Don’t count on governments to pay for national broadband rollout, St. Arnaud tells FCC

In an era of trillion dollar deficits and near bankrupt state and local governments, policy makers shouldn’t count on governments to pay billions of dollars to rollout broadband nationally, CANARIE’s chief research officer, Bill St. Arnaud, told the US Federal Communications Commission (FCC) on Thursday. Relying on the private sector to do the job is also problematic, he adds, saying what’s needed is a new business model for facilities-based competition. St. Arnaud appeared via videoconference at the FCC’s technology and fixed broadband workshop – one of 18 broadband workshops being hosted by the FCC at its Washington headquarters between Aug. 6 and Sept. 3. The US regulator was tasked by the Obama administration as part of the country’s economic stimulus plan to submit a national broadband strategy to Congress by Feb. 16, 2010. St. Arnaud was invited to bring a Canadian perspective to the issue. The biggest problem impeding the development of a national broadband strategy – whether in the US or other countries – is the need for a solid business case, argued St. Arnaud. The problem is particularly acute given the current recession, making it highly unlikely that most countries will spend billions in public dollars to finance broadband expansion. Here in Canada, the Harper government announced in June that it would invest $225 million over three years for Industry Canada to develop and implement a strategy to extend and improve broadband coverage. The solution, stressed St. Arnaud, needs to come from the private sector. But as he pointed out, the business case for traditional next-generation access deployment is weak. It relies on companies generating triple play revenues of $130 per month at a time when these applications are increasingly migrating to the internet where access may be free. “Even with those numbers, high speed broadband based on fibre will only reach about 40% of custoers,” explained St. Arnaud. “So what we need is to experiment with new business models to underwrite the cost of next generation broadband.” He recommended that the FCC work with the research and education (R&E) community, and advanced networking organizations in particular to experiment with new business models that address this problem while still promoting facilities-based competition. “The R&E community has long experience in operating their own networks national and locally and many university networks are equivalent to those that would be deployed in a small city,” he said in written remarks. “New broadband concepts like condominium networks, customer-owned and controlled networks, hybrid networking, etc., all started with the R&E community.” For example, earlier this year Google Inc. policy analyst Derek Slater and Tim Wu at Columbia Law school promoted the idea of “homes with tails”, where customers essentially purchase the cables that provide last-mile broadband connectivity. The idea comprises three pillars, according to an article authored by Wu and Slater for the New America Foundation - a non-profit public policy group: 1. Individual fibre strands are sold to consumers. 2. Companies and governments could sell the fibre. 3. Governments could provide tax credits and other mechanisms to help consumers afford the fibre. Green broadband is another idea being considered in Canada and several other countries, said St. Arnaud. The goal is to bundle the cost of fibre deployment and internet service with the consumer’s energy bill, thereby reducing energy consumption and also providing service providers with a steady and predictable revenue stream that doesn’t depend on triple play services. In Canada, CANARIE is investing $3 million in a pilot program to help industry and academia identify new business opportunities in this field. Other examples cited by St. Arnaud include a condominium fibre deployment in Netherlands being lead by KPN in partnership with Reggenfiber and Swisscom’s national condo fibre project being deployed in partnership with numerous energy companies in Switzerland St. Arnaud’s presentation and background slides can be found at: http://www.slideshare.net/bstarn/fcc-broadband-workshop

Don’t count on governments to pay for national broadband rollout, St. Arnaud tells FCC

News | August 17, 2009

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