Broadband - A Long View

Agreat deal's been written about broadband Internet connectivity and broadband penetration rates. In mid-2006, China pulled ahead of the U.S. in absolute numbers of broadband subscribers (see 48 million to 41 million in 1Q06 per Point Topic). Comparing penetration rates, (i.e., number of broadband connections per capita), South Korea leads the world (see Point Topic, 4Q06) with 89% as of the end of 2006, while the U.S. has fallen to 25th behind South Korea, Japan, Taiwan, Canada and more than a dozen Europeans countries.

When speed of connection is considered, Sweden leads (see Comparison of OECD Broadband Markets, by Wairua Consulting for InternetNZ, May 2006) with 100 Mbps fiberto- the-home (FTTH) services available in many locations and higher than average DSL speeds elsewhere.

Statistics like these lead to extensive gnashing of teeth and vigorous calls for public policy change, both in the U.S. and elsewhere. But while there is a lot of noise, there is relatively little systematic examination of what works where and no discussion of longer-term issues. So let me point out two long-term issues that should be part of the discussion in any country.

First, it takes decades to make fundamental changes in laws or regulatory regimes. In the U.S., major changes have included the FCC's Computer I inquiry (1960s) and Computer II Final Decision (1980), and the Telecom Act of 1996 — all more than 15 years apart. For the idea of auctioning wireless spectrum, it took 35 years from Ronald Coase's original proposal (1959) to the first wireless auction (1994).

Over the next 15-35 years, one would hope we'll see a proliferation of FTTH. But consider the useful life of the various elements involved in a FTTH connection.

The right-of-way in front of my home or business is a fundamental access bottleneck. It's of limited size and is shared with neighbors under town or city laws or via deed restrictions (easements, condominium covenants, etc.). The conduits and poles in that right-of-way have useful lives of 30-60 years or more. Dark fiber has a useful life of 20-50 years or more. These useful lives align with legal and regulatory timeframes.

On the other hand, anything electronic is functionally obsolete within 2-3 years.

To me, this suggests the focus for government regulation should be on the provision of point-to-point (home run) dark fiber from each business and residence to aggregation points where enough other fibers come together that multiple competitive ISPs (and other service providers) are attracted. Then individuals could pick which ISP they wanted to light their fiber.

However, this is a personal view — what I'd like in my community. As my second long-term issue makes clear, it would be a terrible idea to impose any particular solution, however good it seems, on a national basis.

The second point of long term import was best expressed by U.S. Supreme Court Justice Louis Brandeis more than 70 years ago in New State Ice Co. v. Liebmann, 285 U.S. 262 (1932): "It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country."

The United States has 50 states and more than 22,000 local municipalities. The richest laboratory for broadband policy would be to give 22,000 municipalities permission to do whatever they want, and then see what emerges. Federal policy might be required to give them permission; (i.e., to undo decades of communications regulation and restrain local lobbying by existing national monopolies), but competitive public policy choices would be preferable to risking all on a single national policy, especially in an area that's evolving as rapidly as broadband connectivity.

Brough Turner is Senior VP of Technology, CTO and Co-Founder of NMS Communications. (news - alert) For more information, please visit the company online at http://www.nmscommunications.com.