CORRECT:FCC Says Universal High-Speed Web Access Could Cost $350 Billion
September 29 2009 - 7:01PM
Dow Jones News
It could cost more than $350 billion to bring universal access
to the fastest Internet connection in the U.S., the Federal
Communications Commission said Tuesday.
The conclusion is part of the FCC's initial report after having
held dozens of public meetings and collecting thousands of comments
on its national broadband plan, which is due in February.
The private sector is the driving force behind Internet
investment, said the FCC's Blair Levin, who is coordinating the
commission's national broadband effort. The government's economic
stimulus package put forth $7 billion for Internet buildout, but
Levin has said that sum represents only a small portion of what is
needed to blanket the country with Internet access. It's still
uncertain how much of the cost would be borne by taxpayers.
"Most of that ecosystem is funded by the private sector," Levin
said at an FCC meeting Tuesday. "We expect that to continue. Where
can the government play a role in ensuring and improving the role
of that ecosystem?"
The cost to deploy the most basic Internet access to all parts
of the country is only around $20 billion, but FCC officials
questioned whether current basic Web speeds will be enough to
foster future economic growth.
The average consumer today uses the Internet for Web browsing,
email and instant messaging, and entertainment, said Peter Bowen,
the applications director for the FCC's Omnibus Broadband
Initiative.
However, the applications expected to drive future markets --
streaming video, video teleconferencing and electronic medical
monitoring -- require considerably higher speeds, Bowen said.
In drafting the broadband plan, the FCC will need to determine
how to measure the quality and speed of consumers' Internet
connections, which could impact such Internet service providers as
Verizon Communications Inc. (VZ), Comcast Corp (CMCSA) and AT&T
Inc. (T).
Internet service providers generally discuss the speeds they
offer in terms of the highest levels available for subscribers,
rather than disclose the typical user experience. Actual broadband
speeds lag advertised speeds by at least 50% and possibly more
during the busy hours, according to the FCC.
"It is critical to focus on actual end-user speeds during busy
hours of usage, when typical Americans want to be online," said
Shawn Hoy, a member of the FCC's broadband team.
Competition is limited among providers who offer the highest
speeds, according to Rob Curtis, another FCC broadband team member.
At least half of Americans only have access to one provider that
can offer Internet speeds that would support two-way video
conferencing and other high-speed applications, Curtis said.
The picture gets more complicated when mobile Internet is taken
into account. Smartphones like Apple Inc.'s (AAPL) iPhone or Palm
Inc's (PALM) Pre are putting a crunch on the nation's wireless
capacity.
Smartphones will overtake sales of traditional cell phones by
2011, according to the FCC. Smartphone users generally eat up far
more cellular minutes and bandwidth than people with more
traditional cell phones.
The FCC is considering how to make more airwaves available.
Companies and agencies that hold licenses to frequencies tend to
want to hang onto them, but the FCC's Levin warned earlier this
month that licensees should be prepared to justify their
ownership.
It isn't clear where the needed airwaves will surface. The U.S.
government, namely the Defense Department, holds a sizable chunk.
Industry insiders say the government's airwaves could be more
efficiently used in the private sector.
An industry group, CTIA-The Wireless Association, Tuesday sent a
letter to the FCC saying the government needs to identify a
significant swath of airwaves for commercial licensees.
CTIA's members include Verizon Wireless, AT&T, Sprint Nextel
Corp. (S), and T-Mobile USA, a unit of Deutsche Telekom ADR (DT).
Verizon Wireless is a joint venture of Verizon Communications Inc.
and Vodafone PLC (VOD).
-By Fawn Johnson, Dow Jones Newswires; 202-862-9263;
fawn.johnson@dowjones.com