Connected Research

Union policy research in the 21st century

Posts Tagged ‘3G

America’s National Broadband Plan

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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

French companies complain about 3G licences

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Both Vivendi, the second largest mobile operator in France and part-owned by Vodafone, and Bouygues Telecom, the third largest, have complained to the French courts over the licence conditions and tender process for the award of the fourth 3G licence in France. Applications for the licence close a week today, 29 October.

The focus of the complaints is the fee for the licence, set at €240m compared to the €619m the other three licence holders have paid. (And this was heavily reduced, in the case of the largest two operators and after the threat of legal action on the grounds of state aid, from the fixed fee of nearly €5bn they first paid when the licence process was concluded not long after the end of the auction processes in the UK and Germany back in 2000). France Telecom/Orange, the largest operator, has also previously threatened a reference to the European Commission on the grounds that the cheaper 4th licence amounts to illegal state aid (as indeed previously has Vivendi).

Clearly, the state aid argument is going to run – having worked in the favour of operators once before in the same context, why not try it again? – and a (further) reduction of the licence for all is the most likely outcome if it is found to hold water at EU level. This might first have to happen, as the French government is unlikely to want voluntarily to make further concessions to what is already, on the basis of there being only one confirmed bidder for the licence even at €240m, a rock-bottom price. Of course, other bidders may yet emerge but most seem to have already ruled themselves out of the bidding. Consequently, this seems likely to be close to the price that ‘the market’ would pay at this point – an important consideration in defining whether a licence sold cheaply now, at this price, really does constitute state aid. At the same time, despite the obvious level playing field arguments of having licence prices all set at the same figure (or, at least, all operators bidding at the same time and to common rules they all know in advance), the advantages to the existing holders, both of exploiting what they have already paid for and of thus being able to build a market position which can be used against incomers, are not to be under-estimated.

The French 3G licensing process has already been long drawn-out – not to say a costly and embarrassing one – and it looks as though it has significantly further to run yet.

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Written by Calvin

22/10/2009 at 3:38 pm

Posted in Telecoms regulation

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