So, How Are We Doing?

What with Yom Kippur, some major addresses at the United Nations and, oh yeah, a presidential election in full bloom this week, you’re excused if you missed a major address on U.S. broadband policy. On September 25, Federal Communications Commission Chairman Julius Genachowski visited the Washington (DC) headquarters of VOX Media to both recognize, once again, that broadband – high-speed Internet, wired and wireless – is transforming our economy and the way we live for the better – and to warn that significant challenges lie ahead in the global bandwidth race.

By most measures, Gavin O'Malley wrote in Media Post this week, the Web has never been a more vibrant place for communication, content consumption and commerce. As of August 2012, Nielsen estimates, 278 million U.S. consumers had Internet access. Among those connected consumers, about 215 million were actually active online -- spending nearly 29 hours on average browsing the Web.

Chairman Genachowski touted America’s reemergence as a global Internet power:

• The U.S. now leading the world in deploying the next generation of wireless broadband networks – 4G LTE – at scale;
• We have 69% of the world’s LTE subscribers and every expectation to maintain 4G leadership for the foreseeable future;
• The U.S. is the global test bed for LTE apps and services;
• More than 80% of smartphones sold today throughout the world run operating systems developed by U.S. companies (up from less than 25% three years ago);
• U.S. companies account for roughly three-quarters of tablets sold and for the operating system on almost all tablets; and
• 80% U.S. homes are passed by a wireline broadband network capable of 100 megabits per second (up from 20% in 2009).

Broadband, Chairman Genachowski said, is having a major impact on the U.S. economy:

• Mobile innovation is estimated to have created 1.6 million U.S. jobs over the past five years, and the nascent apps economy has already created nearly 500,000 U.S. jobs;
• Companies delivering cloud services added 80,000 new jobs in 2010, not counting the many jobs they helped create by boosting productivity and lowering costs for businesses large and small; and
• From 2009 to 2011, annual investment in wired and wireless networks increased approximately 30% to more than $60 billion, even in this challenging economy.

Chairman Genachowski touted the FCC’s role in promoting Internet access and investment:

• Crafting the national broadband Plan;
• Reforming the Universal Service Fund and creating the Connect America Fund, the largest U.S. broadband infrastructure program ever established, which will use $45 billion over 10 years to extend broadband deployment throughout the country;
• Modernizing the intercarrier compensation system;
• Accelerating the transition to IP technology by aligning incentives for the broadband world;
• Freeing up spectrum for mobile broadband;
• Removing regulatory barriers and lowering the cost of broadband buildout (such as easing access to utility poles and speeding processes for siting cell towers); and
• Promoting competition through new Open Internet and data roaming rules, merger conditions and rejection.

But the chairman also identified the broadband challenges ahead of the U.S.:

• Dramatic increases in demand for broadband – both wireline and mobile; and
• Many countries – including Korea, China, the EU, Australia -- have plans to deploy ultra-high-speed broadband on a wide scale to become a magnet for innovators and capital.

“The faster we can connect our citizens the faster our economy can grow,” Chairman Genachowski said. “The more people of all walks of life have access to bandwidth the more opportunity we spread for all.”

The U.S., Genachowski said, is in a global bandwidth race and the challenge is to ensure the U.S. has a strategic bandwidth advantage. The three key elements of developing a strategic bandwidth advantage are:

• Broadband speed: Businesses and consumers need high speeds to take advantage of services like cloud computing, which can make every smartphone, tablet, and laptop capable of harnessing the power of the world’s latest supercomputers and capable of accessing the petabytes of vast data centers.
• Capacity: To maximize the opportunities of broadband for our economy, consumers need sufficient monthly broadband capacity to make e-commerce routine and unconstrained. To maximize the opportunities of broadband for education, health care, and other important national goals, consumers need sufficient monthly broadband capacity so that families with school age children won’t have to fight over who gets to use the Internet for homework this week; a distance learner can take a full course load online; and a senior with diabetes can have regular online video consultations with a doctor in another town. “As consumer usage grows and technology improvements enable providers to deliver more bits at lower cost,” Genachowski said, “we should expect that any monthly usage limits will increase and that consumer cost-per-bit will decrease.”
• Ubiquity: Broadband should be available anywhere, anytime: the fastest, latest wireless broadband networks should cover at least 98% of the country; no American should be without a robust home broadband option; and “we must change the fact that nearly 1 in 3 Americans remains unconnected at home.”

