Setting the Record Straight on Broadband Investment

• Patrick Brogan

03.14.2014

Some people will never be happy. This is the reaction that comes to mind as I read David Cay Johnston’s Newsweek Online article , “Telecom Giants Drag Their Feet on Broadband for the Whole Country.” Johnston inexplicably portrays America’s broadband industry as revanchist profiteers out to nickel and dime consumers. Yet, by any objective reading, broadband providers are spending extraordinarily large sums of money to deploy modern networks — and consumers have benefited enormously, with more choice and technological innovation than they could have imagined even a decade or two ago.

Let’s begin with the article’s unsubstantiated claim that broadband providers hoodwinked the citizenry and the government into believing there was some earmarked “project” to wire every corner of the country, charge for it, and then pocket the cash. The facts are that broadband providers, including wireline telecom, wireless telecom, and cable, are investing nearly $70 billion annually in capital expenditures , predominantly to build out advanced networks. Wireline broadband providers account for more than one-third of that. Since 1996, the broadband industry has invested more $1.3 trillion dollars in capital expenditures, with wireline telecom providers accounting for at least half. A recent report on U.S. “Investment Heroes” ranks AT&T and Verizon the top two investing companies in the country. According to this report, other than the energy sector, telecom makes more capital expenditures than any other sector, and three times as much as the technology sector. While the broadband sector continued to invest more than $60 billion per year in the depths of the recession, many other sectors were retaining cash .

Second, let’s address the article’s claim that vast swaths of the country have “little or no service” and that telcos have wired only “high-density big cities.” Looking at the very national broadband map Johnston cites, we can see that more than 99 percent of the population has broadband available over any wireless or wired technology and 95 percent can get wired broadband. Moreover, in just a few short years, substantially higher speeds have become more widely available. Wired broadband at 10 megabits download or greater is now available to 92 percent of the population, up from 85 percent in 2010; wired broadband at 50 megabits download or greater is available to more than 80 percent of the population, up from 46 percent in 2010; and wired broadband at 100 megabits download or greater is now available to 57 percent of the population, up from 11 percent in 2010.

In addition, new technologies have gained ground in recent years. Fiber-to-the-home is available to 25 percent of the population today, compared to less than 15 percent in 2010. This figure does not include projects that push fiber closer to the home, such as AT&T’s U-verse, which has recently announced upgrades to 45 megabit speeds over hybrid fiber-copper networks for about three-quarters of its roughly 30-million-home footprint. AT&T plans to upgrade U-verse to 100 megabit speeds in the future. Carriers are beginning to roll out gigabit fiber services to consumers. Finally, mobile wireless broadband at 10 megabits download or greater is now available to 95 percent of the population today, compared to just 8 percent in 2010.

As for the claim that only big cities have been wired, approximately 20 percent of households in the United States are rural. If 95 percent have wired broadband from telecom or cable operator, at least three-quarters of rural households can get wired broadband, not to mention that nearly all households can get wireless broadband at 10 megabits download. As the FCC’s national broadband plan states — not just an industry claim, but a government analysis — it is uneconomic to deploy broadband to some high-cost areas. Of course, it is important to connect all Americans with broadband. That is why USTelecom has supported FCC efforts to reform its universal service programs to include support for broadband.

Also inexplicable is Johnston’s nostalgia for the networks of the 19 ^th century. Sure, they didn’t depend on the electrical grid. That is because they were copper from end to end. If you want the kinds of usage and convenience that modern networks demand, you need more fiber and more wireless technology in your networks. These require separate power. Just as important, the copper network of the 19 ^th century, even when upgraded with late 20 ^th century digital switching technology, could only provide dial-up Internet access at 56 kilobits per second. Surely we want more than that, which requires trade-offs — and unlike on the traditional network, end user capacity demands are constantly growing.

Maintaining increasingly underutilized legacy networks diverts resources from modern networks needed to accommodate the critical demands of the modern information economy. Certainly industry does not want to cut off consumers from services like 911, home security, and health monitoring. But isn’t it better to find ways to deliver those services more efficiently over modern networks that to maintain duplicative networks indefinitely?

- See more at: http://www.ustelecom.org/blog/setting-record-...jgMcd.dpuf