Executive Summary

One of the significant challenges facing network operators today is the high capital cost of deploying next generation broadband network to individual homes or schools. Fiber to the home only makes economic sense for a relatively small percentage of homes or schools. One solution is a novel new approach under development in several jurisdictions around the world is to bundle the cost of next generation broadband Internet with the deployment of solar panels on the owners roof or through the sale of renewable energy to the homeowner. Rather than charging customers directly for the costs of deployment of the high speed broadband network theses costs instead are amortized over several years as a small discount on the customer’s Feed in Tariff (FIT) or renewable energy bill. There are many companies such as Solar City that will fund the entire capital cost of deploying solar panels on the roofs of homes or schools, who in turn make their money from the long term sale of the power from the panels to the electrical grid. In addition there are no Energy Service Companies (ESCOs) and Green Bond Funds that will underwrite the cost of larger installations.

For further information and detailed business analysis please contact Bill St. Arnaud at bill.st.arnaud@gmail.com.

Thursday, December 24, 2009

Must Read: Excellent OECD report on FTTh and Innovation

[Some excerpts -- BSA]


Wednesday, December 16, 2009

The Economist on customer owned fiber


[Great article in this week's economist on customer owned paper based on the original paper by Derek Slater and Tim WU, which was based on the project we have in Ottawa and elsewhere -- BSA]

Monday, November 16, 2009

UTOPIA Trailblazing New Opportunity For Customer-Owned Fiber

[Some excerpts from Geoff Daily's excellent blog on Broadband. As you
know this has been a model I have been advocating for some time, and
have tried to deploy in Ottawa with additional twist of bundling the
cost with the customer's energy bill -- BSA]

Geoff Daily's Blog: http://www.app-rising.com/

My blog: http://free-fiber-to-the-home.blogspot.com/

UTOPIA Trailblazing New Opportunity For User-Owned Fiber



An exciting development has occurred recently in the world of fiber
deployment. A new model is emerging in Brigham City, a city of less
than 20,000 in northern Utah, for how user-owned open fiber networks
can be financed and deployed.

It used to be that the only way you could get fiber was if you were
lucky enough to have a private provider lay it or to live in a city
that did it itself. Today in Brigham City, for $3,000 you can buy your
own fiber. And in fact more than 1,600 local residents have already
bought in to this new opportunity.

With that fiber they'll get access to UTOPIA's competitive and
growing ecosystem of service providers, where they get to choose what
services from what providers they want running on their pipe.

While this may sound radically different from how fiber has been
traditionally deployed in the US to date, user-owned open fiber
networks have already been a big success in Sweden, helping them wire
remote mountainous communities with world-class broadband

We also need to realize how potentially brilliant the open fiber
concept is for rural America because of how it allows for competition
to happen between service providers on a single pipe. With open fiber
you can make sure that everyone benefits from having access to a
competitive marketplace of communications services.

But I'm even more excited about what UTOPIA's new model could mean
for the future of fiber deployment.

The biggest problem with the economics of deploying fiber is that you
have to carry a massive debt load and begin paying it off before much
revenue starts coming in. Plus you have to invest a lot of money into
neighborhoods without any real idea of how many people are going to
sign up for service.

The user-owned model totally changes these dynamics. First off, by
having users pay for their own pipes you disaggregate most of the
debt. Just look at Brigham City. They're building a $5.5 million
network and the city's only putting up less than $700,000. So no
massive debt load for the city (or a private provider for that matter)
to carry.

The second major piece of this is that UTOPIA's going to have
built-in take-rates when they build out neighborhoods. Plus churn
should fall to zero since people own their pipes.

Basically the way I see this is as the possible beginnings of a new
third model for fiber deployment in the US. You no longer have to wait
for a private provider to make the investment, or for your city to
figure out how it can overcome all the roadblocks and then actually
execute effectively. Instead users who want service can band together
and find a way to get it now rather than waiting twenty years for
someone else to figure out how to do it.

They have developed a special assessment area model, though, that
allows homeowners to commit to a $25 a month payment over 15 years to
spread out the cost over time.

Another potential trouble spot is how to deal with renters who want
service but landlords who don't want to pay to have it installed.

