FCC Displeased with U.S. Broadband Deployment Rate

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FCC Displeased with U.S. Broadband Deployment Rate

According to an eWeek article, the FCC is not pleased with the rate at which broadband is being deployed in the U.S. According to eWeek, the FCC has started a Notice of Inquiry into whether broadband services are being provided to all Americans in a timely and reasonable fashion. They also have a Notice of Proposed Rulemaking on methods of collecting information needed to set broadband policy in the future. FCC Commissioner Michael Copps, agreeing with Martin, asked, "Can we finally agree that something drastic needs to be done?" Copps noted that the United States is 15th in the world in broadband penetration.

While it true the U.S. lags behind countries such as Japan, South Korea, and many European nations, part of the problem is the sheer size of this country. While Japan, South Korea, and most European nations have very dense population centers and few rural or small town areas. The U.S. on the other hand while it has large metro areas, it also has many rural areas (i.e. "Fly over country", many rural area in large states, including upstate New York, Montana, etc.) that makes it cost prohibitive for the carriers or cable companies (MSOs) to easily and cost-effectively provide broadband service.

Of course, the FCC's USF (Universal Service Fund) subsidy tax was supposed to help with deploying phone service to rural areas, so by proxy the USF should be able to subsidize DSL broadband over those subsidized copper phone lines. So why isn't this happening? That's a damn good question. It's possible some rural areas are just too far from the CO (Central Office) for high-speed DSL to work. While DSL standards are getting better all the time and squeezing more bandwidth at further distances, I'm sure there are still many rural population areas in the U.S. that are out of reach of DSL. That leaves cable broadband which uses shielded coax, which can travel further distances. Unfortunately, cable companies don't receive nearly the same amount of federal government subsidies to deploy cable to rural areas. That's why you often see satellite dishes on rural rooftops because no cable is available. Heck, when I go skiing to rural Vermont, I've noticed many more satellite dishes than other areas I've visited.

I'm glad to hear the FCC is taking a strong stance on increasing U.S. broadband penetration. This can only help the broadband VoIP industry grow, since customers will be able to use Packet8, SunRocket, and Vonage (assuming they still exist after the Verizon court case). Of course, the FCC may be taking a very pro-broadband stance right now and may look to increase USF taxes to fund broadband penetration. The FCC has discussed taxing VoIP to fund the USF, which I discussed last June. Specifically, FCC Chairman Kevin Martin proposing that VoIP service providers such as Vonage, Skype and others begin paying 10.9 percent of 65 percent of their revenues into the USF.  The USF was expected to lose as much as $350 million starting in August 2006 when DSL and other broadband Internet access services became exempt from having to contribute to the fund. So the FCC's pro-broadband stance could be at the expense of VoIP service providers via a USF tax, which would be very bad news for the VoIP industry.

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