August 14th, 2009
U.S. national broadband strategy: Funding is the elephant in the room
The Federal Communications Commission held a series of discussions about broadband polices, wiring rural locales and fostering innovation, but the elephant in the room was funding.
The rough goal of the Feds’ national broadband dreams is to wire everything in a high-speed access utopia. Radio waves, fixed wire and wireless technologies will all mesh into one big uber pipe for a bevy of innovative services.
It all sounds great on paper. Then the backhoes, private sector companies and reality bonks you over the head. Someone has to foot the bill for all of this wiring and frankly there’s not a lot of economic incentive for private companies to take on the mission. Is it any wonder that the Washington Post reports that Comcast, Verizon and AT&T don’t want broadband stimulus funds? Who would want the strings attached?
Here’s a look at the two money quotes—literally—from one of the FCC panels on Thursday.
Bill St. Arnaud, chief research officer of Canarie, said:
“We doubt governments will invest in broadband given the deficits and the business case is weak. We’ll have to look to the private sector but the business case for next generation broadband even for a monopoly or duopoly are hard to make.”
The problem: Carriers need triple play revenue to justify building those networks and that model only goes so far.
Adam Drobot, chief technology officer of Telecordia, said:
“Whoever wires this up will spend well in excess of $300 billion. Improved productivity would make those figures more palatable.”
Vint Cerf, vice president and chief evangelist at Google, delivered his familiar refrain about how these broadband pipes are essentially the same as highways, the electric grid and other national infrastructure. These pipes should “open entrepreneurial opportunity beyond the party that builds it.”
But here’s the problem: Why would a party build this uber network if there weren’t any returns. Everyone wants access to this future network, but no one wants to be the sucker that has to build it.
Henning Schulzrinne, a professor at Columbia University, noted that the current economics favor the incumbents in the broadband market.
Simply put, the government will have to do it.
But before the U.S. goes on some Australian quest to wire far-flung regions, there needs to be more engineering and economic research.
St. Arnaud said that research and engineering can go a long way with radio technology, using white space and other angles to deliver broadband. However, just as much thought—if not more—has to be given to the business models that will justify next generation networks. For instance, the customer could own the last mile of fiber and maybe this fiber is bundled with a consumer’s electric bill.
The best takeaway from the FCC’s powwow is that the models have to change just as much as the infrastructure, but a lot of the chatter seemed devoid of much reality.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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