Fixing US broadband: $100 billion for fiber to every home

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http://arstechnica.com/news.ars/post/20080131-fixing-us-broadband-100-billion-for-fiber-to-every-home.html

Fixing US broadband: $100 billion for fiber to every home

By Nate Anderson | Published: January 31, 2008 - 12:58PM CT

The US is in desperate need of 100Mbps "big broadband." That's the conclusion of a new report from EDUCAUSE (PDF), a group that represents IT managers at over 2,200 colleges and universities. But these 100Mbps connections are coming slowly; in the meantime, countries like Japan already have them. To avoid falling further behind, the report calls for a national broadband policy to be passed this year, one that includes $100 billion for a fiber-to-the-home infrastructure that will connect every household and business in the country.

The report opens by citing the familiar, dreary facts: US broadband might now be widely available, but it's slow and relatively expensive. Between 1999 and 2006, the US fell from third place to 20th in the International Telecommunications Union's broadband usage measurements. When it comes to average connection speeds, the US isn't beaten just by Japan but also by France, Korea, Sweden, New Zealand, Italy, Finland, Portugal, Australia, Norway, Luxembourg, the United Kingdom, and Germany. And it's not about population size or density, either; Finland, Sweden, and Canada beat us on most broadband metrics despite having lower population density. Finally, we're getting beat on price, coming in 18th worldwide when it comes to cost per megabyte.



Why? Two reasons. First, the US has not made a national investment in broadband infrastructure, unlike most other developed countries. The lack of national leadership (usually explained as a need to let the market do its thing without interference) has meant that broadband is still not treated as a utility that is made available to all people at reasonable prices. States have recognized the problem, and many (such as California and Kentucky) have launched innovative public/private partnerships of their own to bring broadband to all members of the state.

Second, the market hasn't worked as well as it might in part because there's little competition. Consumers are lucky to have two choices, but even in those cases the costs (in time, money, and hassles) make it nontrivial to switch. All OECD countries except for Mexico, New Zealand, Switzerland, and the US have adopted "unbundling" rules that allow competitors access to "local loops." In the US, where such rules used to exist, companies like Speakeasy could offer DSL service via AT&T's local loops without the need for building a parallel national network themselves.

The EDUCAUSE report points out that "broadband prices in countries without unbundling policies exceed prices in countries with unbundling policies," and the fact that speeds in such countries are often higher than in the US should put to rest the old argument that unbundling necessarily destroys infrastructure by eliminating investment incentives.

The solution, according to the report, is one that has been adopted in other countries and some US states already. EDUCAUSE calls for the construction of a national fiber network that would reach every home and business, with the $100 billion cost split equally between the federal government, the states, and a private- or public-sector entity that would actually build and maintain the network. Because fiber networks can increase speeds simply by carrying more wavelengths at once, the report notes that such an investment in infrastructure might "provide adequate broadband connectivity for several decades."

All that's needed is $8 billion a year for four years from the feds, with the states also coming up (collectively) with the same amount. Put another way, 116 days of the Iraq war could fund the entire federal $32 billion contribution. We've made such investments before, and not just in roads and highways; the Universal Service Fund continue to dole out billions of dollars to fund rural phone connections, for instance.

What's at stake isn't simply faster download speeds for movies. As the report (like many others before it) points out, a robust broadband infrastructure creates economic opportunity. It also opens the door to more telework, better communications tools, e-health opportunities, and distance learning.

While some free-market groups have criticized any move towards federal investment and regulation of broadband and have taken issue with the OECD numbers often used in these debates, there's actually plenty of data on the table about US broadband—and none of it suggests that we are a world leader anymore. As Google's Derek Slater noted on the company's blog, "Whether or not one agrees with EDUCAUSE's particular strategy, the paper demonstrates that a clear, concerted national broadband strategy of some kind is required to reach that bigger, better broadband future."

Surprisingly for such reports, the EDUCAUSE paper is quite readable, and it's well worth a look by anyone interested in broadband policy. The president's report on broadband is due to be released today; look for coverage of that here.