FCC study estimates $23.5 billion needed to bring broadband to unserved areas

Approximately 90% of the 7 million U.S. homes that are not able to get broadband connectivity could be most economically served by a fixed wireless solution, according to the results of a study presented yesterday by Federal Communications Commission officials.

The remaining 10% of homes, which are primarily in areas with low population density and uneven terrain, would be most economically served using DSL. The study estimated the total cost of bringing broadband at speeds of at least 4 MB/s to the 7 million unserved homes, which house approximately 14 million people, at $23.5 billion.

Researchers used a “net present value” model in arriving at their estimate, said FCC Deployment Director Rob Curtis. The study looked at “the extra cost of deploying [broadband] on [top of] current infrastructure,” he said, adding that researchers used a “granular” approach aimed at capturing economies of scale.

In presenting the study findings, Curtis and FCC Infrastructure Manager Steve Rosenberg emphasized that it was not their responsibility to make decisions about which technology should be supported by Universal Service funding, which regulators want to extend to cover broadband connectivity. Underscoring this thinking, the study actually used the more expensive of the two technologies for individual areas in arriving at the $23.5 billion estimate.

Researchers also looked at the cost of bringing broadband to unserved areas using other technologies such as fiber to the premises, but found those alternatives to be more costly in all cases. Curtis also noted that the estimate of the cost to provide broadband service using fixed wireless was based on using 700 MHz spectrum, which has excellent propagation characteristics. In the PCS band the cost to deploy broadband service would double, Curtis said.

Ironically, broadband stimulus awards granted to date have emphasized fiber-based projects. It’s worth noting, though, that the new FCC study essentially looked at the cost of providing “last-mile” connectivity, which has been the primary focus of the Rural Utilities Service, while the National Telecommunications and Information Agency has focused on “middle-mile” connectivity and connectivity to anchor institutions. Many RUS awards included a loan, as well as a grant component, which means the economic analysis would not be directly comparable to the approach that the FCC used in the new study.

Another consideration is that in the first funding round more applicants proposed fiber projects than wireless projects. Connected Planet has not yet seen an analysis of applications made in the second round of broadband stimulus funding, but in view of progress made in developing 700 MHz equipment, they may include a higher percentage of wireless projects. Certainly several of the more ambitious applicants have proposed wireless. 

Interested parties will have the opportunity to comment on the findings through the FCC notice process, Curtis said.