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Barriers to broadband: the American view

20 Nov 2009 | 12.32 Europe/London
How is it possible to achieve universal broadband adoption in a country of over 300 million people occupying around 10 million square km – the world’s third largest in terms of land area? That’s the scale of the problem facing the Federal Communications Commission (FCC), the US telecoms regulator, which has been charged with delivering a national broadband plan to the US government by February of next year.

After extensive consultation, the FCC has just issued a press release identifying what it sees as some of the “critical gaps" in the nation’s policies, programs and practices that hinder universal adoption of broadband. And it’s not a particularly short list.

First, the FCC identifies problems with the nation’s Universal Service Fund (USF) structure, saying it doesn’t support broadband deployment and adoption despite the fact that over $7 billion (£4.2 billion) is spent annually. Most of the money goes on subsidised telephone service for low-income families and those in rural areas. Some funds are used to provide internet connectivity to schools and libraries, but overall very little of the cash is used for broadband.

The second issue is a familiar one: broadband adoption. Nearly 90 percent of families with incomes of $100,000 or more subscribe to broadband services, compared to 35 percent with incomes of $20,000 or less, according the FCC. There are strong geographic and cultural differences too, with rural households being less likely to subscribe than urban households, and higher subscription rates among white households than among Hispanic or African-American households.

Adoption issues are tied in with the so-called “consumer information gap”, which has a dampening effect on the uptake of broadband services by undermining choice and hence competition. “Consumers lack information about actual performance of their broadband service compared to the advertised speeds,” said the FCC in its statement, echoing recent comments by UK regulator Ofcom. The application providers also lack knowledge of access network performance, which makes it difficult for them to deliver new and innovative services.

Perhaps one of the more serious problems is the “deployment gap”. The cost of rolling out next-generation infrastructure can be prohibitively expensive, especially in rural areas. The FCC singled out the middle mile – the pipes connecting the local access network to the internet points of presence in major cities – as a particular problem. “Middle mile costs for transit and transport of Internet traffic can cost rural providers up to $150 per subscriber annually, almost three times as much as network operations, and can be a serious barrier to rural broadband,” said the FCC.

Other problems identified include the best way to allocate radio spectrum, which is essential for the continued growth of mobile broadband, and the lack of suitable television set-top boxes capable of handling video, TV and data traffic in a single device – more Americans have a TV than a computer.

It will be interesting to see what potential solutions the FCC comes up with.