Ubiquitous Wireless Broadband Won’t Come Cheaply, CTIA Warns
Making wireless broadband “ubiquitous” in the U.S. will cost $7.8 billion to $21 billion “in initial investment alone,” underscoring the need for a “robust and ongoing” Mobility Fund as the FCC reforms the Universal Service Fund, CTIA said in a letter to the FCC. The report comes at a critical time, with the FCC expected to take up a USF revamp plan at its Oct. 27 meeting, though Chairman Julius Genachowski indicated Thursday that vote may not come off as expected. America’s Broadband Connectivity (ABC) plan, submitted by major carriers, would allocate only $300 million a year to the Mobility Fund for wireless build-out. CTIA is not expected to release a more detailed estimate of the optimum size of a Mobility Fund, an industry official said.
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Genachowski said he could not offer guarantees that the FCC will vote on a USF/intercarrier compensation order at the upcoming meeting. “I don’t have anything to announce on [the] schedule,” Genachowski said during a press conference after Thursday’s FCC meeting. “We're working very hard. We're in the homestretch.” USF and intercarrier comp reform “is a real focus right now at the agency by the staff, by each of the commissioners, including me,” he said. “We all recognize an important need to finally transform and reform USF and intercarrier comp.”
The costs were tabulated by consulting firm CostQuest, which updated a 2008 study. “While commercial providers are making enormous investments toward the build-out and enhancement of their networks, and will continue to do so, this study’s analysis of evolving mobile broadband technologies demonstrates that there is a not insignificant percentage of the country ... that remain unserved by mobile broadband technologies,” CTIA told the FCC (http://xrl.us/bmd576). “CostQuest’s study is not intended to be a precise estimate of the final costs of this build-out effort, but rather it is intended as a broad estimate to frame the scope of the issue.”
CTIA said the report has “significant implications” for the USF debate. “It suggests that proposals to cap the Mobility Fund at $300 million would be significantly inadequate for deploying ubiquitous mobile broadband,” CTIA said. “The Commission must approach this challenge consistent with its obligation to ensure ’sufficient’ universal service support.” Supporters of the ABC plan have conceded that the $300 million figure should be looked at only as a starting point for discussions (CD Aug 25 p1).
The CostQuest report found that 165 million Americans do not have access to any form of next generation OFDM mobile broadband service, either LTE or WiMAX, at their primary residence and 90 percent of road miles in the U.S. aren’t covered. The cost of deploying both LTE and WiMAX everywhere would be $21 billion, while deploying just one service would cost about $10 billion. CostQuest said 54 million Americans and 62 percent of road miles are not covered by both EVDO and HSPA, the earlier generation of wireless broadband. The cost of ubiquitous deployment would be $7.8 billion, the report found. The cost estimates only cover initial deployment, but not maintenance and service.
"If you look at the services that consumers are migrating to, it’s broadband and it’s mobility,” CTIA Assistant Vice President Scott Bergmann said in an interview. “We think that having a robust mobility fund is really a key part of universal service reform and the whole purpose of this study is to try to give the commission some empirical evidence about the size of the challenge in getting mobile out across the country.” All signs are that the FCC understands the importance of a Mobility Fund, Bergmann said.
"The study shows that building out broadband networks, whether wired or wireless, requires huge commitments of resources,” said USTelecom Senior Vice President Jonathan Banks. “The study does not address whether or where USF support may be necessary to achieve the wireless buildout the study models."
Rural Cellular Association President Steve Berry said he welcomed the report. “RCA has been in the forefront in pointing out the inequities in the ABC Plan,” he said. “If you're a wireless carrier, even one of the larger carriers, you have to be opposed to the right of first refusal and the unconscionable proposal to eliminate wireless as a choice for consumers throughout the U.S. I'm hopeful that this information demonstrates that the USF fund needs to have more opportunity for wireless competitive carriers to access the fund.” Only incumbent and rural local exchange carriers at this point fully support the ABC Plan, Berry said.