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FCC Report Validates Providers' Broadband Uptake Fears

By Kelly Teal
February 24, 2010 - News
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As the FCC prepares to release its national broadband plan recommendations to Congress, it turns out there are some Americans who don’t even want high-speed Internet. About 93 million don’t have the option at all, and many of those citizens see the Web as a waste of time and money, according to a new FCC survey.

Whether that’s a silly perception is for you to decide. Yet, as the Obama Administration pushes for ubiquitous broadband coverage with stimulus money and a pending strategy, the reality is, the FCC is finally getting to the bottom of some providers’ fears – if we build it, will they come? And the answer is not necessarily yes.

Sure, some of the respondents said they haven’t signed up for broadband because they think dial-up is sufficient. Or they don’t know how to use a computer, harbor privacy and security concerns, don’t like long-term contracts or can’t afford broadband. But that’s no salve for the operators spending millions, or billions, of dollars to build networks in high-cost areas – even if they expand their business models to target vertical markets, not just residential or commercial accounts. In fact, such information probably adds to their concerns since they still have to recoup their investments. And it’s not a one-time proposition.

“There’s an ongoing problem of operations to consider,” Dean Cubley, CEO of ERF Wireless, said last week. “It may turn out to be a nice network, but if there’s no cash flow to justify its upkeep,” what then?

That’s when companies have to “continue to manage costs and look for new revenue streams, which is why we push broadband as hard as we do,” said Mike Rhoda, senior vice president of governmental affairs at Windstream Corp. (WIN).

ERF, for its part, does some of that already. It runs private networks for banks and the oil and gas industry, for example. And Windstream leases computers and the related equipment to customers who can’t afford the up-front expense.

Nonetheless, the adoption question, as highlighted in the FCC’s report, remains, putting the onus on the Obama Administration to educate Americans about the benefits of broadband. That’s something the FCC is expected to tackle in its forthcoming proposal. Another way the agency likely will address the 93-million-people gap is to press carriers to lower their prices. Again, though, the investment vs. return issue comes into play. Operators don’t want their margins to suffer. So, they say, the government needs to overhaul the Universal Service Fund to support broadband, rather than legacy voice, buildouts, something the FCC is expected to champion in the pending report.

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