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U.S. Broadband Deployment: Where the FCC Should Focus

September 28, 2012 - 13 Comments

By Howard Baldwin, Contributing Columnist

At a time in the United States when political opinions seem to fly to the extremes, with no middle ground, it’s no surprise that the FCC’s recent report on broadband deployment evokes a similarly polarized reaction.

Of the five commissioners who authored the report, three (including chairman Julius Genachowski) seem to believe that 95% penetration of fixed broadband by any technology (see graphic) is cause for alarm, citing the lack of broadband in rural areas and tribal lands. Two of the three commissioners filed dissents to the conclusions of the report.

Larry Downes, an Internet consultant writing in Forbes, called this conclusion “bizarre” and accused the FCC of an incipient power grab:

“Under section 706 of the 1996 Communications Act, the FCC must make an annual determination of whether broadband ‘is being deployed to all Americans in a reasonable and timely fashion.’ If not, the agency must take ‘immediate action’ to remove barriers that are keeping network operators from spending their investors’ money even faster. Which translates, on the majority’s view, into a vast array of regulatory powers that otherwise aren’t available to the agency.”

According to Troy Wolverton, writing in the San Jose Mercury-News from the heart of Silicon Valley, industry lobbying group Broadband for America called the report “inaccurate” and focused “too much on those who lack broadband and not enough on the investments made by broadband providers to improve access and speeds.”

The FCC did acknowledge the private sector’s $1 trillion investment in broadband deployment. “The private sector continues to do its part,” Wolverton quoted Broadband for America co-chairman John Sununu saying. “Rather than misrepresent this record, our government should be working with us to identify the best approach to reach the small percentage of rural homes without broadband access.”

Or should it? Is there a third element missing from the FCC report, beyond rural vs. urban? I submit that there is, and that missing element is context. It’s arguably encouraging having government officials admit, “We can do better,” rather than hollowly touting success. But pointing out the lack of rural broadband, especially when the percentage is in the single digits, misses the bigger picture: where does the U.S. sit in comparison with the rest of the world?

It’s not surprising that nobody wants to talk about that, because among the top 25 countries, the U.S. is 23rd in broadband penetration – and that’s down from 22nd place, according to research firm Point Topic. Only Cyprus and the Isle of Man trail the U.S., according to the latest figures from Q3 of last year.

Look at the graphic again, and note that fiber deployment is way down at 19 percent. The industry has done great at deploying broadband, but as the FCC report rightly notes, technology tends to move forward rapidly. This is one of those situations.

Instead of worrying about the lower 5 percent of Americans who don’t have broadband, why aren’t we worrying about the upper 5 percent of Americans who want to create new start-up companies but don’t have access to the super-fast broadband to do so?

If the FCC wants to make a power grab, why doesn’t it mandate fiber deployment where it will do the most good, rather than insisting that telecommunications companies eliminate demographic data from their determinations of where to deploy fiber?

Why not let  broadband service providers deploy high-speed fiber in urban downtown areas, where companies will be most likely to happily pay a premium for it, and then use that income to backfill in other areas? And do that in radiating circles, from urban areas to suburban areas, and finally to rural areas.

If I had one message for the FCC, it would be to stop pitting urban versus rural, and start figuring out how to move the U.S. up the international ranks of broadband penetration.

