White House Releases Report on Community-Based Broadband Solutions, Touting Municipal Competition for Gigabit Networks

WASHINGTON, January 14, 2015 – The White House on Tuesday released a report, “Community-Based Broadband Solutions: The Benefits of Competition and Choice for Community Development and Highspeed Internet Access,” seeking to bolster President Obama’s new push for Gigabit Networks.

The report states:

Affordable, reliable access to high speed broadband is critical to U.S. economic growth and competitiveness. Upgrading to higher-speed broadband lets consumers use the Internet in new ways, increases the productivity of American individuals and businesses, and drives innovation throughout the digital ecosystem. As this report describes, while the private sector has made investments to dramatically expand broadband access in the U.S., challenges still remain. Many markets remain unserved or underserved. Others do not benefit from the kind of competition that drives down costs and improves quality. To help fill the void, hundreds of towns and cities around the country have developed their own locally-owned networks. This report describes the benefits of higher-speed broadband access, the current challenges facing the market, and the benefits of competition – including competition from community broadband networks.

The report highlights laws that restrict municipalities’ involvement in broadband:

Not all communities, however, have the choice to pursue a local broadband network. 19 states currently have barriers in place limiting community broadband and protecting incumbent providers from competition. President Obama believes that there should be a level playing field for community-based solutions and is announcing today a series of steps that the Administration will be taking to foster consumer and community choice.

In highlighting the demand for internet access, the report also puts emphasis on the need for applications:

Demand for Internet access is growing quickly. Total wired and wireless Internet access revenues in 2013 were $140 billion, and have increased by about 15 percent per year in real terms since 2005. The rapidly growing demand for bandwidth is driven by new applications of the Internet that effectively require a broadband connection. These applications, which are increasingly central to everyday life for many Americans, include video streaming, which is used for education, entertainment, and communication; teleworking; cloud storage that allows users to store their files on the Internet, share them, and access them from any device; and online games that allow users to interact with one another in a virtual environment.

The report highlights limitations in access:

The gap in broadband availability between urban and rural communities is linked to the economics of network investment. The costs of providing a connection increase with distance, and the expected profits increase with the number of customers served. This makes it more economical to serve densely populated urban locations, where shorter wires can serve a larger number of potential customers. While satellite and terrestrial wireless technologies continue to deliver promising improvements, more work is needed to close the urban rural gap in broadband availability.

To address this gap, the USDA, BTOP, and the FCC’s Connect America Fund program have all invested in creating the middle-mile infrastructure that provides high-speed access to “anchor institutions” such as schools and libraries in many rural communities. With middle-mile and community infrastructure in place, the remaining challenge is to provide last-mile connections so millions of Americans have access to high-speed broadband. As we describe below, the availability of middle-mile connections creates a significant opportunity for municipalities to increase such access.

And it highlights challenges in affordability:

U.S. broadband is also relatively expensive when compared internationally. The next chart uses data from a recent report on broadband prices in 24 U.S. and international cities. While the 24 cities in this study may not be representative of all urban locations in the U.S. or abroad, it is notable that the median monthly price at each speed level is higher in the U.S., often by 50 percent or more. And while it appears that the U.S. has less price variability at speeds above 75 Mbps, this observation actually reflects the fact that fewer U.S. cities even offer a consumer plan at that level.

It singles out Google Fiber’s beneficial impact on competition:

Domestic experiences also show how the threat of competition can produce gains for broadband consumers. When Google announced that Google Fiber was coming to Kansas, speeds on existing networks surged 97 percent—the largest year-over-year jump in bandwidth observed in any state, ever. Likewise, when Google indicated that it would begin offering extremely fast connection speeds in Austin, TX, AT&T responded by announcing its own gigabit network.

It then presents a series of case studies about the impact of super-fast broadband in Chattanooga, Tenn.; Wilson, NC; Lafayette, Louisiana; Scott County, Minnesota; and Leverett, Mass. – a project supported by the Massachusetts Broadband Intitiative – and Choctaw National Tribal Area, Oklahoma.

It concludes with an appendix of “U.S. Municipalities with Broadband Networks,” based upon data provided upon request from the Institute for Local Self-Reliance.