to anchor institutions such as schools, hospitals and government buildings.

5: To ensure the safety of the American people, every first responder should have access to a nationwide, wireless, interoperable broadband public safety network.

6. To ensure that America leads in the clean energy economy, every American should be able to use broadband to track and manage their real-time energy consumption.

To ensure delivery of these goals, the Plan envisages the release of 500MHz more spectrum – the aim being that auction monies will be sufficient to finance the Plan; a Connect America Fund based on a shift of $15.5bn over the decade out of the existing Universal Service Fund and the provision of public funds of ‘a few billion dollars per year over two to three years’; and a Mobility Fund designed to ensure that no states lag behind the national average for 3G wireless coverage.

Aside of a small quibble around the slightly hyperbolic reference to the Plan ‘always being in beta’ (well-intentioned as the reference is to ensuring the Plan is flexible enough to meet changing circumstances, drafts do have to be concretised if action is ever to result), there are a lot of good things in it. Specifically, I like the following:

– the measure for high-speed broadband to be not ‘average’, or ‘up to’, but ‘actual’ and ‘at least’

– the specific requirement for upload speeds, as well as download ones, to be of a minimum standard

– an interim milestone of 50Mbps download and 20Mbps upload speeds to be delivered to 100m citizens within five years

– the universal service aspects of broadband to be based on delivering a ‘robust’ service to ‘every American’ which appears to be based on 4Mbps actual download speeds (not my emphasis but that of the Plan)

– the requirement for ‘anchor institutions’ (schools, hospitals, government buildings) in each community to have a 1 Gbps service

– the serious component based on improving digital literacy to improve the choice for citizens to be online.

There are some clear gaps. The availability of high-speed broadband is, despite the impressive language around speeds, aimed at just one-third of Americans; while a universal service of 4Mbps by 2020 might be said to be a little conservative. Such a programme creates, or exacerbates a clear digital divide within America with some, inevitably heavily urban, citizens to have super-fast speeds while others, inevitably out in the sticks, have to be content with a much poorer service.

There also appears to be little said about the levels of investment required to deliver such high speeds, which clearly require fibre to the home, other than via private sector investment based on competition. Estimates have put the costs of the Plan at some $350bn (£230bn). Given that there is a simultaneous requirement for access to be ‘affordable’, and in conjunction with other aspects of the Plan being funded by sales of wireless spectrum, that is likely to place a serious burden on capital expenditure amongst telephone companies and on the regulatory environment in which they operate. Whether that could be supplemented by state funding other than the $7bn intended to come from President Obama’s 2009 stimulus package is an interesting point for debate.

I would also be concerned that the Connect America Fund, designed to deliver universal service, is to be funded largely by a shift in existing Fund resources, together with a few billion dollars extra. The Fund (raised, incidentally, by a levy on telephone providers’ revenues, currently running at 15.3%, which may then be passed on to consumers) is already in difficulty concerning its existing responsibilities, so there is a natural concern as to how these will be met once the Fund is re-focused and – more so – how an expanded target will be delivered.

Nevertheless, the Plan – welcomed by the Communication Workers of America as a ‘good roadmap’ and described by it as ‘far-reaching’ – provides policy-makers with an extensive amount of material to debate over the coming months as the recommendations start to turn from paper towards implementation.


Written by Calvin

18/03/2010 at 11:50 am

2 Responses

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  1. Well, this is interesting. I hadn’t appreciated that the USF was raised by a levy directly on the providers, including the mobile operators. Begs the question – why was the UK so reluctant to follow the same path? Does free market USA have more bottle than New Labour UK?

    Adrian Askew

    18/03/2010 at 5:24 pm

  2. It is an interesting question, Adrian. As far as I recall, the last piece of work I saw done on this was back in the days of Oftel, when a cost-benefit analysis of providing universal service resulted in a regulatory position that universal service, far from costing BT, actually benefited it – hence, no need for a fund.

    Ofcom will be re-examining this issue shortly.

    The US Universal Service Fund is large and has been growing significantly. Comparatively, 15% of household telecoms expenditure in the UK would represent a monthly levy of £9.95 given monthly household telecoms bills of £65.01.

    That’s quite a difference from the 50p/month levy (on fixed lines only) which the government is using towards rolling out high-speed broadband to the ‘final third’ (albeit that this is not the same thing as providing universal service).

    I’m not sure what percentage of operators pass this on to consumers and what percentage absorb it, or have some mid-way position; other than not being able to levy particular groups of consumers, it’s left to the commercial judgment of the operators (though I bet there’s a fair degree of concertation going on!). Where it does appear on consumer bills, it does so as a specific item.

    Clearly, providing a universal telecoms service across the expanses of the US mid-west is expensive (and probably more so than rolling it out to rural areas in the UK). Nevertheless, I do like the solidaristic element of the Fund which, as you say, is somewhat surprising in a highly free market country.

    Calvin Allen

    18/03/2010 at 5:43 pm

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