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  1. Reading through the previous discussion by gentlemen who are obviously experts in this field another point is being skirted. Why does the FCC have this much power in the industry? There has been mention of a potential power grab by the FCC, political crippling of initiatives and overall not enough innovation. The government does not innovate and they rarely foster innovation. Many of the telecommunications companies have become so stifled with tariffs, unions and other management challenges that they can hardly get out of their own way. Stripping the FCC of much of its power and oversight and demanding that government get out of the way economically, has been proven repeatedly as the best way to create competition, foster new start-ups and for new ideas we aren't even thinking of today to become the new normal. Also, the US is a very large country (in square miles) and it is difficult to compare our urban vs rural penetration to many other countries that are a fraction of the size of the US. Our diverse geographic challenges in deploying wired and wireless technologies is something many other nations don't have to contect with. The US also has many other infrastructure challenges in roads, bridges, water, etc that also require focus in the coming years with significant investment required and not everything can be solved at once as perfectly as we'd wish while still keeping our economy intact. In this country, some choose to be "rural" because they don't want to be highly connected and studies like the one that kicked off this conversation likely don't take that into account. My mention of government above is in the context of Federal government. It is perfectly reasonable to have local cities working with their business and economic development councils to find ways to drive growth and solve their local infrastructure challenges but as a taxpayer, I am tired of having money taken from me in all these various federal funds to help in ways that are burdened by administrative overhead and bureaucracy. Cities should be trying to compete for businesses and their residents and if NYC for example has overgrown their infrastructure and can't compete, some will make the decision to move their interests to another location that meets their needs. That kind of competitive pressure is a good thing and keeps us all highly motivated to innovate and continually improve. The FCC should become a very small part of that complex equation.

    • @Jeremy, thank you for taking the time to share your thoughtful perspective. Agreed, it's important to consider geography and demographics when making national ranking comparisons -- that's why I've mentioned the preference for conducting international peer-to-peer market comparisons in the past. Infrastructure deployment advances in Canada was an insightful comparison that has been used before. That being said, perhaps a more local (city, town or community) peer comparison will raise the bar of expectations in a more convincing way. As an example, comparing the Hong Kong market with a similar city in the U.S. market could uncover some actionable insights. My point: there are likely examples of progressive policymaking in other parts of the world that can be adopted in the U.S. marketplace, so that perhaps the nation's ranking will become more attuned with to the global economist expectations. Given the recent history in America, however, the outcome from a decline of government oversight within the financial services industry might lead some economists to conclude that the free market doesn't always choose the best path for economic development progress. Granted, this scenario is complex (even for the most informed constituents), but the potential dividends gained from finding a workable solution should make this topic a high-priority on the agenda of any forward-thinking national government -- and their savvy commercial sector stakeholders.

  2. Hey David, Glad you mentioned the U.S. Interstate Highway System; it worked and made the U.S. mobile, even taking into account the enormous cost as a result of our large geographic boundaries. A couple of caveats on broadband infrastructure: Broadband companies defend their turf by highlighting that government will raise taxes to build infrastructure, thereby negating the role communities can play in building their own broadband, i.e. creating more competition. Private companies defend their investments by insisting on a level playing field, which they feel government competition is not. They claim subsidies abound in this type competitive metric. These are the current obstacles in front of local some communities getting in the game. Besides Google's initiative, EPB ( of Chatanooga, TN has been successful in building their own broadband, and Eutopia (http:// is another community based broadband initiative with some success in the mid-west. There has to be a significant grassroots effort national-wide to change the current competitive environment in the U.S.

  3. Great article David, The concept presented seems logical, but remember our government leaders both congressional and senatorial are bound by corporate lobbying and the resulting campaign contributions to be re-elected. That makes it difficult to pass the needed legislation and fund ground-breaking initiatives. Everything suggested by Wired in the article is needed in America, the question remains a political one. How legislators are elected is a stumbling block to real broadband progress. Effective competition is the key to a true (Broadband Super Highway) and Congress should act on these realistic recommendations. Here is an article on the subject of infrastructure deployment that may be of some interest.

    • @Leonard, thanks for sharing that insightful article about shifting infrastructure needs in the 21st Century. I'm hopeful that one day, in the not too distant future, the bar of expectations will be raised and the only vested interests being promoted will be America's collective role in the Global Networked Economy. Perhaps the example of the U.S. Interstate Highway System is still proof-positive that the national leadership can and will support progressive policies

  4. Can the U.S. apply the New Zealand model to advance fiber deployment?

  5. Using a burger quote, "Where is the broadband beef" hopefully puts the discussion in perspective. Michael, your expert comments are noted. About missing the point on this discussion; at least we are having one. Private broadband wireline companies have no incentive to build ultra-fast networks anywhere, since a lack of competition lets them rest on minimal innovation. The bright spot in broadband is wireless where existing competitive forces spur innovation including speeds, access, etc.. As stated, Google is leading the way to a competitive broadband future without help from government. It is a believer and innovator. Startups are not limited to large metropolitan areas, they are embedded throughout the broadband landscape, and as pointed out, forcing local governments in that landscape to partner with private enterprise to build infrastructure.

