[kictanet] Fwd: [Internet Policy] Universal service fund in the U.S. has failed badly. Despite $billions, U.S. has close to the worst coverage in the developed world.

Wed Apr 13 13:57:16 EAT 2016

Barrack

Interesting. It would really be interesting to hear from the folks at USF.  They have taken quite a beating from this forum. Maybe a good idea to listen to them and get a feel of where they are at and what sort of challenges they face.

Ali Hussein
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> On 13 Apr 2016, at 10:46 AM, Barrack Otieno via kictanet <kictanet at lists.kictanet.or.ke> wrote:
> 
> Listers,
> 
> In light of Walu's write up on Universal Access, this might provide an
> interesting comparison.
> 
> Thank you
> 
> Best Regards
> 
> ---------- Forwarded message ----------
> From: Dave Burstein <daveb at dslprime.com>
> Date: Wed, 13 Apr 2016 02:48:29 -0400
> Subject: [Internet Policy] Universal service fund in the U.S. has
> failed badly. Despite $billions, U.S. has close to the worst coverage
> in the developed world.
> To: Richard Hill <rhill at hill-a.ch>, "internetpolicy at elists.isoc.org"
> <internetpolicy at elists.isoc.org>, Alejandro Pisanty
> <apisanty at gmail.com>
> 
> Folks
> 
> I changed the subject to avoid getting entangled in the debate about the
> particular report and focus on the issue of achieving access. Based on the
> U.S. experience, I believe USF funding is inefficient at best.
> 
> The U.S. has about 5M homes that can't get landline broadband despite $7B
> in our stimulus and billions more over the years in Universal Service
> money. (FCC data) That's 7-10X the unserved rate in much of Western
> Europe.The greater land area is only a partial explanation. See the work of
> Professors Rosston and Hazlett as well as Scott Wallsten, who was chief
> economist of our broadband plan. I did two workshops for our Broadband Plan.
> 
> I don't have depth on the issues in other countries but what I know
> suggests USF isn't performing well most places.  I believe the Kurth
> Solution, named after the German regulator, is strongly preferable.
> 
> Unserved rural areas by their nature are scattered and have limited local
> infrastructure. In most places, only the incumbent has the local facilities
> and backhaul required to serve the area at competitive cost. This became
> obvious when almost none of the applications for our broadband stimulus
> were from new entrants looking to connect the unserved, although that was
> the primary goal of the funding.
> 
> The result was that the local phone company could and did claim their costs
> were far higher than they needed to be. Add on the political power of the
> phone companies (regulatory capture) and the system is spending what I
> estimate is easily twice what an efficient subsidy would be. (Limited hard
> data.)
> 
> Kurth in Germany covered most of the "white spaces on the map" at a much
> lower cost. In a spectrum auction, the carriers were required to cover
> white spaces before they use the spectrum in the big cities. While the
> companies could reduce their bids, WIK Consulting told me the impact was
> very small.
> 
> Vodafone and Deutsche Telekom, spending their own money covered those small
> towns rapidly and what I believe was far less than any USF subsidy would
> have been. LTE speeds are now 50-100 megabits, enough for most purposes.
> The caps on the rural wireless were much too low but technology is rapidly
> improving that. Today's LTE gear has 3-4X the capacity of the earlier
> systems, mostly through carrier aggregation. More advanced MIMO and MU MIMO
> are likely to deliver 10X the current capacity in the next few years,
> according to leading wireless experts such as Stanford's Paulraj. That will
> allow raising the cap to perhaps 100-150 gigabytes/month, probably with
> unlimited access nights and mornings.
> 
> Portugal and others are working with a similar system.
> ----------------------------------
> Unless you have a plan to educate the regulator and enforce reasonable
> pricing in USF, I think the plans are somewhere between overly expensive or
> ridiculous. The U.S. couldn't do it despite major efforts since the
> Broadband plan.
> 
> The "Kurth Solution" - indirect competitive bidding as part of the spectrum
> auction, seems to work well. It's not the only alternative.
> 
> Australia is building a National Broadband Network for everyone.
> Unfortunately, the cost has gotten out of hand, as so often happens with
> government projects.
> 
> India may have a better idea; the government is extending fiber to 10's of
> thousands of small towns with the expectation private or cooperative
> efforts can deploy the last mile. The backhaul costs are often the largest
> expense in rural service. They require so much capital few but the largest
> companies can finance backhaul.
> 
> With mobile phones and WiFi gear now under $50, local businesses or munis
> can connect to that fiber and serve the area with a small investment. This
> is very promising, although political entanglement has drastically slowed
> construction. Some government projects work well (China), others we know
> are unsuccessful.
> -------------------------------
> 
> Satellite has become much more attractive than before. Mark Dankberg,
> Viasat CEO, told our broadband plan today's satellites have an order of
> magnitude more capacity and reduce latency by half. (They haven't solved
> the 22,000 mile distance but improving the routers and caching apparently
> makes a huge difference.) No politician would admit it, but the assumption
> in the U.S. plan was satellite for the last 1%.
> 
> All current Universal access programs may have become obsolete on December
> 21, The Falcon 9 successfully launched a constellation of 11 Orbcomm-OG2
> second-generation Low Earth Orbit (LEO) satellites. The first stage
> returned to Cape Canaveral successfully, which Elon Musk's company says
> will reduce costs by about 30%. The first two sea landings failed but April
> 8, 2016, Falcon 9 Flight 23 successfully landed a 1st stage booster on
> drone ship Of Course I Still Love You.
> 
> Low Orbit satellites solve the latency problem but still have a way to go.
> Small, inexpensive tracking antennas need to be developed. An engineer I
> respect has studied the problems and expects LEO sats will be the way to go
> in a few years.
> 
> Facebook's drones will probably never be cost-effective just serving
> extreme rural areas, I believe; I'm anticipating they will need urban
> customers to cover the costs. Their engineers may be good but the head of
> the project didn't know the facts on the ground. I haven't researched it
> but I expect the rapidly dropping costs of LTE will be much less than the
> drone network. I would guess the same about Google's balloons but the team
> seems far more knowledgeable.
> 
> I've bcc'd this to the experts mentioned. I hope they and any others catch
> any mistakes I have.
> 
> The above is only about access. I'm very encouraged by the new U.S.
> Broadband Lifeline, a $9.25/month subsidy for the poor where networks are
> already in place. Broadband networks are a classic case of high fixed
> costs/low marginal costs. The marginal cost of adding a customer to an
> existing large broadband network in America or Europe is $4-8/month.
> 
> Dave Burstein
> 
> Editor, Fast Net News, Net Policy News and DSL Prime
> Author with Jennie Bourne  DSL (Wiley) and Web Video: Making It Great,
> Getting It Noticed (Peachpit)
> 
> 
> 
> -- 
> Barrack O. Otieno
> +254721325277
> +254733206359
> Skype: barrack.otieno
> 
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