What You Need To Know About the National Broadband Plan

The FCC will deliver its National Broadband Plan to Congress a day earlier than originally scheduled — on March 16. Also on that day, the five FCC commissioners will vote on a “mission statement” intended to represent the spirit of the submitted documents. The plan, which Congress called for as part of the stimulus package passed last year, will recommend ways to provide universal broadband access as well as encourage Congress and industry to use broadband in health care, education and energy efficiency programs.
So far we have been relatively unimpressed with the aspects of the plan that have been pre-announced, as have other economists and analysts. It tends to favor the existing broadband duopoly while offering little in the way of innovative ideas for expanding access. While the complete document isn’t out yet, many of the big-picture items in the plan have been previewed within the last two weeks. So with the caveat that it may all change by March 16, here is a rundown of its main components and a few beneficiaries that we believe our readers are most likely to care about.
Wired Broadband: The plan’s most far-reaching goal is to deliver 100 Mbps  to 100 million households by 2020. But as we’ve already pointed out, such a goal isn’t really that ambitious given that 65 percent of homes in America will have broadband that could deliver 100 Mbps speed by the end of this year and 90 percent will have it by 2013.
Also as part of improving wired broadband the plan will tackle the issue of universal service reform, a snore-inducing topic but one that nevertheless will be a primary means of funding rural broadband access. Currently USF is an $8 billion program aimed at phone-based technologies rather than broadband and IP services. On Friday the FCC suggested a decade-long transition that will gradually shift that spending from voice to IP-based services. The long transition should ease the pain for rural phone companies — such as CenturyLink (s CTL) or Windstream (s decc) — that have benefited from the program.
Aside from USF reform, when it comes to higher speeds, it’s the carriers using fiber-to-the-node strategies that are likely to lose. Despite assurances from chip vendors such as Ikanos that 100 Mbps over copper is feasible, Qwest (s Q), AT&T (T) and other providers relying on DSL and copper for any part of the last mile will struggle to reach 100 Mbps unless they make huge investments.
Wireless Broadband: This is where things get a bit more interesting. FCC Chairman Julius Genchowski is a big proponent of mobile broadband — he almost always seems to steer the conversation from wired broadband to mobile — perhaps because he’s acknowledged that the lack of competition in the U.S. is a problem he doesn’t know how to solve. As such, he has dedicated many FCC resources to a variety of cellular issues, from calling out carriers on early termination fees to finding more spectrum assets. The National Broadband Plan asks the government to free up 500 MHz of spectrum — less than the wireless industry asked for, but still a nice chunk.
However the government won’t demand that spectrum from broadcasters, as had been originally floated by the FCC. Instead the FCC is asking broadcast television spectrum holders  to voluntarily give up their spectrum in exchange for compensation. Such an offer won’t go far in freeing up much-needed spectrum available in urban areas, but will be a boon to spectrum holders and broadcasters in rural areas, which will get payouts for something they aren’t using.
The plan also tackles the almost decade-old problem of the lack of a nationwide, wireless public safety network by saying it will enable some type of private-public partnership with consumer-grade equipment that could be cheaper for the feds to buy — a plan that could cost up to $16 billion. This might hurt Motorola (s MOT), which provides a lot of specialty public safety gear — unless the government gets Android (s goog) handsets.
Wireless broadband will also have a role to play in connecting the roughly 5 percent of the population that will be too expensive to connect with wired broadband, some of which will come from wireless phone service and some of which will be satellite. The key will be ensuring that satellite providers and wireless broadband providers that serve as the sole means of broadband don’t cripple the service with low caps and wretched speeds.
Adoption: Once the infrastructure is in place, there’s still a key hurdle to adoption — namely the cost of broadband and convincing people they need it. The FCC recently found that 94 million people don’t have broadband, choosing to forgo fat pipes because they couldn’t afford it or just don’t value it. Providing access for the poor through some sort of government lifeline program will likely be part of the plan; what’s unclear is whether or not the government would pay the high retail rates for those lines or cheaper, wholesale ones.
The ISPs benefit either way, although they would love to get the higher prices. But using additional programs modeled after that of cable’s A-Plus project to boost access for the poor by subsidizing the cost of broadband may result in slower speeds for those receiving the subsidized service — and as such, won’t help convince people broadband is worth paying for!
In the meantime, it’s unclear if the plan will tackle special access issues whereby ISPs in rural areas pay far more than ISPs in urban areas because the number of providers selling the rural ISPs with an on-ramp to the Internet backbone are so few. Attempting to solving that problem by investigating the abuse of a monopoly and regulating prices in those areas would lower broadband costs for ISPs, which could then afford to provide faster speeds without building new infrastructure in rural areas.
National Purposes: This aims to solve the chicken-and-egg problem plaguing broadband adoption, smoothing the path for services such as health care, education, smarter energy management systems and even government programs to be delivered via broadband. Demand for such services will not only spur investment from infrastructure companies, but will also give folks a reason to adopt broadband in their homes.
The National Broadband Plan will likely contain several miscellaneous items as well, such as a section on opening up set-top boxes and making room for unlicensed wireless spectrum, but at its core it’s still a recommendation. To bring many of  the recommendations to fruition will require legislative action on the part of Congress as well as the enactment of formal rule-making procedures from the FCC, especially when it comes to things like USF reform and special access reform. Other federal agencies will also get involved, such as the Food and Drug Administration, which is already working with the FCC on ways the agencies can regulate wireless medical devices. Given the sclerotic pace of the bureaucracy and the amount of lobbying the communications firms will continue to bring to bear, expect the actual implementation of many aspects of this plan to take years to become reality.
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