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U.S. VoIP and Broadband Policy: Today's Debate is Off the Mark!

Feb 17, 2006 | Inside: Regulation & Policies

Despite rather rapid growth in broadband access, the U.S. is falling further and further behind other countries—we’re now ranked #16 in the world. What’s slowing the U.S. down?

Two threads dominate U.S. broadband policy debate today. The first focuses on traditional telecom regulation—reciprocal compensation, universal service, e911, and CALEA (wiretap capabilities). The second focuses on “Internet freedoms,” i.e., guarantees that your broadband access provider won’t block or inhibit specific applications like VoIP.

I don’t want to suggest that we ignore what are serious near-term risks, but major shifts in government policy take years—even decades—and for those time scales, we’re not even discussing the important issues. To improve access, we need to focus on open spectrum and access to first mile rights-of-way.

The Access Bottleneck

There is no lack of bandwidth in the Internet backbone. There are many potential rights-of-way between major cities and competing fiber construction efforts have filled these rights-of-way with excess fiber. There’s also no lack of bandwidth within the enterprise, or in individual residences. Here users purchase products (not services) and easily deploy 100 Mbps and Gigabit Ethernet or 11/54 Mbps wireless LANs. The bottleneck is first mile access, where affordable services are typically asymmetric and limited to a few Mbps in the fast direction, i.e., downloads.

Some countries have succeeded in opening up existing copper cables to competing providers of DSL services. Where there’s been meaningful competition, DSL penetration has taken off. But competition among DSL providers leaves no incentive to deploy fiber. The real bottleneck is not copper, coax, or fiber, but access to the physical right-of-way. Is it possible to think of competition in the right-of-way? Yes. There are two approaches --wireless and fiber.

Wireless

Wireless access is widely discussed, in part because of the hype surrounding WiMAX. Indeed, wireless is a real option in some markets today and wireless performance will continue to improve exponentially for decades to come. The biggest obstacle to wireless deployment is government regulation.

The potential technical performance of wireless systems (in bps per Hz per sq. mile, for example) has improved exponentially for more than 100 years. However as the result of existing regulations, most wireless spectrum is unused in most areas and where it is in use, the technology deployed is obsolete—frozen at the state-of-the-art as it stood when the band was defined 10, 20, or 50 years ago.

The one exception is in the three slivers of spectrum where unlicensed operation is permitted. Here rampant competition has emerged and usage has soared as WiFi, Bluetooth, WiMAX and a dozen proprietary schemes have taken off. It’s in these bands that we see new modulation schemes, smart antennas, and mass-market products.

Luckily, this innovative surge has not gone unnoticed. Today there is active discussion of “open spectrum,” so it’s likely more spectrum will be allocated for unlicensed use over the coming years (and decades).

But this is not the whole solution. When fiber can be justified, it far outperforms wireless (in capacity x distance) and fiber performance is also improving at exponential rates. However, lack of competition in the first mile limits fiber deployment.

First Mile Fiber

Unfortunately, the exciting public discussion of open spectrum is not mirrored in first mile fixed access. Most public discussion of first mile access centers on regulating duopoly service providers and hoping that some wireless alternatives will emerge. Some argue that fiber is a “natural monopoly,” i.e., the first provider to install fiber has such leverage that no other service provider can justify the capital expense to install a second fiber, and therefore there can be no competition in first mile fiber. This is na├»ve. It assumes fiber is only available for service providers and there is only one kind of service. In fact, each of today’s broadband access providers bundle other services with their Internet access offering. And, in the real world, brands, market focus, partnerships, and other issues differentiate service providers. Finally, users can own their own fibers.

In the backbone, many companies, both service providers and large end users, already own their own fibers. Typically these are individual fibers in common cables, with ownership organized along condominium lines. Unfortunately, in the U.S., there is little or no discussion of similar fiber ownership in the first mile.

The Answer: Layer Zero Competition

Today, there are many services utilizing first mile right-of-way—not just telephone and cable TV, but electricity, water, sewer, and gas. Each is regulated under completely different regimes. And at least two of the incumbents (telephone and cable TV) have incentives to block new entrants.

If we want the rich diversity of broadband access alternatives that competition could bring, we need to foster competition at layer zero—the physical right-of-way. If local rights-of-way were truly available to independent parties, we’d see condominium fiber builds, municipal fiber builds, and multiple new facilities-based ISPs providing a diverse set of access options.

One can argue about what regulatory scheme is needed to promote such layer zero competition, but until we start having this debate, we’re settling for the slower growth implied by a regulated duopoly. Let’s go for rampant growth and diverse options! Stop focusing on “Internet freedoms” as other than a short-term fix, and instead, turn our attention to layer zero competition! 

This has been a featured post from Brough Turner. To visit the weblog maintained by Brough Turner click here.

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