Broadband Stimulus: A Tiny Step Forward

The February 2009 American Recovery and Reinvestment Act provides a total of $7.2 billion to the USDA’s Rural Utilities Service and the Commerce Department’s National Telecommunications and Information Administration to fund projects that expand access to and adoption of broadband services. First round award announcements began in late 2009.

As you might expect from a political process, stimulus money is funding a few gems and a lot of credible programs, but makes no fundamental change in policy or industry structure, thus the decline in our international position – at least with respect to broadband speeds, prices and availability – is likely to continue. Still, there are some rays of hope.

The broadband stimulus has focused attention on broadband policy issues, prompting U.S. powers-that-be to look (seemingly for the first time) at what’s working in other parts of the world. Significantly, stimulus money has funded a highly credible study by the Berkman Center at Harvard on broadband services around the world, showing the relative position of the U.S. in speeds, costs and availability, and the impact of different countries’ regulatory structures on broadband outcomes.

In the past, it’s been difficult to get consensus on international broadband statistics. Readily available data, e.g. from the International Telecommunications Union or the Organization for Economic Co-operation and Development, came with various flaws. The Berkman team sought to understand the advantages and limitations of the available data, learn from it and then improve the dataset. Arguments are bound to continue, but at least the underlying data is now credible.

The policy implications are profound. The U.S. has, at most, two competitors building physical broadband infrastructure, i.e. a cable company and a telephone company. All of the many countries that now outperform the U.S. in broadband metrics have some form of open access to basic infrastructure. This results in many competitors delivering actual services at higher speeds and lower costs.

Forms of open access vary. Stockholm has “structural separation” where Stokab A.B. leases dark fiber to all comers. The U.K. has “functional separation,” where British Telecom has separated its business into OpenReach, a wholesaler offering access to copper pairs, and the rest of BT (News - Alert), a full service communications company, buying access from OpenReach. Finally there’s “bitstream” access in places like Japan where, for example, Nippon Telegraph and Telephone sells layer 2 Ethernet access to competitors at regulated rates.

Funded stimulus projects include token open access provisions, but nothing that will change the way the U.S. broadband industry is structured. Indeed, considering the substantial vested interests, it may take decades to change course. But at least credible data is now available and some discussion has begun. IT

Brough Turner (News - Alert) is title here with Ashtonbrooke Corp. (www.ashtonbrooke.com), a stealth mode startup involved in wireless infrastructure.

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