But while there are questions still to be answered, the keys for
right now is that this model has worked elsewhere, and now at long
last we have someone willing to step out and see if it can work here
in the US.

So I say to UTOPIA: best of luck as you continue on these endeavors!
The rest of the country is watching, and we're all hoping you succeed
as there are millions of us that wish we could get our fiber now but

And to Brigham City: Kudos to you all! We are all cheering you on,
inspired by your commitment to getting yourselves wired with the most
important infrastructure of the 21st century.

Update on the Ottawa pilot


Lessons from the land of cheap broadband in Hong Kong

[Excerpts from CNN article. While HK density is a factor, it still does not account for the huge price differential in Internet pricing between HK and elsewehere in the world. I love the quote "The telecom industry tends to commoditize people. Our strategy is to commoditize bandwidth". - BSA]

Lessons from the land of cheap broadband in Hong Kong


City Telecom's 400,000 customers pay $13 a month for 100 megabit synchronous broadband. And they get a money-back guarantee: If they don't clock 80% of the promised speed, the company pays them twice their monthly fee.

If you live within coverage area of Verizon's FiOS
service (VZ
), you pay as much as $150 a month for up to 50 megs downstream and 20 upstream.

How can City Telecom possibly offer service that's more than twice as fast at less than 10% of the price?

Density is a blessing

It's partly geography and partly vision. While Hong Kong has 7 million inhabitants, only a small fraction of the island's mountainous terrain is developed, which means everyone basically lives on top of each other. The population density is 16,380 people per square mile – versus 640 in Japan and 80 in the US. That makes every customer far cheaper to serve. "We have a phenomenal network built at $200 per home. Verizon is talking about a cost of north of $1,000 per home,"
Lai says. "We built ours at one-fifth the cost."

Of course building the network in the first place required vision.
City Telecom was founded 17 years ago as an international calling-card company by two cousins who plowed in 100,000 Canadian dollars to get started. They could have leased lines to get into Internet-service business the way many carriers do, but that would have meant encountering the same last-mile bottleneck. So, they built their own $400 million network over a decade.

And now the company is on a tear. The largest IP service provider on Hong Kong, PCCW , has about 1 million customers, according to Lai, but is growing at a fraction of the pace. It added only 3,000 in the last six months, compared to 41,000 for City Telecom. PCCW recently slashed its prices to match City Telecom, but still can't come near the speeds. But can City Telecom really make a business out of cheap broadband?

Innovation trumps incumbency

Lai insists the company already has. "The network is cash flow positive since 07. We're debt free with 10% revenue growth and 30% EBITDA growth," he says. "Our stock is up 200% in 12 months, and the market is starting to realize what we're doing."

All that success, Lia adds, is a result of having a Big Hairy Audacious Goal and doing everything possible to achieve it. "The telecom industry tends to commoditize people. Our strategy is to commoditize bandwidth, to make 100 megabits the industry norm in Hong Kong," he says. "Our plan is to win by offering the best service at the lowest possible cost structure. Thirteen dollars is not a lot, but if you scale it and drive your cost base down, it's a beautiful business to be in."

If only some US telecom executives felt likewise.

Wednesday, October 7, 2009

Switzerland Government Gets it

Switzerland Switzerland

Wednesday, 7 October 2009

FTTH round table 'making progress'

The Swiss Federal Office of Communications (ComCom) has revealed that
round table discussions on the deployment of fibre-to-the-home (FTTH)
networks are producing concrete results. According to the regulator the
major players are now in agreement on uniform technical standards,
meaning that there are no technical barriers to the rapid expansion of
the fibre network. A consensus has also been reached on coordination,
which will prevent the parallel construction of new networks by laying
multiple fibres in every building (known as the multiple fibre model).
At the same time the participants at the round table have agreed that
all providers must have access to the fibre-optic network under the same
conditions, so as to protect end-users' freedom of choice. The
participants drew up further recommendations for standardised network
access by services. Thanks to an open interface, service providers will
enjoy network access to customers at all times via network operators.
If, at a later date, the customer opts for a different service provider
on the same fibre-optic network, the switch will be possible without any
technical complications.

The roundtable discussions involve cable network operators, telecoms
companies and electricity utilities. Further roundtables and working
groups will be held to clarify points. ComCom will also examine whether
new regulatory measures are needed to govern FTTH deployment, with the
aim of reporting to parliament by mid-2010 at the latest.