The goal here, Chairman Genachowski stated, is to remove bandwidth and location as constraints on innovation.

What’s needed to reach this goal? Chairman Genachowski identified the following:

• Innovation Hubs: a critical mass of communities with the most robust bandwidth in the world – where broadband abundance is a fact of life – so that private-sector innovators and the research community can invent and test tomorrow’s essential services with a meaningful number of potential users.
• High-speed, high-capacity broadband service: that truly high-speed, high-capacity broadband plans should be the norm, not the exception. The National Broadband Plan set a goal of affordable 100 megabit-per-second service to 100 million households by 2020. Genachowski said “we need to get faster, sooner.” He expressed some concern about who will drive the next round of Internet service upgrades – from today’s broadband to, if you will, tomorrow’s high-speed broadband. Currently, major providers of high-speed fiber-based consumer broadband have said they have no plans to further extend their current build outs, which means that roughly half of all households could begin losing out on future rounds of telco-cable competition. So how can we ensure that we see the network upgrades our innovation economy needs?
• Access for all: We need to connect even the hardest to reach areas of the country and the least advantaged consumers as “each new wave of applications moves from novelty to necessity.” 19 million Americans still have no access to home broadband and roughly 30% of all Americans are still not connected. We need to close these broadband gaps, Chairman Genachowski said.
• Mobile Leadership: We need to build on our global lead in the deployment of 4G wireless networks, and keep pushing to make sure we are first in 5G and beyond. It’s also the only way we’ll remain a world leader in mobile innovation.

Chairman Genachowski addressed what the country needs to do to meet these challenges. What’s needed?

• Massive private investment in both networks and applications: A virtuous circle where innovative applications drive user demand for bandwidth, which generates returns and incentives for network providers to invest in speed, capacity and ubiquity, which in turn enables further innovation, more demand, more network investment, and on we go.
• Balancing regulation and free market: A smart broadband policy puts a well-functioning free market – with healthy competition – as a core objective. Government has a role to play – limited, but vital. “Light touch,” not “no touch.”

Finally, Chairman Genachowski outlined the three key areas where the FCC should act:

1. Driving improvements in broadband infrastructure and accessibility: Promote investment in broadband networks by continuing to remove barriers to broadband buildout and lower the costs of infrastructure deployment. Make more spectrum available for mobile broadband and significantly increasing the efficiency of spectrum use by moving forward on sharing and small cell technologies. Implement broadband adoption efforts for low-income Americans and invest in broadband deployment through programs. Encourage more state and local initiatives to increase broadband speeds, capacity, and ubiquity.
2. Protecting and promoting competition: Fairly and rigorously review all transactions; reexamine old regulations; keep an eye on local developments in places like Chattanooga and Kansas City; increase transparency which helps make markets work more efficiently; and adopt rules that prevent anticompetitive practice.
3. Preserving open platforms: Protect the Internet’s openness and freedom – the ability to speak, innovate, and engage in commerce without having to ask anyone’s permission both in the U.S. and in negotiations at the United Nations later this year.

Chairman Genachowski ended by saying we need to be asking ourselves these questions:

Do we have places where broadband is measured in gigabits – places where innovators can push the envelope? Are high speed, high capacity broadband networks widely deployed across the country, creating the market for next-generation services? Are all American children able to share in the game-changing benefits of broadband for education, regardless of where they live or the family they were born into? And are we continuing to drive innovation across the mobile ecosystem?

In short, is our broadband infrastructure providing a strategic bandwidth advantage—delivering to the country performance that is the world’s envy?

In other words -- so, how are we doing?