Introduction:

The IEEE ComSoc SCV chapter’s March 10^th, 2010 meeting featured a very informative talk by William B. Wilhelm Jr., Partner, Telecommunications, Media and Technology Group at Bingham McCutchen LLP titled, “Effects of Broadband Policy and Economic Stimulus on Innovation at the Edge and in the Cloud.” The meeting was chaired by Simon Ma, Secretary, IEEE ComSoc SCV and was attended by approximately 30 chapter members. Despite the relatively low turnout, the number of questions which were raised and discussed during the talk and subsequent Q&A reflected the keen interest amongst the attendees on the broad topic of the Federal Communication Commission’s (FCC) National Broadband (NB) Plan.

Presentation Highlights:

Mr. Wilhelm explained that the FCC (on behalf of the federal government) believes that broadband can form a strong foundation for economic success and has hence drafted the NB plan. The FCC’s primary objective for the NB plan is to spur broadband deployment nationwide through innovation in devices and applications, which in turn, it is hoped, will drive broadband adoption amongst the United States populace. Furthermore, the FCC has designated that the plan must seek “to ensure that all people of the United States have access to broadband capability” and establish benchmarks to meet that goal. In fact, the foregoing statement also delineates the current top internal priority of the FCC. According to Mr. Wilhelm, a data rate of 3 Mbps is regarded as “broadband” within the United States. Underlining the non-trivial nature of the NB plan objectives, Mr. Wilhelm pointed out that several key challenges will need to be overcome to ensure the plan’s success. These challenges include agency and administrative action among the FCC, National Telecommunications and Information Administration (NTIA) and Rural Utilities Service (RUS), legislative action by Congress and a fair competition policy determined by the Federal Trade Commission and protected by the Department of Justice.

Regarding the objective of ensuring that all people of the United States (US) have access to broadband capability, Mr. Wilhelm noted that the American Recovery and Investment Act of 2009 (ARRA) has allocated $7.2 billion in stimulus funds for the expansion of broadband facilities and services to so-called unserved, underserved and rural areas of the country. Additionally, other ARRA-born programs including health care, smart grid and transportation may also promote large-scale broadband adoption. Describing the response to the first round of funding applications, the talk indicated that nearly 2,200 applications were received, requesting a total of $28 billion with $23 billion requisitioned for broadband infrastructure. The presentation also elaborated on the fact that, in addition to the $7.2 billion in stimulus funds for broadband expansion, over $19 billion has been earmarked for Health Information Technology (HIT) including over $16 billion in medical provider incentives for deploying HIT. The aforementioned funding for HIT is aimed towards developing a nationwide health IT infrastructure which allows for electronic storage, transmission and retrieval of healthcare-related information. The talk also provided attendees with a view to the workings of the FCC with regard to new policy generation such as Notice of Inquiry (NOI) release, and the holding of workshops to close gaps in the comments obtained from the NOI release.

Mr. Wilhelm then described the current broadband scenario in the US in terms of deployment, user adoption as well as a qualitative description of the state-of-the-art in hardware and software systems as found in US homes and offices. It was interesting to note that, while the US leads the world in internetworking equipment, semiconductor chipsets, software and internet services and applications, the US suffers from conditions which are fairly unexpected for a country of its economic stature. These latter conditions include the fact that 50-80% of the homes may get broadband speeds which they need from only one service provider, the fact that broadband adoption is lagging in certain customer segments and the fact that deployment costs for various geographies are significantly different. Further elaborating on the shortcomings in the broadband services faced by users in the US, Mr. Wilhelm pointed out that, for the median user during peak hours, actual download speeds are only about half of the advertised speed! Moreover, around 5 million homes get less than the advertised 786 kbps and approximately 35 million homes get less than 10Mbps. Other broadband service drawbacks faced by US-based customers include the fact that several market segments show penetration rates significantly below the 63% average and that the lack of widespread adoption may entail a social cost in the future in terms of lowered access to jobs, education, government services and information. For example, high school and university students who have little to no Internet connectivity will be at a growing disadvantage compared to students who have materially good quality access to the Internet.

Thereupon, the talk pointed out how high-quality broadband connectivity enables innovations across a broad swath of national priorities – for example, health care (electronic health records, telemedicine and remote/mobile monitoring), energy and environment (smart grid, smart home applications and smart transportation), education (STEM, eBooks and content, electronic student data management), government operations (service delivery and efficient administration, transparency in governance and civic engagement), economic opportunity (job creation, job training and placement, and community development) and public safety (next generation 9-1-1, alerts and cybersecurity). On being queried whether retail services are currently the dominant application of broadband communications, Mr. Wilhelm acknowledged the pertinence of the question, but was unable to comment further on the topic since the FCC report had not been released at the time of this talk.

The presentation then delved into topics such as regulation and deregulation of broadband networks, network neutrality, spectrum policy, investment in telecom systems and services, and next-generation 9-1-1 systems. Explaining the significance of internet services like DSL being taken off from under Title II of the Telecommunications Act as a result of deregulation, Mr. Wilhelm pointed out that since the DSL service is no longer under Title II, the FCC cannot protect DSL customers and small DSL companies anymore from being controlled by telcos or network service providers. With regard to net neutrality, the case of Comcast versus the FCC wherein the former is alleging that the Internet was not under the purview of Title II, was briefly touched upon. A question was then posed on whether managed services were expected to crowd out the non-managed services such as best-effort services. An audience member proffered his knowledge that the very same issue is being discussed in the public domain and that no clear consensus has been reached on this topic. On the subject of spectrum policy, the talk reiterated the oft-heard chorus in the telecom circles that the currently allocated spectrum is woefully inadequate to meet projected future demands (especially for the mobile broadband applications). Mr. Wilhelm then elaborated on the need for investment in telecom services and technology since venture capital investments in these sectors has fallen significantly in recent years. According to Mr. Wilhelm, investment in telecom is a key ingredient to promoting innovation across the hardware, software, network and services ecosystem and the absence of strong investment could result in reduced value of services to end-users.

Pointing out that broadband communications can support public safety and homeland security efforts, Mr. Wilhelm then touched upon the prominent areas of public safety which can be improved as a result of a new broadband initiative such as the national broadband plan. These areas are next-generation 9-1-1 systems, cybersecurity, alerting and a nationwide public safety network. For 9-1-1 systems, Mr. Wilhelm suggested the possibility of having an all-IP based system and to also allow users to submit recorded video to the 9-1-1 operators who could then dispatch the user videos to first responders.

Analysis:

The national broadband plan which the FCC will release (which, at the time of the writing of this article, has been released) is a key step in promoting the widespread adoption of broadband connectivity within the US. If a large portion of the US population gains access to broadband communication systems, the US can continue leading the world in technology innovations in telecom hardware, software and services sectors. Indeed, we believe that it is imperative that the FCC’s objectives of widespread broadband adoption be met in order to help meet other national goals such as homeland security, economic opportunity, healthcare and education. However, as was pointed out by Mr. Wilhelm, the adoption and retention of broadband communications among US users will entail significant investment in the telecom services and technology fields by venture capitalists as well as the federal and state governments. The lack of adoption could result in the exacerbation of the digital divide, especially in the education sector where students from schools which are not well-funded may fall behind in acquiring the skills and knowledge necessary to compete in higher education and (subsequent) job markets. On the other hand, the successful adoption of broadband communications could contribute an order of magnitude improvement in the quality of life for American citizens and further their nation’s leadership in the technology arena.