It’s an important question – the answer can be measured in billions, literally. As the rules for the broadband stimulus plan get written, the concept of ‘unserved’ is receiving increased scrutiny. What’s certain is that unserved territory, however it ends up being defined, will be a key determining factor in where a significant portion of the allocated $7.2 billion broadband stimulus money gets directed.
On the surface unserved seems like a pretty simple concept – an area with no broadband service. But not so fast – like many key policy issues in telecom, unserved means different things to different people. “If there is no wireless broadband in a given area, we consider that area unserved,” said Carolyn Brandon, Vice President of Policy at CTIA, on a panel at the recent Implementing the Broadband Stimulus workshop. We suspect that a wireline company with broadband facilities in that same territory would care to differ. Another key factor in determining unserved is the lack of actual broadband availability data to the scale necessary to determine unserved versus underserved. For example, will zip codes determine who is unserved? Zip codes are definitely an inexact science in the context of broadband availability. Zip codes can be vast areas, particularly in the rural western part of the country, where certain territories within a zip code may have multiple broadband providers, while adjoining territory within that same zip code may have no broadband availability at all. The same can be said for ‘study areas’ of rural telecom carriers. It’s a perplexing problem with huge financial implications.
Whatever the final definition, it appears that unserved will have a definite priority over underserved. Service providers who are interested in participating in the broadband stimulus program should start lining up and documenting their targeted unserved territory. While the stimulus plan has its critics, it does present a real opportunity for interested carriers to lay claim to unserved territory, fueling the expansion of their broadband footprints and enhancing their long term prospects.
As part of its proposal, the Free Press was very clear in its definitions related to proposed stimulus.
The key definitions are below:
Unserved: A census block group (CBG) where terrestrial non-dial-up Internet service is not available to more than 10 percent of the occupied residential premises.
Additional clarifications are below:
Completely Unserved: terrestrial non-dial-up Internet service is only available to less than 10 percent of occupied homes
Severely Unserved: terrestrial non-dial-up Internet service is available to more than 10 percent by less than 50 percent
Moderately unserved: terrestrial non-dial-up Internet service is available to more than 50 percent by less than 90 percent
Underserved: An areas that has some level of broadband services by where speeds are below any “reasonably comparable” standard
A very nice attempt at defining what is “unserved”. My question is the “why”. Why is an area unserved? Most logically it’s because the area is not profitable… meaning that any company who now decides to cover the area with broadband based on the stimulus package will be forever “hooked” and FOREVER subsidized by the federal government — the exact same scenario encompassing the E-rate program for schools and libraries. Is this good or bad — depends on your philosophy. But one thing is for certain – the Erate program rules have become more complicated than anyone could have possibly imagined at the start of the program, and also includes waste and fraud.
On the other hand, doesn’t the stimulus package in essence PENALIZE telcos that have been responsible and have already deployed broadband in their serving area through the use of privately-secured loans? Penalized in a sense that maybe we should have waited for the government to “give us cash” before deploying 6Mg download speeds throughout our service area by using our own hard-earned revenues.
Don’t mean to be negative, but this whole notion that the country is unserved gives all us responsible telcos who have deployed broadband 100% throughout our service areas a black eye.
Mike makes a point that many others have made — doesn’t this program penalize those who have been making capital-intensive broadband buildouts rather than handing out cash to shareholders or private owners?
On the other hand, what is one to do — punish citizens because they live in an area where the service providers haven’t spent the dollars? Too bad that this stimulus package didn’t have some kind of retroactive component that those have plant in-service can accelerate depreciate or apply for a retroactive tax credit.
In regards to Mike’s concern about ongoing subsidies, he’s exactly right. The FCC should also be reviewing the USF program to see how it can help service providers maintain the plant and make profitable returns so that 30 to 40 years from now when the fiber plant needs to be replaced that the service provider can do so. Removing the cap on the HCL portion of the USF fund could be a interim move while the record is updated on this issue.
Teresa:
Thanks for your comments. The RUS has proposed a “at least 75% rural” metric, and the FCC does have some verbiage to distinguish between served and unserved. If only the definitions had the clarity that the Free Press has been able elucidate.
While I’m glad it’s not white and black such that they use the term “underserved” in addition to “served” and “underserved”, some additional granularity would help policy makers in doling out the funds.
Can you clarify why the adjective “terrestrial” is used? I’ve seen a lot of wireless vendors salivate in the last two weeks and I’m looking forward to see how the rules will be written. They will have a lot to do with how much fiber versus wireless is deployed. I’ve heard one suggestion such as defining speeds for low and high speed broadband for wireline and wireless. While the FCC has tried to be technology neutral (which has sometimes mean ignoring the technical limitations/costs/practicalities of certain mediums so that it’s given a chance to compete against copper and fiber, think of powerline for example), long term the end game is fiber. Hopefully wireless will be “promoted” when it can be shown that it is x% cheaper than deploying fiber. For example, if high speed wireline was defined as capable of 100 Mbps and high speed wireless was defined as capable of 10 Mbps, and deploying wireless would cost $10 M and deploying fiber would cost 300%, then wireless would “win”.
I suspect the recently updated Form 477, where all the service providers had supply the number of homes served, and speed, for a certain census track area, will be used by the FCC to help model what percentage of areas would match a certain definition of served, underserved, unserved. It will also help assist the NTIA and RUS in where to dole out the funds, but I’m not sure how quickly the FCC can put that data together. It will also help the FCC establish at least some kind of baseline, so that as the monies for the broadband mapping are spent and projects deployed, citizens will be able to see how we’re really doing as a country.