  6. Some (many?) people, to quote Gertrude Stein, believe, "broadband is broadband is broadband." Well it isn't; not just for speed but for location and availability across ALL contexts (work, social, play). Increasingly people are consuming much of their broadband via mobile/transient devices/means. Anyone who has gotten a 4G phone and knows where wifi is can speak to this. My own mobile/transient "wireless" consumption relative to fixed wireline has gone from 10/90 to more like 30/70 in just a month since getting my S3/4G. And I am a fairly heavy online user. That's why Dell and the Wintel ecosystem is under such heavy duress. Stop skating to where the puck was and start skating to where it will be. Lastly, the comments debating where broadband is (urban, suburban, rural) and who uses it (rich, poor, consumer, enterprise), not only miss the mobile/transient aspect, but they entirely miss, as does 99.9% of broadband discussion/debate/study Metcalfe's laws. Namely that a) the value of the network grows geometrically as the cost increases linearly, and b) that companies will be subsidizers and buyers of broadband everywhere in the future, as broadband not only lowers their real physical costs (labor, real estate, transport) but also increases their transaction and revenue opportunities. We've lost sight of the latter "800" model because we killed competition over the past 15 years. Let's hope Google and others begin to realize and prove this via a "horizontal" approach that is service, device, market and application agnostic. Vertically integrated broadband networks have failed in that broadband costs are 20-150x higher than they should be based on current technological capabilities.

    • @Michael, thank you -- once again -- for sharing your perspective on this topic. You said "Stop skating to where the puck was and start skating to where it will be." Most of the leading global broadband markets today (Hong Kong, Singapore, etc.) earned their high ranking with decisive strategic foresight -- that was originated more than a decade ago. Perhaps, using new technology, it's possible for some of the trailing markets (like the U.S.) to make a quantum leap and thereby catch-up over a shorter period of time. What’s your thoughts – is that a likely outcome?

  7. Hey David, I see your point. My Thoughts: The City of New York should be working on attracting new businesses/start-ups to an area designated for such ventures, existing urban/suburban etc. This area should be equipped with an ultra-fast fiber ring to serve that specific community. As stated, these type ventures have been constructed in other U.S. cities. It is up to the city to pull in partners for this venture, maybe a public/private initiative. Certainly, the newly designated USF Fund could be considered. Private sector broadband companies are not going to fill this void on their own. They need density and business commitments, etc.. for the economic payback.

    • @Leonard, Part of the challenge is associated with the rental space that these start-ups seek out, in relatively lower-cost areas of NYC. Unfortunately, those same locations often don't already have the required infrastructure in place -- and getting it installed can be problematic. Here's a story about the proactive forward-thinking campaign that Mayor Bloomberg has championed to address this issue

  8. Not sure I understand the point here. Urban areas where, as you state, businesses are located is incorrect. Most businesses have moved to the suburbs, or outlying areas, leaving the inter-city to decay. Just look at the Google Fiber Initiative in Kansas City and the 1-Gigabit speeds this will produce for the business environment. The urban areas you mention, where the business community resides, historically have multiple broadband providers that, if they would, offer the speeds you are suggesting. That is the competitive model needed to get faster speeds to Start-Ups.

    • @Leonard, perhaps to understand the point it would help to consider some of the places, such as New York City, where urban redevelopment has reportedly been impacted by a lack of adequate telecom infrastructure. Also, perhaps companies who are used to the broadband that's typically available in the leading Asian markets (i.e. Hong Kong, Singapore) don't understand why U.S. service providers can't deliver similar offerings (with symmetrical bandwidth, at globally competitive price points). Moreover, while some entrepreneurs in NYC may consider moving their start-up to Kansas City to take advantage of a superior service offering, many may prefer to stay put. The local digital business ecosystem that's currently available in NYC likely won't be replicated in Kansas City.