If we stop to ponder the reasons why America has a second-rate broadband infrastructure, behind many other industrialize countries, we only have to look at our private business model. Leaders talk about effective competition as a possible solution to the ills of virtual monopolies which flagrantly resist upgrading infrastructures to improve speeds across the U.S. It is a simple economic reason of supply and demand and investment vs. payback. Yes, companies invest in infrastructure to make a reasonable payback based on perceived consumer demand. That is exactly why we must work toward an equitable fast broadband solution.
High Infrastructure Costs Deters Competition
The high cost of building broadband infrastructure has limited the amount of entrants into the broadband competitive model that is; if one incumbent builds infrastructure to a city/county area, they need the whole market to get the reasonable payback required to invest. If two or more competitors elect to overbuild, or enter that same market, each company could end up with 1/3 of those markets consumers. The payback on investment then becomes unreasonable, depending on the size and density of that market. Warranted, those communities with very high density populations which are affluent can support multiple investments. It is a relative (cost-per-mile) infrastructure cost vs. population density which determines competitiveness.
F E D E R A L C O M M U N I C A T I O N S C O M M I S S I O N | N A T I O N A L B R O A D B A N D P L A N “JUST AS WIRELESS NETWORKS USE PUBLICLY OWNED SPECTRUM, wireless and wired networks rely on cables and conduits attached to public roads, bridges, poles and tunnels. Securing rights to this infrastructure is often a difficult and time-consuming process that discourages private investment.”
Pondering a Solution
This leaves the question that most of us ponder; how do we upgrade a national infrastructure to provide fast and cheap wire-line broadband? Some communities have banded together to partner with private enterprise to subsidize the build-out of fast broadband. A case in point is Google’s high-profile initiative in Kansas City. Broadband speeds 100 times faster than any offered in the U.S. today. This is the type broadband America needs to compete on a global scale. The crux of this issue is how best we can achieve that end in the most efficient and productive way.
As Blair Levin pointed out in this recent article on Gigaom our current broadband infrastructure was built on a public/private partnership with communities. Cities and counties entered into franchise agreements with broadband operators where public rights of ways were used to construct lines. Stipulations or contracts provided that private companies offer something back to the community served. This included franchise fees, free service for public buildings and schools, along with service guaranties for the consumer. This worked fine in the early days of broadband proliferation. Now that model is outdated, needing a complete over hall to bring us into an 21st Century Internet economy, one that can compete globally, no matter where consumers live, New York, NY, Kansas City, Missouri, or Paducah, Kentucky.
Re-Writing Broadband Policy
This puts government leaders at the forefront of stepping up to the task of updating current telecommunication policy which seems to become ineffective and outdated within 10 to 15 years of formulation. Now is the time for legislators to work with the FCC to start a sweeping broadband policy that ensures Americans have the right to work in a global economy no matter their location or situation. This is not a matter of asking private companies to go into competition with incumbents without realizing the investment hurdles faced by massive infrastructure costs. A solution which rewards competitive metrics, public private partnerships, and fair play are warranted.
However, as Mr. Levin pointed out, let’s not reward incumbent operators asking for fair contract terms without their willingness to meet the same standards as a Google Broadband, one that has set the standard for fast broadband in America.