National Broadband Plan: A Look at Chapter 8 and Availability

Editor’s Note: This is the ninth in a series of articles written by BroadbandBreakfast.com staff summarizing each chapter of the FCC’s National Broadband Plan.

WASHINGTON, May 3, 2010 – Chapter 8 of the National Broadband Plan deals with the fundamental issue of availability. The chapter sets out a very systematic and long-term set of policies intended to expand availability.

It addresses the need for a solid definition of universal service. While many other nations also have set universal service goals, the Federal Communications Commission intends to make its definition include actual speeds.

The FCC has become acutely concerned with the difference between actual and advertised broadband speeds. The target set by the FCC is 4 megabits per second download speeds and 1 mbps up by 2020. However, this could change as the plan recommends that this target be re-evaluated every four years.

The plan sets out a three-stage process that is broken into roughly four-year increments. The aim of the first stage is to change the overall policymaking apparatus to allow for future changes to occur. Primarily, the Universal Service Fund will be transformed from a telephone support system to a broadband support system. In addition, two new funds would be created – the Connect America Fund and the Mobility Fund – to foster the connection of rural, underserved and high cost areas.

The Connect America Fund would replace high cost programs but differ in some very key aspects. Unlike the current high cost fund, the CAF will only provide funds to areas where there is no private sector firm willing to provide service due to a lack of profitability.

One of the major criticisms of the current high cost fund is that the program is being taken advantage of by firms that are making profits not from the sale of telecommunications services but from the subsidies provided by the USF. The second provision of the CAF also will help mitigate this problem by only providing support to a single entity per geographic area. Since the goal of the program is to provide internet connectivity, all forms of access will have equal opportunity to obtain funds regardless of their mode of transmission.

The mobility fund will be focused on expanding wireless internet access, which has been the preferred mechanism for access for many minorities and rural America, according to studies. The plan cites a American Roamer report which claims that 98 percent of the population is covered by 3G service which was done without any government support but took a number of years to achieve. If the government provides some support in the way of capital investment assistance or permit assistance, the expansion of 4G will occur much faster, according to the plan.

In addition to changing the way funds are distributed, the plan recommends that voice-over-Internet Protocol traffic be taxed in order to obtain funds to help support expansion. Currently, only traditional phone connections are taxed and with the increasing adoption of VoIP and cellular service, the amount of funds available for USF will decrease substantially.

The second stage is scheduled to occur between 2012 and 2016. It will expand reforms and see the actualization of the CAF and Mobility Fund. In the prior stage, both programs would be set up but would not be directly distributing funds. During this second stage, the programs will be able to distribute the funds they have collected. Middle mile costs and pricing also should be evaluated to determine if the market is working properly and to determine if any direct intervention is necessary. During this stage, the shift from taxing telephone to broadband services and bundles would occur.

The third stage would occur from 2017 to 2020 and would see the death of the USF; during this stage all old high cost, low income and other USF programs would be discontinued in favor of CAF and Mobility Fund projects. To expand the work of the CAF, the plan recommends that Congress disburse a few billion dollars every two to three years to fund projects.

While transforming the USF will go a long way in the overall rise of availability, the plan makes other suggestions. The Rural Utility Service currently runs a successful program called Community Connect that helps fund access projects to small rural town. The plan recommends the expansion of this program to cover the nation.

One of the more daring initiatives recommended by the plan is that Congress should instruct local entities to build networks if they are not being served. These planned co-ops have had major opposition from the telecom industry. When Philadelphia announced plans to build a local wi-fi network, Comcast actively began to lobby the state legislature to stop the city from proceeding. While Philadelphia was able to complete its network, the state barred any other locality from attempted to start a network without first attempting to get commercial bids.

Another major program they recommend is that anchor institutions band together to create high-speed access networks. Currently local and state regulations prevent libraries, schools, hospitals and general government buildings from working together to create a single network.