The Broadband Availability Gap: Think Differently
An FCC report proposes satellite-based broadband as a solution to help close the broadband availability gap and spur profitability.
The FCC paper: Broadband Availability Gap (OBI Technical Paper 1) is an interesting read. Long and acknowledged by the authors as complicated, it's still a good look into the insight and thinking of efforts to improve our national networks. OBI is the FCC Omnibus Broadband Initiative.
The report states that, "there's a $23.5 billion funding gap for 7 million housing units (HU's) that lack access terrestrial broadband infrastructure capable of meeting the National Broadband Availability Target of 4 Mbps download and 1 Mbps upload."
This means that each household would require just under $3,358 in subsidies, and according to the FCC report, these households (household units) will largely remain unprofitable going forward. But early on in the report the FCC states: "Therefore, satellite-based broadband, which can provide service to almost any subscriber regardless of location and at roughly the same cost, could be an attractive part of the overall solution."
The FCC statement about satellite-based broadband is correct and reasonable, since monthly costs range from $39.95 to $129.95 (Based on speeds), and there are satellite providers capable of providing Internet services (let's make an assumption here) to most of those lacking terrestrial Internet service.
Bandwidth requirements have a tendency to grow. I recall that in 2009, after deploying SIP trunks on Verizon's FIOS with just 10 Mbps/2 Mbps ($44.95 monthly) service, we removed all POTS and analog services and grew to Verizon's FIOS Quantum service--75 Mbps/35 Mbps ($114.95 monthly) in 2013. We are still paying less for all telecommunications services, with cellular now being the biggest hit against our telecom budget.
While the report is granular in detail and makes assumptions about costs incurred for attempting to serve those 7 million HU's via different media, the FCC clarifies later in the report that these 7 million HU's represent 14 million people.
Looking back, in the days of the Rural Electrification Act (REA) of 1935, the nation was in the midst of the Great Depression, and farms, ranches, and rural homes across the nation still did not have electricity. Today we see a strikingly similar landscape in both economic conditions and accessibility to high speed Internet.
I believe the core difference is in vision and again holistic understanding of both telecommunications services and networks. In 1935, there was vision and desire to build infrastructure in this country. Technology reigned in the copper plant, and that copper plant grew; today it is contracting because of higher costs to maintain it, technological limitations, and obsolescence. But is there a similar vision to build a national telecommunications infrastructure with fiber?
Verizon isn't alone in the quest to rid itself of aging copper. AT&T plans expansion into 25 metro areas with their new service GigaPower. Google Fiber is already available in Kansas City and due to arrive in Austin, TX and Provo, UT.
Getting back to the FCC report, the commission goes on to acknowledge some of the benefits of FTTH and RF over Glass (RFoG). The report states: "HFC and fiber networks have similar outside plant (OSP) costs, which are mostly a function of labor costs. However, RFoG and FTTP deployments, by removing all active electronics from the outside plant, have lower ongoing expenses."
To elaborate, HFC (Hybrid fiber coaxial) and fiber networks have similar one-time initial OSP costs. Fiber has long life--just how long is debated, but the range is believed to be from 40 to 100 years. When end of life is reached, fiber networks, unlike HFC or copper plants, will not allow traversal of electrical interference and influence, meaning fiber's properties will not result in damaged gear.
While fiber costs may be high for lower density populations, the benefits over the life of the fiber make a better business case. In the matter of "national defense," a national fiber infrastructure is a hedge against any EMP (electro-magnetic pulse) threat.
To guard against EMP, the electronics must be protected (shielded/bonded/grounded) at both ends, but the OSP must consist of fiber. As reported in the Report of the Commission to Assess the Threat to the United States from Electromagnetic Pulse (EMP) Attack, it:
"...Is resistant to E1 attacks and much of the backbone of communication networks are often located or housed in facilities that are designed to protect this equipment from EMP effects or lightning, so there is some built-in industry protection in these areas."
Fiber is more resilient, and the potential to reduce electrical damage on a national level has more benefit, contributing to the reduction of insurance claims and losses, downtime and disruption to both enterprise and residential users.
The FCC elaborates over cost and the expected decline of FTTH/FTTP costs as RFoG is adopted, since all fiber infrastructures offer future proofing and lower life cycle costs compared with HFC.
While the PSTN may get the proverbial cut, I don't think that it's being thought out in the way of sustainability. The arguments and cost models for alternative means of delivering high speed Internet are detailed and found within the FCC report.
POTS may be short lived, but DSL technology still requires copper OSP. It doesn't look like the Telco OSP is going away anytime soon. If POTS is dead, what kind of operating cost impact does this have on remaining services delivered via copper OSP? The FCC states that, "We are forced to use a statistical model for Telco plant because we are not able to acquire a nationwide data source of availability or Telco infrastructure locations."
Has the North American Telco become too big to manage? It seems that the traditional Telco infrastructure shouldn't be a mystery, and if the PSTN is nearing end-of-life/usefulness, a paring down would follow along with consolidation away from traditional Central Offices to a move to the data center.
Then, what investments may or may not occur based upon profitability may not matter. Is the demise of the PSTN overstated or will it force new regulations and subsidies in preparation? There are other interesting challenges outlined in the report that I'll discuss later.