Wednesday, September 16, 2009

New Zealand Government gets it

The NZ government has taken a major step forward in building a structurally separate FTTh network


The government's overall objective for the ultra-fast broadband investment initiative is to accelerate the roll-out of ultra-fast broadband to 75 percent of New Zealanders over ten years, concentrating in the first six years on priority broadband users such as businesses, schools and health services, plus green-field developments and certain tranches of residential areas.

This government's objective will be supported by government investment of up to $1.5 billion, which is expected to be at least matched by an equal amount of private sector investment, and will be directed to open-access infrastructure.

On 16 September 2009, Communications and Information Technology Minister Hon Steven Joyce announced the final design of the government's broadband investment initiative [link to Beehive website].
Key highlights

Key highlights of the government’ proposal include:

* An open, competitive partner selection process.
* Government investment will be directed to an open access, passive fibre network infrastructure.
* A new Crown-owned investment company ('Crown Fibre Holdings') will be operational by October, which will carry out the government’s partner selection process and manage the government’s investment in fibre networks.
* Crown Fibre Holdings will establish with private sector partners a 'Local Fibre Company' (LFC) in each region, to deploy fibre network infrastructure and provide access to dark fibre products and, optionally, certain active wholesale Layer 2 services.
* The Government is open to national proposals and proposals aggregating any combination of LFC regions.
* Expansion from 25 to 33 candidate coverage areas based on the largest urban areas (by population in 2021).
* LFCs will be required from day one to be open networks facilitating access to their infrastructure on an equivalent basis to all users.
* LFCs cannot be controlled by any party who also operates as a telecommunications retailer.

Monday, August 24, 2009

The regulatory and telecom policy issues of PON versus home run fiber

[Here are 2 excellent pointers on the telcom policy and regulatory issues with respect to PON versus home run fiber. As governments around the world accelerate plans to deploy next generation broadband there is clear desire by many to ensure greater completion and create a level playing field for new entrants. Most incumbents prefer to deploy various forms of PON as it keeps them in control of the network (and the customer), even if they are obligated to provide some sort of open access. PON is also seen as marginally cheaper than point to point home run fiber (but with new optical ribbons that is debatable). Regulators on the other hand, especially in Europe, see point to point home run fiber as way of promoting facilities based competition and ensuring structural separation between service providers and infrastructure. Home run fiber also opens the door to new business models such as condominium fiber, customer ownership of the last mile (Google’s Homes with tails) and Green Broadband where the cost of fiber and service is bundled with the energy bill. Thanks to Prashanta Mukherjee and Benoit Felten for these pointers – BSA]

Regulating Fiber Access Networks in New Zealand

Point to Point versus GPON: A comparison of two optical network access technologies

Monday, August 17, 2009

My testimony at FCC broadband workshop

[The FCC has been tasked to develop a national broadband strategy and are holding a series of workshops. I was invited to give a short presentation on some of the ideas we have been working in Canada and elsewhere. Here are my speaking notes – Bill]


My presentation and background slides can be found at

Good morning

First all I would like to thank the FCC staff inviting me to give speak at this event and I applaud their initiative in this area. These workshops will be very critical in defining a national broadband vision not only for the US but other countries around the world as well

I am Bill St Arnaud Chief Research Officer for CANARIE

CANARIE is the Canadian equivalent of Internet 2.

Our mandate is a bit broader in that we have been tasked to advance Canada’s telcom and Internet networks and applications

We work closely with organizations like Internet 2, NLR , Educuase in the US and institutions like UCSD

As everyone knows the Internet originated with the R&E community.

