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FCC Chairman Lauds Broadband Access Increase a Bit Too Loud
[July 07, 2005]

FCC Chairman Lauds Broadband Access Increase a Bit Too Loud


FCC Chairman Martin says the U.S. is making progress in broadband development. Can he be believed?

By TED GLANZER
TMCnet Communications and Broadband Columnist

High-speed connections to the Internet increased 34 percent in the U.S. during 2004, according to a report released today by the Federal Communications Commission.

Interpreting what this means in the general scheme of things depends on who you believe: FCC Chairman Kevin Martin or your eyes.

The data, among other things, do reflect positive gains in the number subscribers of high-speed services for Internet access in the U.S. as of December 31, 2004.

The report, however, also highlights several troubling aspects regarding how many consumers will gain access that is essential to an expanding Internet-based information economy.

Consider the following:

• The total number of high-speed line subscribers increased by 34 percent, to 37.9 million lines, in 2004.

• Resident and small business subscribers are the heart and soul of broadband access, accounting for 35.3 million of the 37.9 million lines, representing a 36 percent increase over last year.

• Telecoms prospered in 2004, as asymmetric digital subscriber line (ADSL) high-speed lines increased by 45 percent, to 13.8 million lines.

• Cable companies didn’t do too badly, either, as cable modem service increased by 30 percent, to 21.4 million lines.

• The remaining 2.7 million high-speed lines represent alternative broadband connections such as satellite, terrestrial wireless, fiber, powerline, or wireline connections other than ADSL.

• Alternative broadband connections represented a small fraction of the total number of lines that residents and small businesses have available to access high-speed services.

• The four states that offer the highest number of high-speed lines are, not surprisingly, California, New York, Florida and Texas.

• Also not surprising, high median household income also has a “positive” association with reports that high-speed subscribers are present. High-speed subscribers are reported in 99 percent of the zip codes ranked in the top one-tenth by median household income. By contrast, high-speed subscribers are reported in just 83 percent of zip codes with the lowest median household incomes.



In light of the foregoing, Chairman Martin’s editorial published today in the Wall Street Journal could only lead to one of two conclusions: he is either Pollyanna or delusional.

Martin started his editorial off well, stating that broadband access is his top priority as the new chairman of the FCC.


Unfortunately, the editorial’s remaining thoughts appeared inconsistent with his initial statement.

You can almost give Martin a pass for referring the overall increase in broadband access as “dramatic growth,” even though the U.S. still lags behind other countries with respect to broadband subscribers per 100 inhabitants.

Even if there was growth that could be construed as dramatic, Martin can’t be forgiven for his unchained optimism about meeting President George W. Bush’s goal for universal national broadband access by 2007.

“The dramatic growth in broadband services . . . proves that we are well on our way to accomplishing the president’s goal of universal, affordable access to broadband by 2007,” Martin gushed.

Okay, reality check.

“There is no way we can meet [Bush’s] goal without the public, private and philanthropic sectors working together,” Cheryl Leanza, National League of Cities principal legislative counsel, policy and federal relations, told TMCnet on Wednesday.

Unfortunately, the public and private sectors aren’t playing nice with one another, with telecoms seeking to put the kibosh on municipalities offering low-cost broadband services to their residents.

All right, even if you give him a pass for looking on the bright side, there is no explanation for his subsequent commentary, which ranges from inexplicable to laughable.

For example, he stated that “[b]roadband platforms are engaged in fierce competition,” apparently without irony considering the Supreme Court’s recent Brand X decision, which effectively stymied an entire class of competitors – independent ISPs - from the broadband landscape.

To support the “fierce competition” theory, Martin went so far as to actually cite (no lie) satellite, wireless, fiber and powerline connections as legitimate alternatives to the government-sponsored cable/telecom broadband duopoly.

“Most Americans today can choose between several broadband service providers and satellite providers are aggressively getting into the broadband business,” he added.

Methinks our FCC chairman needs to bone up on emerging technology posthaste. After all, wireless is several years away, powerline must overcome legitimate interference problems and there are still huge cost concerns regarding satellite service.

In short, none of the so-called competitors listed by Martin are capable of mounting any kind of challenge to telecoms and cable providers.

But, hey, don’t take my word for it. The figures in the FCC’s report speak loud and clear.

Indeed, according to the report, residents and small businesses that subscribe to broadband service via fiber or powerline accounted for a whopping .1 percent of the total number connected to high-speed lines.

Furthermore, residents and small businesses that access broadband via satellite or wireless accounted for just 1.2 percent of the total number of those connected to high-speed lines.

In light of those numbers, telecoms and cable providers have shown remarkable restraint in not having cried uncle, especially considering their rather meager broadband market shares (60.3 percent for cable companies, 37.2 percent for telecoms).

And the beat went on….

“This competition is leading to broadband providers offering customers faster and faster connections at lower and lower prices,” Martin said.

Not so. SBC and Verizon cut their DSL prices, respectively, in early June in response to delays to their pending video services launches, according to a Merrill Lynch Industry Update.

Nevertheless, Martin remained steadfast.

“[B]roadband growth in the U.S. is exceptional and leads the world,” Martin said.

If so, that world sure sounds like a nice place to live.

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Ted Glanzer is assistant editor for TMCnet. For more articles by Ted Glanzer, please visit:

http://www.tmcnet.com/tmcnet/columnists/columnist.aspx?id=100033&nm=Ted%20Gl
anzer

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