US Broadband: FCC’s Blueprint – Analyst Blog

The US telecom regulator Federal Communications Commission (FCC) has outlined its goals for the “National Broadband Plan” (NBP), which the agency will deliver to the Congress on March 16, 2010. The regulator has drafted ambitious proposals that will revolutionize the US broadband industry and provide the necessary infrastructure to connect all the corners of the nation.

 

As a reminder, the NBP is aimed at setting up strategies and appropriate regulatory framework to promote adoption, affordability and wider availability of broadband Internet in the US. Under the directives of the Congress, the FCC has chalked out action plans to ensure ubiquitous accessibility of broadband in the country.

 

As expected, the FCC’s blueprint includes the previously announced “100 Squared” initiative. The agency expects Internet service providers to offer broadband speeds of 100 megabits per second (Mbps) to roughly 100 million US homes by 2020. Existing broadband networks offer speeds in the range of 3−10 Mbps.

 

FCC aims at making the US the world’s largest market for blazing fast Internet users. The 100 Squared initiative will boost investment in broadband that will benefit network equipment vendors like Cisco Systems (CSCO), Qualcomm (QCOM) and Alcatel- Lucent (ALU). Moreover, tower companies such as American Tower (AMT) should also benefit as more cellular towers will be built.   

 

Another ambitious proposal featuring in the FCC’s six-page executive summary is to provide Americans affordable access to ultra-high speed broadband that delivers peak speeds of up to 1 gigabit per second (Gbps), nearly 100 times faster than today’s regular broadband deployments. The proposal, which should benefit key institutions such as schools, hospitals and military bases, follows Google’s (GOOG) recent 1-Gig initiative.  

 

FCC’s proposal also includes a more effective use of the available spectrum, which is facing impending shortages. The agency aims to make 500 megahertz of spectrum available in 10 years for licensed and unlicensed use. This will benefit the Tier-1 US carriers such as AT&T (T), Verizon (VZ), Sprint Nextel (S) and Deutsche Telekom’s (DT) T-mobile USA, who need more airwaves to roll out super-fast Internet.

 

However, the chunk of the unused spectrum has been occupied by broadcasters including CBS Corp (CBS), who may be unwilling to free it easily without a huge compensation. Nevertheless, the FCC plans to offer broadcasters a portion of the proceeds from the new spectrum auctioned to the carriers.

 

FCC also proposed to expand the broadband adoption rate to more than 90% from the existing 60%. Moreover, the regulator also aims to promote competition in the broadband space by means of a greater transparency, removing barriers to entry and conducting a market-based analysis.

 

The agency also has suggested an overhaul of the Universal Service Fund, which subsidizes phone services in rural areas. The FCC recommends a shift of funding from traditional phone services to broadband in high-cost areas. This would facilitate the rapid expansion of broadband services in rural regions.

 

Technology giants such as Cisco and Microsoft (MSFT) have endorsed the FCC’s proposals as faster broadband speeds will usher in economic growth and foster job creation. However, the proposals have already drawn resistance from a few members of the Congress as well as industry groups such as broadcasters. The NBP is under fire for being highly ambitious, unviable, lengthy and expensive.