Not many people realize however that R&E community is also a major pioneer in new broadband architectures and business models

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

New broadband Concepts like condominium networks, customer owned and controlled networks, hybrid networking, etc all started with the R&E community

[First slide]

In my opinion the biggest challenge in developing a national broadband vision is defining a business case

Many people think that government is going to invest billions of dollars in a national broadband deployment

In this era of trillion deficits and near bankrupt state and local governments I very much doubt that governments will be able to make any significant investments in broadband

So we have to look at the private sector as the primary vehicle for deploying broadband

But the business case for private sector to deploy national broadband is also very weak, especially if we want multiple facilities based competitors

I think there is general agreement that multiple facilities based competition is the ideal solution as competition drives innovation, lower prices and more choices for the consumer

But the business case for traditional NGA deployment is very weak and is predicated on 40% takeup and triple play revenues of $130

And of course revenues from triple play are gradually being undermined as video and voice service migrate to the internet in the coming years

Even with those numbers high speed broadband based on fiber will only reach about 40% of customers

So what we need is to experiment with new business models to underwrite the cost of next generation broadband


Some good examples are the “Home with Tails” concept that some Google analysts are advocating where the customer owns the last mile

Another one is Green Broadband where the cost of the broadband infrastructure and service is bundled with the customers’ energy bill, and the customer is encouraged to reduce their energy consumption, while the service provider makes money from the energy bill rather than triple play. There are now several pilots around the world adopting this model

As you may have heard CANARIE has launched a modest Green IT pilot program to help industry and academia capture new business opportunities in this field

Other examples include the condominium fiber deployment in Netherlands being lead by KPN in partnership with Reggenfiber

Another good example is the Swisscom national condo fiber project being deployed in partnership with numerous energy companies in that country

So my number one suggestion to FCC is that they work with R&E community and fund a number of NGA pilots that promote facilities based competition

For more information please see the links on your screen

Thank you

Tuesday, June 23, 2009

Open Access Fiber Infrastructure makes economic sense for carriers

[Benoit Felten, an analyst at Yankee Group has recently published an excellent report on the economics of FTTh, and why an open access infrastructure makes business sense for cariers like that being deployed by KPN in Netherlands (in partnership with RegenFibe and CityNet) , Swisscom and others.

He notes in his report that “ The business model for fiber to the home (FTTH) is a tough one to make fly. Despite the increasing pressure (competitive and political) for wireline copper operators to upgrade their networks to FTTH, the economics of the business model scare both the telcos themselves and their shareholders or financiers… It’s virtually impossible for FTTH to pay for itself in less than five years unless takeup is at least 30 percent, and even then a time frame of seven to eight years is more realistic considering known conditions in most developed markets” This bleak assessment of the business case for FTTH applies not only to carriers but also to municipal fiber builders as well.

However M. Felten clearly demonstrates that “Although it might be perceived by most incumbents as going against the grain, opening up a new FTTH network to competitors is actually an efficient way to increase takeup without sacrificing strategic positioning. It has a significant impact on the reduction of the payback as it generates additional revenue from low ARPU but high-margin wholesale customers.”

I would also add that if the carrier deploys point to point open access fiber infrastructure it opens up new business opportunities such as customer owned fiber (as advocated by Google and others) and bundling cost of fiber and Internet with customer’s energy bill, as in the case of Swisscom. For more details please contact Benoit Felten at Yankee Group BFelten@yankeegroup.com or visit his excellent blog on the subject http://www.fiberevolution.com/ -- BSA]

Monday, June 1, 2009

Excellent OECD report on broadband and stimulus

[Here is another excellent OECD report on broadband and stimulus. As with several other reports they stress the importance that government investment should create a competitive, open access infrastructure. The choice of network topology is critical for enabling competition. Some excerpts – BSA]


At the same time, governments recognise that competitive broadband communication networks are increasingly fundamental to economic and social development. They are
viewed as a general purpose technology that will not only support critical services but are required for innovation, competitiveness and growth across economies.

When the public pays for broadband investment they should expect to benefit from improved service and greater choice in the market place. One means to accomplish this is to ensure that networks built or augmented using any public funding are available via “open access” rules, meaning network providers offer access or capacity to all market participants on cost-based, non-discriminatory terms.

The physical topology of broadband networks has a significant impact on the potential for competitive access in the future. In general, the topologies which offer the most access to competitors are the most expensive to install but may also provide more longer-term economic benefits and improved consumer surplus than other topologies. By way of contrast, some topologies may serve to strengthen existing dominant positions in the market and should be carefully considered before governments commit any public funds. Public investment in passive infrastructure may be another important way for governments to put people to work and build a platform for future economic growth without displacing private-sector investment.

