Bringing Broadband to All Americans

Although new devices/phones, the economy, and jobs seem to dominate the headlines, the Federal Communications Commission remains focused on a key priority of the Obama Administration: making sure broadband Internet is available and adopted by all Americans. Developments in the last week point toward bigger policy decisions expected by the end of October.

Late last week, the Federal Communications Commission released a, perhaps, forgettable government report: “Internet Access Services: Status as of December 31, 2010.” Although universal access to and meaningful use of high-speed Internet service is still a hot topic in Washington (DC), the report reveals some problems with the FCC’s approach to reaching the goal. First off, the data, obviously, is already nearly a year old. Quicker access to the data the FCC collects would help everyone involved in broadband policy debates make more informed recommendations.

Second, the report summarizes information about Internet access connections over 200 kilobits per second (kbps) in at least one direction in service – not exactly “high-speed” or “broadband” to many Internet users today. In fact, 67% of reportable Internet access service connections (or 113.1 million connections) in December 2010 were too slow in both the downstream and upstream directions, or too slow in a single direction, to meet the FCC’s broadband availability benchmark: downloads of 4 megabits per second (mbps) and uploads at 1 mbps over the service provider’s network. A slow Internet connection could be costing you $8,000 a year in lost bargains. High-speed broadband allows consumers to browse more sites in less time (obviously) and seek out bigger bargains, according to a new study released by the Internet Innovation Alliance, a Washington-based non-profit industry group. The popularity of Groupon and LivingSocial has also helped consumer cut their spending in half, says Nick Delgado, principal of Chicago-based wealth management firm Dignitas and author of the IIA’s study, “The Real Cost of the Digital Divide in 2011.” The average annual household spending on housing, food, gasoline and clothing quoted in the study is gleaned from the government’s annual “Consumer Expenditure Survey,” which was released last month by the U.S. Department of Labor. For a household that spends $5,000 on entertainment, they can save nearly 50% by using a faster broadband connection, Delgado says.

Finally, there are currently 18 million Americans who lack access to broadband. And the harms from not having broadband are rising every day for consumers, and for our country. (On October 13, the FCC released an interactive map which shows that large swaths of our nation are being bypassed by broadband.)

But the FCC did note these developments from 2010:

  • Internet connections overall are growing. The number of connections over 200 kbps in at least one direction increased by 28% in 2010 to nearly 169 million.
  • Growth is particularly high in mobile Internet subscriptions, but fixed-location connections also continue to increase. The number of mobile subscriptions exceeded 84 million by December 2010 – up 63% for the year. The number of fixed-location connections increased by 6% to over 84 million at year’s end.
  • Both fixed and mobile services are shifting to higher speeds. By the end of 2010, 53% of fixed-location connections and 13% of mobile subscriptions were at speeds at or above the availability benchmark adopted in the Sixth Broadband Deployment Report, up from 49% and 4% respectively at the end of 2009.

The FCC report, however, was just the first of many developments in universal broadband access and adoption this past week.

On October 7, the FCC also released two sets of rules to implement the 21st Century Communications and Video Accessibility Act (21st CVAA). These included new rules for "Contributions to the Telecommunications Relay Services Fund" and "Advanced Communications Services." The Telecommunications Relay Services Fund (TRS) rules require TRS Fund contributions to be assessed against interstate end-user revenues. Section 716 of the 21st CVAA requires providers of advanced communications services (ACS) and manufacturers of equipment used for ACS to make their services and equipment accessible to people with disabilities, unless it is not achievable to do so. Where it is not achievable to do so, these providers and manufacturers must make their services and equipment compatible with commonly used assistive technologies. Section 717 requires new recordkeeping requirements for these providers and manufacturers and new enforcement procedures for these accessibility obligations.

On October 12, we saw the first reports of the FCC’s latest, broad effort to encourage more Americans to use high-speed Internet. Later that day, FCC Chairman Julius Genachowski launched Connect to Compete , a national effort to address the barriers to broadband adoption, digital literacy and the employment skills gap. A number of private-sector companies and non-profit groups have joined in the effort to offer basic and advanced digital literacy training and certification. Kelley Dunne will lead the initiative as part of his current role as CEO of OneEconomy. Best Buy’s Geek Squad will provide in-person digital literacy training and Microsoft will provide an on-line equivalent. Organizations such as 4-H, Boys and Girls Club, Goodwill, and Connected Nation will help in generating awareness of this training. (For more on Connect to Compete)

Point Topic -- a UK-based, broadband research firm – recently studied broadband costs and consumer purchasing power in 64 countries. To increase global broadband use, the firm concludes, services need to be more affordable. Broadband has been shifting from a luxury to a necessity – and, in some markets, a human right – over the last decade. For consumers, there have been a number of barriers to entry, including education, literacy, access to equipment and so on, but, increasingly, these are minimal compared to the cost of a subscription.

