Will battles batter building?

16 April 2015 | Dr Judy Reed Smith

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Dr Judy Reed Smith

Blog Author | ATLANTIC-ACM; CEO


On our side of the pond, the FCC has added fuel to telecoms fires by upping the speed definition of broadband by greater than six fold, from 4Mbps to 25Mbps downstream and 3Mbps upstream.

On our side of the pond, the FCC has added fuel to telecoms fires by upping the speed definition of broadband by greater than six fold, from 4Mbps to 25Mbps downstream and 3Mbps upstream.  

Remember that, as our Stateside regulator, the FCC needs to count and report progress on the dissemination of the internet to end-users. Many leaders, beyond just the FCC itself, have been concerned about all sorts of divisions of our population, some of which deal with our strong urban fibre systems versus weaker coverage in the vast rural areas of countryside that stretch from one side of our continent to the other. Changing the definition of broadband illuminates the scarcity of fast connections in small towns, and the potential for a growing digital divide between inhabitants of cities and inhabitants of rural towns and communities.   

To date, most fibre battlegrounds in our industry have occurred city by city. Verizon was the pioneer provider of fibre all the way to the home, beginning service in 2005 despite heavy criticism from Wall Street at the time for the bold expenditure. AT&T followed with Uverse, offering fibre to the curb and coax to the home. Google jumped into the game, driving demand for Gigabit service, and is moving beyond Kansas City to several other cities. (Some believe Google targeted AT&T cities to spur the giant into action.) AT&T now is proposing GigaPower with fibre to the home and CenturyLink, for its part, now has a long list of cities in which it plans to deliver fibre service to homes.

But the other part of this broadband battle is the Net Neutrality issue, which shifted into high gear in February with an FCC vote to regulate the internet as a public service (as communications rather than as data services). This would allow the FCC to ask providers to fund Universal Service, as with telephone service in the old days, to ensure coverage for rural areas, schools and the poor. It also could mean required resale of lines, which significantly changes a fibre builder’s business model. (Even before this tough new proposal from FCC Chairman Wheeler, AT&T had publicly questioned the conditions under which it would lay out the heavy capital necessary to cover another city with GigaPower.)  

This puts the strategic thinkers for each company into overdrive, laying out potential scenarios in which it will be worthwhile to invest, and in which ways. In parallel, the lawyers and lobbyists are racking up hours upon hours representing their clients’ objections to the FCC move. Specific rules will likely be published in a few months, giving the pros from all quarters more to work with.

In many boardrooms, executives worry that making consumers happy with policy choices without taking reasonable business models into consideration will significantly slow network development. The worst situation for investment, however, is the undecided policy. Once companies are able to reasonably estimate future costs, they can make business models that work for them. In the end, they may or may not build fiber to the extent consumers would like, and this “public service” may require incentives to keep flowing the billions of dollars of fiber investment we have experienced in recent years.