Economic literature focuses on two types of government spending, “productive” and “nonproductive”. The term “productive” relates to government expenditure that can be included in the private production function and thus is the only kind of spending which has an effect on long-term economic output. In other words, productive spending would increase the productive capacity of individual firms via
externalities (Kneller et al., 1999). In terms of the current crisis “unproductive” investment can fulfil the first goal of putting people to work but will not affect the second goal of expanding productive capacity.

The focus on “productive” spending is important because it works as a positive externality to firms in the economy. Angelopoulos et al., (2007), refer to this spending as “the engine of long-term growth” and suggest that governments could improve their growth performance by reallocating public expenditure
towards productive activities. This has implications for policy makers considering government stimulus investment. Government spending should target “productive” investments whenever possible because of the dual effects they can provide. They essentially offer much better returns for the same initial investment.
Infrastructure investment can be “productive” because of its effect on long-run aggregate supply

Network investments are typically used as examples of “productive” government investment because of the positive externalities they provide. Aschauer (1988) finds that investment in core network infrastructure, including roads, airports, electrical and gas facilities, mass transit, water systems and sewers
have a strong and significant impact on economic productivity.

Government policy makers should consider four key goals when considering investment in the telecommunication sector: improving connectivity, increasing competition, stimulating innovation/growth and increasing social benefit (see Figure 4). All four elements are highlighted in the Recommendation of the OECD Council on Broadband Development.8 Successful government investment needs to address and
strike a balance of all four elements. Focusing investment on just one element could actually leave telecommunication markets worse off than before the investment. For example, money invested which creates or strengthens a monopoly provider may expand connectivity but will likely stifle competition,innovation and possibly social welfare.

Government investment in telecommunication networks must be used to foster competition and not to entrench existing operators at the expense of potential new entrants. One risk of governments investing in telecommunications is that they tend to have to choose winners in the market.

It would not be desirable for public funding to strengthen monopoly or duopoly service providers at the expense of new entrants. All investment should help promote competition for broadband access from the start. When governments do decide to intervene in markets by subsidising communication networks they should consider requiring the resulting network be available via “open access” rules. The term “open
access” refers to an arrangement where network providers offer capacity or access to all market participants under the same terms and conditions. Operators of open access networks must allow competitive access to the network on non-discriminatory terms. Open access networks play an important role promoting competition and can help offset market imbalances when certain firms receive government
funds but competitors or later entrants may not.

The level of competition possible on a network is closely tied to its topology. Any government investment in telecommunication networks must take the implications of different topologies into consideration when evaluating projects. There are benefits and drawbacks to each of these topologies. In general, topologies offering more
competition are relatively more expensive to install but will usually have more longer-term economic benefits:

Broadband networks are already an important foundation for innovation and growth in the OECD. Telecommunication networks helped improve the efficiency of virtually every sector in the economy. Their impact can be seen easily during this economic downturn as people turn to the Internet to look for jobs, gather information and shop for discounted goods. Teleconferencing over the Internet has helped
firms deal with decreasing travel budgets and environmental concerns. Finally, the Internet has become one of the leading sources for information, news and entertainment in OECD countries.

Wednesday, May 13, 2009

Open access infrastructure for community networks and economic benefits of rural broaband

[John Sehn has put together an excellent overview of open access infrastructure for community networks at his company’s web site that is dedicated to issues around FTTH Public Private Partnership Analysis.. His organization is also working on a business plan to build regional community networks build around these models. Also Washington Post recently carried an article on the economic benefits of rural broadband on Benoit Felten’s blog – BSA]
Community FTTH networks: Structural Options

See also his section on Community Networks

Various open fiber projects around the world

Do jobs follow broadband access

Thursday, May 7, 2009

Google on How to Change the Internet: You Should Own Your Broadband Pipes

[A great talk by Derek Slater at Google. The concept of customer owned networks, like the Internet started with the university community and is now slowing expending into the commercial world. As I mentioned in previous post, network deployments in Switzerland, Amsterdam, Norway and Sweden enable this type of business model. Thanks to Maxine Brown for this pointer –BSA]

Google on How to Change the Internet: You Should Own Your Broadband Pipes


FTTH provider’s customers bury their own fiber

NAB: FTTH provider’s customers bury their own fiber

LAS VEGAS -- A Norwegian triple-play provider has a unique solution to the pesky problem of digging up consumers' yards to bury fiber-to-the-home. Lyse Tele, an overbuilder that launched its fiber-based all-IP solution in 2002, installs the fiber right to the edge of a customer's lawn, then gives the customer instructions on how to bury their own fiber cable to the house.