At a time when major economies worldwide are facing a slowdown, a new international study has suggest that enhancing the speed of broadband networks has the potential to bring in economic benefits worth $126 billion for the (Organisation for Economic Cooperation and Development) OECD grouping of mostly developed countries. The study, conducted jointly by Ericsson, Arthur D Little and Chalmers University of Technology in 33 OECD countries, quantifies the isolated impact of broadband speed, showing that doubling the broadband speed for an economy increases GDP by 0.3 per cent. A 0.3 per cent increase in GDP growth in the OECD region is equivalent to USD 126 billion. The OECD region accounts for over 60 per cent of global economic output. "Broadband has the power to spur economic growth by creating efficiency for society, businesses and consumers," Johan Wibergh, the Head of Business Unit Networks at Ericsson, said

The activity this week around broadband as the FCC plans a major overhaul to the Universal Service Fund (USF) later this month. The plan, outlined by FCC Chairman Julius Genachowski on Oct 6 and expected to be voted on Oct 27, will revamp a program with nearly $4.5 billion in annual telephone subsidies, redirecting them to expanding broadband access (including mobile broadband). The proposal could bring some changes to phone bills — and consumer advocates and lawmakers are watching closely. Chairman Genachowski has proposed creation of the Connect America Fund with two core goals:

  1. Ensuring universal availability of robust, scalable, affordable broadband to homes, businesses and anchor institutions in unserved areas. The Connect America Fund would begin near-term build-out to hundreds of thousands of consumers in 2012, and would ultimately help get broadband to the 18 million Americans who can't get it today.
  2. Ensuring universal availability of affordable mobile broadband through a new Mobility Fund, which would be part of the Connect America Fund. Deployment of state-of-the-art mobile broadband would be extended to more than 100,000 road miles where Americans live, work, and travel. In addition to a one-time shot-in-the-arm effort to accelerate deployment of 4G networks in 2012, this Fund would provide significant ongoing support for rural mobile broadband.

The growth of the Connect America Fund would be constrained, keeping hundreds of millions of dollars in consumers’ pockets over the coming years. To help achieve this, Chairman Genachowski introduced a competitive bidding process among providers for obtaining universal service support, which would transition over time to a fully competitive system for distributing Connect America Fund dollars. This would be the first time competitive bidding has ever been used in the universal service fund.

On October 12, the Senate Commerce Committee held a hearing on the FCC’s plan. The senators had no specific FCC plan to vet since it has not yet been published, so the hearing included legislator suggestions on what the FCC should or should not do -- cap the fund, for instance, or don't subsidize where there is an unsubsizded competitor -- and comments on the telephone companies-backed America's Broadband Connectivity (ABC) proposal, which the FCC plan is said to resemble. Committee Chairman Jay Rockefeller said, “We’ve been talking about [USF] reform for more than a decade. It’s time to stop talking and to act.”

Gautham Nagesh, writing in The Hill, notes that when the FCC indicated it would act this year to reform the $8 billion fund used to boost rural telecom access, the reaction was almost universally positive. Most observers say shifting the focus of the Universal Service Fund (USF) from subsidizing landline phone service to broadband Internet access is long overdue and reflects the changing needs of rural consumers. The FCC estimates suggest 18 million Americans live in areas without access to broadband. But scrutiny of the issue has ratcheted up significantly now that the FCC is poised to vote in two weeks on its closely guarded plan. Questions abound about the cost of FCC Chairman Julius Genachowski's plan and whether it will remain technology-neutral, in part because he has yet to release a detailed draft.

October 27 is the red-letter, circled date for the next big development in broadband. At its monthly, open meeting that day, the FCC will vote on the plan to comprehensively reform and modernize the universal service and intercarrier compensation systems to ensure that all Americans have access to robust, affordable broadband and mobile services.

Click here to read the article on the Benton Foundation website. 

Tags: Benton Foundation, Charles Benton, Connect to Compete, Department of Labor, Digital Divide, FCC, Obama

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