GAO: Better planning needed for most difficult phase of universal broadband deployment

The United States has done the easy part in providing broadband Internet to its citizens, having provided the vast majority with access to high speed connections, according to the Government Accountability Office (GAO). Meanwhile, the hard part remains to be done, the GAO's auditors said.

“Industry representatives estimate that roughly 90 percent of Americans now have access to broadband at home, work or through other community access points,” GAO said in a recent report to the House Energy and Commerce Committee. “However, getting broadband to the remaining 10 percent will be expensive, primarily because they live in rural areas.”

Providing universal access to broadband networking has been a national policy since the 1990s, and 11 federal programs have been established to fund telecom infrastructure deployment. However, only two Rural Development Utility Programs administered by the Agriculture Department focus specifically on broadband networking, GAO noted and  added that to date, the government has used market-based incentives to remove barriers and encourage commercial investment in broadband infrastructure.

“Under this policy, broadband infrastructure has been deployed extensively in the United States,” GAO said. “However, gaps remain, primarily in rural areas, because of limited profit potential.”

Because of the inadequate return on investment for providing access to the remaining 10 percent of the nation’s population, the government’s emphasis is likely to shift more to direct federal funding to finish the job. The economic stimulus law includes $7.2 billion for USDA, the Federal Communications Commission (FCC) and the Commerce Department’s National Telecommunications and Information Administration to (NTIA) map existing infrastructure, develop a broadband plan and fund grants and loans.

Building out the remaining infrastructure would cost an estimated $10 billion to $30 billion, and would require satellite and terrestrial wireless systems, as well as traditional wireline connections, the report said.

The term “broadband” encompasses a broad range of technologies and transmission speeds, ranging from 768 Kbps to more than 100 Mbps. They have in common that they are faster than the analog-to-digital modulation of dial-up connections using traditional telephone links. Satellite services can cover most of the United States with download links of up to 1 Mbps, but with upload links of only 200 Kbps and with noticeable latency. Digital subscriber lines use existing phone lines to provide 1.5 to 3 Mbps downloads and cable modems can provide up to 6 Mbps. Fiber Optic cable can provide higher speeds, where available, and there are a variety of wireless options, licensed and unlicensed, fixed and mobile, short and long range.

The FCC has primary responsibility for regulating the industry, although most of the regulatory authority is indirect. The market-based approach used to encourage broadband deployment has relied mainly on investment by the private sector in search of profits.

“Industry stakeholders credit federal programs with helping to increase broadband deployment, particularly in rural areas, but told GAO that because of the high cost and low profit potential of providing broadband services in rural areas, the federal government will likely need to provide additional funding to achieve universal access,” GAO said.

Although 90 percent of the population has access to broadband connections, relatively few are taking advantage of it compared with other developed nations. The United States has slipped from fourth place among 30 democratic nations of the Organization for Economic Cooperation and Development (OECD) in 2001, to 15th place in 2008, with a 25 percent penetration. Denmark was ranked first in 2008 with a 37 percent penetration. But the United States accounted for 30 percent of all OECD broadband subscribers in 2008 and Denmark accounted for just 1 percent.

Acting FCC Chairman Michael  Copps said the report's conclusions,“I have been concerned for many years that when it comes to broadband, the United States continues to be far too low in the global rankings. As a country, we have been well out of the lead for some time in getting this essential technology out to our citizens. I believe this, in large part, is due to a failure to develop a national plan for broadband advancement.”

Copps said that the free-market approach to broadband has been inadequate and called the practice of public support for vital infrastructure such as highways, harbors and railroads an “all-American tradition” that should be applied to modern communications.

Congress has required the FCC, together with the NTIA, to develop a national plan for broadband deployment by February 2010. Copps called the stimulus funding an “important down-payment.”

That law authorizes the NTIA to implement a $4.7 billion Broadband Technology Opportunities Program, which will provide competitive grants to states, nonprofits and service providers to expand services to underserved areas.

“NITA is focused on creating metrics and reporting requirements that will ensure that the grants we make are effective in moving the country closer to the administration’s broadband goals,” the NTIA said in response to the GAO report.