The Federal Communications Commission released the full version of its National Broadband Plan yesterday — all 11+ megabytes of it. A quick read (!) of the 300+ page document reveals that the problem of broadband “availability” is not nearly as big as the numbers highlighted in the plan would lead one to believe. If you’re careful to read the caveats and the numbers in the plan that don’t get a lot of emphasis, the problem of people who lack access to broadband is quite manageable.
The plan states that 14 million Americans lack access to terrestrial broadband capable of delivering a download speed of 4 megabytes per second (mbps). Making broadband of this speed available to all Americans would cost $24 billion more than the likely revenues from sale of the service.
(To calculate the dollar figure, the report’s authors estimated the stream of future costs and revenues from extending 4 mbps broadband to places where it does not currently exist, then “discounted” them to present values to make the costs and revenues comparable. The $24 billion “funding gap” is thus a present discounted value.)
Several key assumptions drive these estimates.
First, the plan explicitly declined to include satellite when it measured availability of broadband.
Second, even if the plan’s authors wanted to include satellite, the choice of the 4 mbps benchmark also excludes all but the most expensive residential satellite broadband plans. Perhaps more importantly, the 4 mbps benchmark also allows the plan to ignore “third generation” wireless Internet as an option for households located in places that don’t have wired Internet.
These are important omissions, because the plan reports that 98 percent of Americans live in places that have 3G wireless Internet. On the other hand, 95 percent of Americans have access to wired broadband capable of delivering 4 mbps downloads. If we include 3G wireless Internet, only 2 percent of Americans live in places where broadband is not available, rather than 5 percent. In other words, including wireless broadband in the calculation cuts the size of the problem by more than half! If we include satellite, the number of Americans who don’t have broadband available must be truly miniscule.
Why is 4 mbps the goal, anyway? The plan does not explain this in great detail, but it looks like 4 mbps is the goal because that’s the average speed broadband subscribers currently receive in the US. As a result, the plan picked 4 mbps as the speed experienced by the “typical” broadband user in this country. Only problem is, other figures in the plan show that 4 mbps is not the speed experienced by the “typical” US broadband user. The same graph that shows the average broadband speed is 4.1 mbps (on page 21) also shows that the median speed is 3.1 mbps. Half of broadband users have speeds above the median, and half have speeds below the median; that’s the mathematical definition of a median. When the median is 25 percent below the average, it’s simply not accurate to say that the average shows the speed that a “typical” user receives. The typical user receives a speed slower than 4 mbps.
The 4 mbps figure is also way above the goals other nations have set for broadband; the plan shows that other countries typically seek to ensure that all citizens can connect to broadband at speeds between 0.5 and 2 mbps. A goal in that neighborhood would surely allow most 3G wireless services to count as broadband when estimating availability.
That $24 billion “funding gap” also deserves comment. That’s the amount of subsidy the plan estimates will be required to make 4 mbps broadband available to all Americans. If you read the plan carefully, you will also find that a whopping $14 billion of that is required to bring broadband to the highest-cost two-tenths of one percent of American housing units — 250,000 homes (page 138). That works out to $56,000 per housing unit!
One wonders whether most Americans would be willing to spend $56,000 per home to ensure that these last few folks can get broadband that’s as fast as the FCC’s broadband planners have decided they deserve. Here’s another option. A basic satellite broadband package costs about $70 per month. Giving these 250,000 expensive-to-reach households satellite broadband would only cost about $200 million a year. It would cost less than half of that if we actually expect these consumers to pay part of the cost — maybe the same $40 per month the rest of us pay in urban and suburban areas?
That cuts the broadband “funding gap” to $10 billion, plus maybe $100 million a year for the satellite subscriptions. If we abandon the arbitrary 4 mbps definition of “acceptable” broadband speed, so that 3G wireless counts as broadband, the gap would be maybe half that size (since more than half of the people who don’t have wired broadband available do have 3G wireless available).
And guess what — the broadband plan identifies about $15.5 billion in current subsidies that the FCC could repurpose to support broadband. In other words, the FCC has the ability to solve the broadband funding gap all by itself, without a dime of new money from taxpayers, telephone subscribers, or broadband subscribers!
I’m surprised the plan didn’t point that out; coulda made the five commissioners look like real heroes.