FCC Broadband Report Promotes Calls for Greater Penetration

The number of U.S. broadband Internet subscribers grew by 34 percent in 2004, but some policymakers fear that increase is happening too slowly.

The FCC yesterday released data on high-speed Internet connections, information, which facilities-based broadband providers must supply twice a year.

Even though the number of residential, business and other subscribers jumped to 37.9 million lines last year, some industry associations fear the United States is lagging behind other countries and are calling for Congressional intervention.

This is the case even as the FCC says service providers reported at least one high-speed subscriber in 95 percent of the nations zip codes, where 99 percent of the countrys population resides.

Walter McCormick Jr., president and CEO of USTelecom, formerly USTA, agrees. This is a very important report that underscores the urgent need for Congress to update U.S. telecom laws to speed the broadband revolution well underway in the U.S. today, he says. This report documents that Americans feel the need for speed as evidenced by 2004s increased broadband adoption rates. We have barely scratched the surface of what broadband can do for consumers and for our economy. [I]ts up to Congress to update U.S. telecom laws to encourage vigorous investment and head-to-head competition from all companies in order to speed the future faster.

Current policies, says Scott Walsten, an analyst for the American Enterprise Institute for Public Policy Research, include attempts to streamline rights-of-way laws, telecommunications unbundling regulations, subsidies and direct municipal broadband provision. To date, however, little empirical research has explored whether these policies, especially at the state level, are effective.

According to Walstens research, state-level policies have not been so successful, underscoring McCormicks call for Congress to get involved. Universal service mechanisms and programs targeted at underserved areas do not boost broadband penetration and may even slow it, possibly by giving an artificial advantage to one type of provider over another, Walsten explains. Likewise, tax incentives appear to have no impact. Laws limiting municipal deployment of broadband are not statistically significantly correlated with broadband penetration.

But, he adds, other policies seem to be promoting greater broadband use. Walsten says more people are getting access to public rights-of-way by broadband providers, and resold phone lines also are helping more people sign on for high-speed Internet. Some programs advocating rural access further are bringing 21st century technology to the countrys remote areas, although Walsten claims subsidies from USDAs Rural Development broadband program are not doing much to augment that access. Subsidies from USDAs broader telecommunications program, however, are, he says.

At least one other industry group takes issue with dire viewpoints on the FCCs report. Kyle McSlarrow, president and CEO of the National Cable and Telecommunications Association (NCTA) says the findings emphasize the great return on the cable industry’s $100 billion investment in building a nationwide broadband infrastructure. The report reaffirms our industry’s commitment to rapid deployment of broadband services and to further providing consumers with a growing array of choices. It also validates the light regulatory touch applied by Congress and the FCC to broadband policy, which has and will continue to result in a vibrant and competitive broadband marketplace providing great value to American consumers.

Some other details from the FCCs report show more adoption of asymmetric digital subscriber line (ADSL) high-speed lines is growing, which shot up in 2004 by 45 percent to 13.8 million lines. ADSL transmits digital information at high bandwidths on existing phone lines.

The use of cable modem service grew by 30 percent last year to 21.4 million lines, and the remaining 2.7 million high-speed connections last year came from satellite or terrestrial wireless connections, fiber or powerline connections, or wireline connections other than ADSL, the FCC says.

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