US Must Modernize Regulatory Framework to Spur High-Speed Broadband Deployment

Policy scholar and communications industry analyst Dr. Anna-Maria Kovacs authored a new 45-page analysis, “Telecommunications Competition: The Infrastructure-Investment Race,” that examines the existing regulatory framework’s impact on the communications marketplace.

Outdated regulations that force companies to build and maintain obsolete copper-based legacy telephone networks are unnecessarily diverting investment away from modern broadband networks and services that 95% of US households prefer, desire and use.

The report finds that the overwhelming majority of US consumers rely on the use of smart wireless devices, cellphones, wired Internet-enabled VoIP services, and over-the-top Internet-enabled applications (i.e. Skype), far more than on traditional telephony to stay connected in today’s digital age. The study notes that 99% of all US communications traffic is now carried over these platforms in Internet Protocol, while legacy circuit-switched traffic is now less than 1% of traffic and likely to further decrease to a small fraction of 1% by 2017. Where incumbent telephone companies invest in IP over fiber-fed infrastructure they are gaining share against cable companies’ Internet-access and video, even as they lose subscribers in places where legacy services such as POTS and low-speed DSL are provided. To illustrate how the current regulatory framework is slowing investment in broadband infrastructure, one need only look at the incumbent telephone companies’ capital expenditures during the 2006 through 2011 period. Dr. Kovacs estimates that the incumbents spent a total of $154 billion on their communications networks. More than half of that was spent on maintaining fading legacy networks, leaving less than half to upgrade and expand their high-speed broadband networks. In contrast, cable providers, who are free from legacy network rules, spent a total of $81 billion in capital expenditures over the same six-year period, and were free to dedicate all of it to their broadband infrastructure.