Monday, April 27, 2009

FTTH provider’s customers bury their own fiber


NAB: FTTH provider’s customers bury their own fiber

LAS VEGAS -- A Norwegian triple-play provider has a unique solution to the pesky problem of digging up consumers' yards to bury fiber-to-the-home. Lyse Tele, an overbuilder that launched its fiber-based all-IP solution in 2002, installs the fiber right to the edge of a customer's lawn, then gives the customer instructions on how to bury their own fiber cable to the house.


Monday, March 30, 2009

Condominium Open fiber infrastructure & CO2 reduction in Switzerland

[Here is a good example of how the concept of open condominium fiber infrastructure, pioneered by the R&E network community enables deployment of lower cost broadband deployment, facilities based competition and new business models for helping reduce GHG emissions. As I pointed out in a previous post forward thinking carriers like Swiscom and KPN understand the business value of open condo fiber muni networks and the potential for radical new business models such as free fiber (http://free-fiber-to-the-home.blogspot.com/) to the home and homes with tails. See also talks by Benoit Felten on this subject. Thanks to Kátrin Schweren for this pointer – BSA]

Last Wednesday, Swisscom has announced its first cooperation that will enable joint roll out of multi-fiber FTTH.

The canton of Fribourg, Groupe E, the Swiss French electricity producer and supplier, and Swisscom are to work hand in hand on the construction of a fibre-optic (FTTH) access network. The partnership aims to reduce costs for both companies and to offer every interested service provider the opportunity to use the infrastructure, therefore avoiding duplicate investments. It consists of setting up a single multi-fibre access network within an existing underground infrastructure and will allow a healthy level of competition in the area of networks and telecommunications services. Groupe E and its energy provider partners will develop energy-related services with the aim of achieving energy efficiency. The canton of Fribourg is clearly following its „High Tech in the Green" strategy by supporting this project which will make the canton more attractive in both urban and rural areas. This is the first collaboration between an electricity company, an operator and a canton in Switzerland.

Please find attached the press release
as well the link to it.

http://www.swisscom.com/GHQ/content/Media/Medienmitteilungen/2009/20090325_MM_Glasfasernetz.htm Deutsche Präsi:

Benoit Felten talk

Monday, March 9, 2009

The Importance of Next Generation Networks for job creation

[Here is a good report on all the future applications and job creation that will be enabled by next generation networks. However, this glorious and wonderful future will not come into reality unless we solve the problem of the business case for next generation broadband deployment and a more competitive marketplace. As long ago as August 1993, Scientific America pointed out that it is NOT new applications that drive demand for broadband but competition driving down prices. The Scientific America article demonstrated that it was the price of telecommunications technology in terms of average per capita income that drives demand and its competition that achieves this price reduction. The PC is a good example of a technology has thousands of wonderful applications, and will continue to do so, but the PC only became widespread once its price became affordable as a result of competition from manufacturers around the world. The opposite situation happened with the telephone, where it took 75 years to reach 50% penetration of homes, because historically it has been very expensive technology as a percentage of average annual income due to its monopoly position in the marketplace.

Some countries like Greece, Switzerland, The Netherlands are starting to understand the importance of providing competition by deploying passive fiber infrastructures throughout their countries with multiple home run fiber strands to every home to enable access by multiple competitors and new business models such as homes with tails, Green broadband etc. Even some carriers such as KPN and Swisscom are starting to understand the importance of this architecture and business model and are beginning to endorse it, as it is the only way that we can cost effectively roll out next generation broadband.

There were several good presentations on this new business model from Greece, Netherlands and Switzerland at the recent Fiber to the Home Council meeting in Europe. Unfortunately the FFTx council has decreed that you need a password to access these documents. – BSA]

The European Fiber to Home Council Meeting - Cophenhagen

KPN joins Amsterdam CityNet in extending its open FttHnetwork

New Report Takes Broadband Beyond Stimulus Debate Next-Generation Networks, More Speed, Key to Growth
Cites Potential for 2 Million Jobs

A new report says next-generation networks capable of providing much faster Internet access are needed to provide the next level of services and applications to consumers.

