Why is the United States, No. 10 in a ranking of countries by the Organization for Economic Cooperation and Development, a broadband laggard?
With the political parties making broadband access an issue in the fall presidential election, CNET News.com asked leading figures from the worlds of business, labor and technology for their insights.
An agenda for the broadband future
Since the beginning of 2001, the communications sector has been a disappointing segment of the national economy. Neither Congress nor the Federal Communications Commission has been able to change the downward trends or mood in the sector. It's high time for the following changes.
- Open a wireless broadband pipe to the home
The FCC can make this happen by clearing spectrum currently used by UHF-TV stations and dedicating it to wireless broadband. This spectrum band has signal propagation characteristics that are ideally suited for , thus lowering costs by more than half and increasing the quality of signals by an even greater factor.
- Encourage fiber to the home
A comprehensive broadband plan for America would copy the successes in , Japan and elsewhere that were based on modest but effective government support to national communications companies, so as to create effective business cases for deploying fiber to homes. Wireless broadband is not the only solution to putting all of America on a ubiquitous broadband network--fiber ought to be part of the network as well.
- Establish an intercarrier transfer plan
For more than a year, major carriers have negotiated a means of exchanging traffic. At critical moments when the FCC might have encouraged an agreement, it was unable to muster the initiative to take action.
- Foster media diversity
In the last three years, the FCC was unable to translate any coherent antitrust policy into respectable, sustainable rules. It is past time to develop a blueprint for competition and diversity that is both reflective of today's markets and also respectful of the purpose of diversity rules.
- Introduce spectrum reform
Since the mid-1990s, scholars and many FCC personnel have well understood the imperatives of spectrum reform. A great failing of the current FCC is its inability to translate the basic principles into rules. For example, spectrum should be freely transferable, unlimited in its use and widely available in both licensed and unlicensed formats.
- Develop an international agenda
Given the imperatives of open markets and freely negotiated standards, the FCC should not have abandoned its international role in the last three years. In 2005, an active international agenda should be a core part of the FCC mission.
- Reconcile programming access
Currently, different distribution systems have different obligations and rights with respect to programming. Given the competition that stems from convergence, the FCC should reconcile the different regulatory regimes under a paradigm of neutrality.
- Reform Universal Service
The FCC has made little or no progress since 2001 in solving the increasing problem of the disappearing revenue base for the Universal Service Program. Moreover, at the state and federal level has grown less efficient over time. The goals should be restated and reaffirmed and the program reformed comprehensively.
- Outline public interest
Despite all the hullabaloo about , the FCC has described no coherent blueprint for the public interest in the media. Next year, this should be a primary goal of the FCC and Congress.
- Introduce management reform
The FCC has grown bigger, more awkwardly organized and more expensive over the last three years. In 2005, the agency should set forth a plan to streamline its functions so as to be smarter, faster, leaner and less of a burden on taxpayers.
Reed Hundt, who was chairman of the Federal Communications Commission from 1993 to 1997, has advised the John Kerry campaign on broadband issues. He is currently an adviser on information industries to McKinsey & Co.
Unraveling the regulatory bundle
Earlier this year, President Bush called for universal, affordable access to broadband technology by 2007 and said he wanted to make sure Americans have plenty of choices in purchasing broadband.
In the early years of telecommunications, the only form of access was via the telephone and its related wires. The technology of telecommunications has, of course, gone well beyond those telephone wires to include DSL over copper wire, satellite, cable (with its hybrid fiber coax and direct fiber to the premises) and the ever-expanding capability of wireless. There are also other carriers, such as power lines.
By and large, the private sector will deploy new technology. The federal role, as with most issues related to technology, is to create an environment in which innovation can flourish. The Bush administration has implemented a wide range of policy directives to create economic incentives, remove regulatory barriers and promote new technologies--all of which are essential to making broadband more competitively available and affordable.
Supporting deregulation of new broadband infrastructure, seeking to end the taxation of broadband access, removing bureaucratic delays in granting rights-of-way and enacting legislation to allow companies to depreciate capital expenditures more quickly are some of the federal government steps that have helped establish an environment where broadband can flourish.
There is still work to be done. For example, the Federal Communications Commission rules on the requirement for investors to share their installations with competitors must be fully resolved. The rollout of most of these broadband technologies involves a considerable commitment of capital. These commitments must be rewarded.
Another critical area is spectrum availability. Through the president's policies, the federal government has nearly doubled the amount of spectrum available for innovative wireless broadband applications such as Wi-Fi and WiMax. These technologies can provide a range of new services--from granting consumers broadband access in restaurants, airports and other public places, to providing an economically viable solution for providing broadband services in rural areas.
