FCC Splits on U.S. Broadband Rollout Success

Despite being ranked eleventh in the world in broadband penetration, the United States is rolling out
high-speed services on a “reasonable and timely basis to all Americans,” according to a new
report narrowly approved today by the Federal Communications Commission (FCC).

In its fourth annual report to Congress on broadband deployment, the FCC
said the United States ranks number one in the world with 28 million subscribers, followed
by the European Union (23 million), Japan (14 million), China (12 million),
South Korea (11 million) and Canada (4.5 million).

But in terms of residential broadband penetration — the number of subscribers per 100
people — the United States with its 6.9 subscribers per 100 residents ranks
behind 10 other countries. South Korea is the global leader with 21.3
subscribers per 100 people, followed by Hong Kong (14.9), Canada (11.2),
Taiwan (9.4) and Iceland (8.4).

“This report will serve as a milestone that we have indeed turned the corner
on digital migration,” FCC Chairman Michael Powell said. “As this
report demonstrates, deployments to date have given Americans a growing
number of ways to communicate, gather information and entertain themselves.”

The Telecommunications Act of 1996 directs the FCC to encourage deployment
of advanced communications services and mandates that the agency regularly
report to Congress on U.S. broadband deployment efforts. The FCC last issued
a report in February of 2002.

Congress and President Bush have repeatedly said the widespread deployment
of broadband tops the country’s technology agenda. Bush has set a goal of
“universal and affordable broadband access” by 2007.

According to the new report, subscribership to advanced services providing
bi-directional Internet speeds in excess of 200 kilobits per second (Kbps)
has more than tripled from 5.9 million lines to 20.3 million lines in December of 2003.

Cable modem and ADSL service providers comprise the largest majority of
advanced service lines, with cable representing 75.3 percent of the lines
and ADSL another 14.9 percent. As of last December, 6.8 percent of
zip codes in the U.S. had no high-speed lines. In the last report, 22.2
percent of zip codes reported no high-speed connections.

“We have taken steps to promote investment in established platforms, such as
cable modems and DSL, but we have also led the charge for new, emerging
broadband platforms,” Powell said. “These networks use Wi-Fi, fiber to the
home, broadband over power lines, EvDO and satellite to deliver broadband to

Commissioners Kathleen Abernathy and Kevin Martin joined fellow Republican
Powell in approving the report. Democrats Michael J. Copps and Jonathan S.
Adelstein dissented.

“When we find ourselves eleventh in the world, something has gone dreadfully
wrong,” Copps said. “When Congress tells us to take immediate action to
accelerate deployment, we have an obligation to do it. When the highest
reaches of government aim for universal broadband by 2007, we need a
strategy to reach that goal. I see none here.”

Referring to the report, Copps said there were “good stories in these glossy
pages” but said defining 200Kbps as a touchstone speed was outdated.

“When consumers get so much more bang for their broadband buck than we do,
something has to change,” he said. “In Japan, for as little as $10,
consumers get broadband service at 8,000 Kbps … why, then, is the FCC still
collecting data about 200Kbps and calling it broadband?”

“I am concerned about mounting evidence that
we are falling behind in broadband deployment,” Adelstein said in his dissent. “Data in the report show that
the global leaders not only have the higher penetration, but offer higher speeds at lower prices.”

Powell told reporters the broadband penetration number that ranks the United States
eleventh is a bad measurement for progress.

“Everybody uses this number, including me. First of all, a lot of it is
based on data from particular global reports that are dated,” he said.
“Secondly, what matters to us is whether our country’s [broadband rate] is
growing at a rapid rate.”

In particular, Powell said comparisons with South Korea were misleading.

“If we really wanted to talk about everything that’s going into South
Korea’s development, you would quickly realize that it is not a model
necessarily for the U.S.,” he said. “It is a massive, industrial program in
which almost every facet of the infrastructure is subsidized very
extensively and heavily by the government. There are applications that would
not be tolerated here that are driving adoption, such as Internet gambling.”

Population density and geography can also be determining factors in a
country’s broadband development. Powell said the United States is developing multiple
platforms to deliver broadband to a geographically diverse country.

“We are trying to put into the market lots of platforms that will both
compete with each other but solve geographic problems that are unique to
America,” Powell said. “You go out to South Dakota and you realize what the
challenge is if you’re going to have run that fiber wire from this house 600
miles to another house. But when you can shoot a wireless signal or you can
use satellite, those solutions are more important in our nation than they
are in some countries.

“It’s really dangerous to make facile comparisons to other
countries on too deep a level because there are very, very different
circumstances in those countries that I would never want to repeat here,” Powell added. “I
think this stuff of us going backward is just not fair, not accurate. By any
measure, there has been an accelerated growth of broadband in the U.S. You
can pick any measure you want other than this kind of funny comparison to
other countries.”

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