Released today by the Information Technology & Innovation Foundation, “The Need for Speed: The Importance of Next-Generation Broadband Networks” identifies the economic and societal benefits of high-speed broadband, as well as policies needed to encourage further expansion.

“Supporting the widespread deployment of next-generation broadband Internet will enable the emergence of a whole host of online applications and services, many of which we can barely imagine today, that will increase quality of life and boost economic growth,” the report finds.
“The true potential of the next generation broadband network lies in the transformative new functionalities it enables and the innovative Web-based applications it supports.”

The study finds that broadband deployment has the potential to create or save two million jobs for American workers over the time period in which that deployment occurred, further emphasizing the importance of national broadband deployment.

“This report shows us that deploying next generation broadband networks will have profoundly positive benefits for consumers, businesses, academic institutions and society in general,” said ITIF President Robert Atkinson. “Deploying next generation broadband to 80 percent of U.S. households that currently lack it can bring the needed economic stimulus by ensuring approximately two million American jobs.”

The report emphasizes that there is a role for proactive public policies to encourage investment in next-generation broadband networks, such as more favorable tax treatment for such investments.

Thursday, January 29, 2009

Competition most important tool to increase broadband deployment

[Here are a couple of good pointers on why competition may be the most important tool to increase broadband deployment. As far back as August 1993 in an article in Scientific American, it was noted that competition was the main driver for the rate of adoption of many technologies from basic telephony to the PC computer. In that article they compared the rate of adoption of the telephone versus cable, VCR, PC etc. The telephone took over 75 years to reach 50% penetration, while cable TV took 35 years and the PC and VCR less than 15 years. There was a clear correlation between the average cost as expressed in per capita income of these technologies and their rate of adoption. And of course what drove down cost was competition. Where there was lots of competition – PC and VCR, prices dropped and adoption rates skyrocketed. Where there was no competition, as in the case of telephone monopoly, prices and adoption declined very slowly. Excerpts from Scott Bradner’s column and posting by Dirk van der Woude on Gordon Cooks excellent Arch-Econ list – BSA]


Obama's broadband stimulus: throwing money at wrong target?
The Pew Internet & American Life Project just published the results of two surveys on Internet connectivity it ran over the last year. This report shows that not all that many people are blocked from getting broadband Internet access because it is not available in their area. There is no question that there are big parts of the country where broadband access cannot be obtained unless you are willing to use a satellite service. It is hard to tell in how much of the country this is true because of the poor statistics the FCC has been collecting. (See "All's well with U.S. broadband deployment (says FCC).")

The Pew report says that some people (more than 15%) have no interest in getting online. Another 6% think the price is too high, and 5% have usability problems. The president's plan is unlikely to change these numbers much.

The current draft of the broadband part of the stimulus package focuses on providing grants to companies that are willing to deploy wireless or wired broadband in underserved areas. The bill mandates open access to any services that result from such grants.

But, if the Pew report is correct, the stimulus money and open access policies might only result in a few percent of additional broadband users in the United States. Figuring out how to get more competition into the picture so that prices could come down might yield a greater return.
[From posting by Dirk van der Woude]

ECTA, the European Competitive Telecommunications Association, yesterday released the latest installement of its regulatory score card. Good reading and below an interesting quote (pag 12). (Hat tip to 'you know who you are').

"It may be tentatively concluded from these and other results found by analysing data reported in the Scorecard together with July 2008 broadband data reported by the European Commission and OECD that infrastructure and effective access-based competition may complement each other in stimulating high broadband take-up rates, and take-up of higher speed services – both of which are necessary to justify and reduce risks in investments in access upgrades such as FTTH.

The positive relationship between incumbent retail DSL lines and LLU also suggests that the benefits of access regulation through increasing overall take-up of broadband may also enable the incumbent to increase its own take-up rates. Although data is not yet available to assess the effects quantitatively, one might also postulate, following similar logic to unbundling of copper loops, that the take-up of fibre access and higher speed services available over it could be stimulated through unbundling and that such expansion and competition could also facilitate increased demand for the incumbents own fibre services."

Whole report: http://www.ectaportal.com/en/basic651.html