The technology exists today to meet the president's vision even before the 2007 goal. Unraveling the regulatory bundle is probably the largest remaining hurdle. Consumers and businesses are showing their willingness to buy into broadband. The latest FCC report on broadband penetration shows a fourfold increase in the number of broadband lines in the United States, from the beginning of 2001 to the end of 2003. Broadband is here. Soon it will be everywhere.
Floyd Kvamme was one of five people who founded National Semiconductor in 1967. Since 1984, he has been a partner at Kleiner Perkins Caufield & Byers. Kvamme served on the 2000 Bush for President campaign's high-tech advisory and national finance committees.
How about some real competition?
A key to the success of the dial-up (or narrowband) Internet in the United States was a ubiquitous telephone network available to all information service providers on reasonable, nondiscriminatory terms.
The Federal Communications Commission followed this policy from the early 1970s, as computer applications over the telephone network began to spread, but abandoned it in the late 1990s, when cable modem service entered the market.
Cable operators, which serve about 85 percent of advanced-service broadband customers, closed their networks to competition. They exclude Internet service providers they don't own and restrict services offered over the advanced telecommunications network.
"Fast" 3-megabit services take up 3 percent of the capacity of cable systems and cost the customer $45 dollars per month. Yet cable operators offer digital TV in tiers priced at $15 per month, even though TV takes up much more of their capacity. Clearly, the companies' priority is to sell digital television.
In contrast to the dial-up Internet, which has an average of 15 ISPs per 100,000 subscribers, the cable modem high-speed Internet in any region is only available via one ISP, owned by the cable company. This is a disincentive for innovation in the broadband market, especially for video applications. Sadly, this could be the future for broadband connections over the same telephone lines that once fostered creative applications.
U.S. telephone companies charge three times as much per megabit as cable operators do. They have dragged their feet on innovation, partly because they also want to be able to close their networks to competition. Although an appeals court declared the FCC policy of not enforcing open markets illegal, the telephone companies and FCC Chairman Michael Powell continue to devise schemes to block the policy of requiring open access for broadband companies to telephone and cable systems.
In Japan, the national telephone company took the lead in introducing high-speed facilities, with the requirement that it had to keep its system truly open. (Ironically, the Office of the U.S. Trade Representative demanded that provision as part of the general effort to open up Japanese markets). Japanese telephone companies charge about $25 per month for up to 8 megabits of service--about one-fifth of what Americans pay. Because telephone companies there are not allowed to discriminate against ISPs, video applications are booming, and broadband penetration is three times as high as that in the United States.
Applications stimulate deployment and adoption, but developers have been driven from this product space by the exclusionary and restrictive practices of facility owners. Stagnation will continue until we rediscover a simple principle--open communications networks are the key to dynamic innovation.
Mark Cooper is director of research for the Consumer Federation of America, a consumer advocacy group in Washington, D.C., that represents about 300 nonprofit organizations.
Fix broadband's problems
Broadband is becoming increasingly important worldwide.
Whether it is used to enable Internet-based fundraising for the U.S. presidential campaign or to deliver advanced IP services such as video-on-demand or computer desktop conferencing, broadband is changing the way we do business.
When broadband first appeared in 1997, it was touted more as a speedy alternative to dial-up. However, as more people seek to download music, distribute digital photos, play games online and conduct private online transactions, it is apparent that the key concerns of broadband users are bandwidth, ease-of-use and security.
No longer satisfied with just e-mails and surfing the Web, people have become increasingly sophisticated in multi-tasking a plethora of bandwidth-intensive applications. This in turn has led to greater demand for network flexibility. Unfortunately, with its current infrastructure, carriers are finding it difficult to meet this demand in a cost-effective manner.
Another increasing broadband concern is security. With dial-up, people generally logged on for an hour or so--a brief window for hackers and viruses to contaminate a home PC or network. As broadband maintains an ongoing link to the Internet, users and networks are more vulnerable and susceptible to malicious attacks. This is a problem that will grow proportionally with the ever-growing number of broadband users. For example, broadband users numbered a mere couple hundred thousand in 1997. By the end of the first quarter of 2004, global broadband subscribers had increased to more than 73 million.
This year, the presidential campaign is giving broadband much needed exposure, but it needs to be included on the national agenda. In addition to government policies such as subsidies for schools and other public agencies, the industry needs to examine ways to protect and improve our networks.
Rather than providing only basic Internet access, broadband has the potential to change the way the world interacts and communicates. Advances in security and quality, connectivity in rural communities, and a rich array of new services will increase the value and utility of broadband.
Scott Kriens is chief executive officer of Juniper Networks, one of the major suppliers of infrastructure equipment for the Internet.