Consequently, it will likely repurpose the mission of the FCC’s Connect America Fund (CAF) program created to subsidize infrastructure construction in high cost areas to instead help defray the cost of deploying fiber to the premise (FTTP) infrastructure in these areas. At the same time, the FCC could also realize that significantly greater funding will be needed to do the job than the $9 billion the CAF has budgeted for its second phase covering the period 2014-2019.
The FCC this year recognized that its current eligibility criterion for CAF subsidies is potentially outdated. It’s targeted to high cost areas where premises are not served by landline connections providing at least 4 Mbs down and 1 Mbs up. The FCC issued a notice of inquiry in August to take testimony as to whether that standard should be increased and modified to include latency as well as speed.
In prepared remarks delivered this week, FCC Chairman Tom Wheeler suggested 25 Mbs should be considered the new minimum. He went on to observe that might also be too low and only a quarter of the throughput that Americans presently expect given their growing appetites for high definition streaming video and multiple connected devices in their homes and small businesses.
“Today, a majority of American homes have access to 100 Mbs,” Wheeler continued. “It is that kind of bandwidth that we should be pointing to as we move further into the 21st century. And while it’s good that a majority of American homes have access to 100 Mbs, it is not acceptable that more than 40 percent do not.”
Relative to high cost areas, Wheeler noted the FCC “will continue to establish requirements for our universal service programs, but beyond that, consumers are establishing their own expectations.” That recognition of end user needs represents a significant departure from existing policy where telecommunications providers and governments tell consumers in these areas what they should expect instead of the reverse. It’s also an implicit recognition that there should be a single standard and not a separate and lesser standard for high cost areas of the nation. Which makes sense given that core content providers and other services are tailored for a single standard of quality at the network edge.
Noting FTTP deployments in several metro areas of the U.S., Wheeler impliedly recognized FTTP infrastructure is replacing the speed-based “broadband” metal wire paradigm of the legacy telephone and cable companies. That model utilizes “bandwidth by the bucket,” speed-based pricing tiers based on the assumption that metal wire infrastructure has limited carrying capacity and that service must accordingly be rationed and priced based on demand.
Wheeler recognized with FTTP, that pricing model that irks many consumers faces obsolescence. “Once fiber is in place, its beauty is that throughput increases are largely a matter of upgrading the electronics at both ends, something that costs much less than laying new connections,” Wheeler said.
Wheeler also acknowledged that mobile wireless services cannot substitute for FTTP. “While LTE and LTE-A offer new potential, consumers have yet to see how these technologies will be used to offer fixed wireless service,” he said.