Sunday, July 06, 2014

“Broadband” infrastructure subsidy programs falling behind in the gigabit world

As telecommunications becomes an Internet-based, fiber delivered service, programs aimed at subsidizing the cost of infrastructure construction are rapidly going out of date. For example, the U.S. federal government’s Connect America Fund helps underwrite the cost of building infrastructure in areas with service providing Internet connections of less than 3 Mbs down and 1 Mbs up. The California Advanced Services Fund targets areas with less than 6 Mbs down and 1.5 Mbs up. Both definitions are now technologically obsolete in that they are purposed for “broadband" service and define "broadband" based on a moving and quickly obsoleted throughput target that only measures speed but not latency or jitter --  key components of throughput quality.

It's no longer a broadband environment where the term broadband was used to distinguish advanced services from 1990s "narrowband" dialup. It's now a "gigabit" world of fiber to the premise (FTTP) that can provide exponentially superior throughput with no near term threat of obsolescence.

In addition to using an outdated and incomplete measure of throughput, these programs are deeply flawed insofar as they aim to preserve the hegemony of the legacy metal wire-based legacy telephone and cable companies with eligibility standards based on the companies’ need to constrain bandwidth on their bandwidth-limited metal wire plants. Program subsidies are only available in areas deemed “underserved” and “unserved” relative to services provided – and not provided -- by the incumbents. 

This isn't a practical definition since the footprint of wireline-based services of the incumbents is highly granular at the network edge due to market segmentation and arbitrary redlining of discrete neighborhoods deemed undesirable and therefore unserviceable.

For the most part, the large first tier incumbent telcos and cablecos have spurned the subsidies, probably because they are far too limited to allow them to significantly upgrade their plants to FTTP. They also likely realize accepting subsidy funding would potentially increase pressure on them to provide service to all premises in their service territories as some advocate, urging the U.S. Federal Communications Commission to regulate the Internet under a common carrier scheme like that in place for decades for voice telephone service.

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