[Ed. Note: This article is part of an occasional series where analysts from around the industry are invited to the Calix blog to offer their perspective on relevant news. The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Calix.]
On December 3, 2011 the New York Times ran an opinion piece “The New Digital Divide” written by the well-respected Susan P. Crawford, a professor at the Benjamin N. Cardozo School of Law and a former special assistant to President Obama for science, technology and innovation policy.
The op-ed piece describes a scenario where only the well-to do in urban and suburban areas have access to high-speed Internet, while the poor and working class, undoubtedly located in more rural areas, will be left behind, unable to join in the on-line shopping experience and without access to e-health, e-education or energy management services.
The opinion further states that consumers at lower income levels will likely choose a wireless broadband option, which will only extend the “digital divide” between those with fixed connections and those without.
So exactly which digital divide are we talking about? Urban versus Rural? High Income versus Low Income Adoption? Fixed versus Mobile? Unlimited Data versus Data Caps? And more importantly, what is the argument? That everyone should have fixed broadband access or simply access to broadband regardless of the type?
The Fixed vs. Mobile Divide
The National Broadband Plan, despite its shortcomings, had a goal to provide universal broadband and set a National Broadband Availability (“Universalization”) Target of 4Mbps/1Mbps by 2020. In addition, it also set a National Broadband Availability Goal of 100Mbps/50Mbps for 100 million homes by 2020 and 50Mbps/20Mbps for 100 million homes by 2015.
Although wired broadband connections are important, the National Broadband Plan made it decisively clear that mobile broadband will play an increasingly important role going forward. Not only is it key to providing broadband access to the millions of unserved, but it is also a key element to the rollout of 4G technologies, as well as serving the National Purposes of job creation and economic development, education, healthcare, energy, public safety, and 21st century government and enhanced civic engagement.
According to the FCC, no area of the broadband ecosystem holds more promise for transformational innovation than mobile broadband.
Secondly, the recently released Connect America Fund (CAF) also clearly states that reforms to the universal service and intercarrier compensation systems have been implemented to ensure robust, affordable voice and broadband service, both fixed and mobile.
As such, there is a newly created CAF Mobility Fund, which provides up to $300 million in one-time support to immediately accelerate deployment of networks for mobile voice and broadband services in unserved areas. This support will be awarded through a nationwide reverse auction, which we expect to occur in third quarter 2012 and winners will be required to deploy 4G service within three years, or 3G service within two years, accelerating the migration to 4G. In Phase II, the Mobility Fund will provide $500 million per year in ongoing support to expand and sustain mobile voice and broadband services in communities in which service would be unavailable absent federal support.
The Urban vs. Rural Divide
The CAF also establishes a Remote Areas Fund, allocating at least $100 million per year to ensure that Americans living in the most remote areas in the nation, where the cost of deploying traditional terrestrial broadband networks is extremely high, can obtain affordable access through alternative technology platforms, including satellite and unlicensed wireless services.
And let’s not forget the $7.8 billion in grants and loans for 648 projects in support of broadband from both the Broadband Technology Opportunities Program (BTOP) and the Broadband Initiatives Program (BIP) of which the bulk is associated with infrastructure projects and will likely benefit approximately 7 million people, many of them located in extremely remote areas, with access to improved broadband services.
In my view, the urban vs. rural debate is futile. Although availability and speeds in rural areas may be lower than in urban areas, this is primarily due to the challenge of serving very low density populations. For many of the Independent Operating Companies (IOCs) serving these markets, subscriber density averages 10 or less subscribers per square mile – with many serving densities of 5 or less per square mile. Despite these obstacles, IOCs have been some of the first in the U.S. to enjoy Fiber-to-the-Home and IPTV services – long before either AT&T or Verizon offered these services.
For many rural operators, the competition for broadband is wireless. As such, many operators – even those without stimulus funding – are upgrading their networks to provide faster broadband connections that will enable a plethora of new services as well as become a key component of economic development for their communities. It will be no surprise if the percentage of households served by fiber in rural markets, far exceeds that of urban in the next few years.
The Income Divide
Finally, in early November 2011, “Connect to Compete” was announced. A non-profit initiative on a national level to address the barriers to broadband adoption, digital literacy and the employment skills gap. The “Connect to Compete” effort will offer millions of families eligible for the National School Lunch Program discounted $9.95/ month broadband Internet, $150 laptop or desktop refurbished computers (or $250 new computers) with Windows 7 and Microsoft Office, and free digital literacy training.
However, if we are really going to address the adoption issue, we also need a similar type of program aimed at older Americas as well as other low income groups (including those without children).
Overcoming the Divide
In short, the Federal Government in conjunction with states as well as network operators are doing everything possible to make broadband services available to those consumers that want to use them. And that is the key phrase – those that want to use them.
According to the most recent report issued by NTIA on Broadband Adoption, 34 percent of dial-up users surveyed (representing 3% of households ) cited broadband as “too expensive”, 33 percent reported “lack of need” , while 27 percent reported “lack of availability.”
In contrast, 47 percent of households no internet access at all (representing 29% of households) stated lack of need as their main reason for not having home Internet services, 24 percent reported affordability, and 15 percent reported inadequate computer as the primary reason for no home Internet access.
Can the United States improve on broadband? Absolutely. Are we on the right path? Absolutely.
We are the third largest nation in the world (in terms of households) and have broadband penetration of nearly 73% at the end of 3Q11. While South Korea and France might have us beat on penetration – they also only have 14% and 21% (respectively) of the total number of households.
At some point in time, the need for broadband services will be a necessity much like water and electricity, but for now it is not. And debating whether or not someone is able to participate in Cyber Monday because they don’t have broadband is perhaps the weakest argument I have ever read for universal broadband.
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About the Author
Teresa Mastrangelo, Founder, Principal Analyst and Director of Research brings 25 years of telecommunications experience to Broadbandtrends LLC. She is regarded as one of the leading analysts covering broadband infrastructure and services, multi-screen, VoIP and Smart Grid.
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Teresa Mastrangelo
