AT&T, Verizon, Qwest: 82% of DSL “Unserved”

Bell_killer_slideThere's a bombshell buried on FCC broadband slide 47: three companies are responsible for the bulk of the problem. People gasped in D.C. when I said the Bells had been treating much of rural America “like the Romans treated the Sabine Women” but even I didn't realize the percentage was that high. Bell rural coverage is often 50-60%, far lower than other U.S. rural carriers or the rural coverage of any Western European telco.

Any U.S. broadband program will therefore fail – badly – unless there's a strategy to reach the homes unserved in Bell territory. Working with the companies is ideal, but if they won't co-operate Larry, Jonathan, and Blair need to find an alternative.

The Bell boycott of the $7.2B the government wants to give away kills the results of the program. From a senior source on the telco side last year, I learned the carriers are asking for $30-60B in subsidies.

That's a remarkable sum, given that the FCC study concludes the country can reach every home at good speed for subsidies of $5-25B (article to follow. Total in FCC slides for 100% up to 3 meg $20B, 10 meg $35B, 30 meg $50B. Required subsidy is 25-50%, I believe, hence $5-25B, probably below $15B. Reducing monopoly rural backhaul rates through “special access” also required.)

I believe there are three strategies: “Bum a billion”, “Teddy Roosevelt's Big Stick,”and “Timms' 99.6% solution”

“Bum a billion” Pay off the bells as requested, because the political price of doing anything else is too high. They pressed hard for this, asking for $20B in December just from the stimulus.

“Teddy Roosevelt's Big Stick.” The Bells are requesting government actions worth about $60B to them over the next 5 years. The changes they expect in USF/ICC and in spectrum policy are worth ten's of billions. If Jules has the courage – and political backup – they couldn't say no to any reasonable proposal. “Use It or Lose It” spectrum renewals on the $100B of spectrum the bells have – much given for nothing – is probably enough to persuade the carriers to reach over 98% at speed without any subsidy at all. Just run the numbers.

“Timms' 99.6% solution” British Telecom years back achieved 99.6% coverage, including Welsh Highlands and Scottish Islands. When they first said they couldn't do anything like that, Minister Timms funded some independents in the areas BT couldn't reach and said he would do more if necessary. Suddenly, they discovered broadband economics had changed and they reach almost everyone. The U.S. is ideal for this, because ~3/4s of the Bell unserved can get cable TV. 30+% of the “unserved” can be reached with 50 megabit DOCSIS 3.0 for less than $500/home, or $2B of the $7.2B stimulus. In one week, two RUS employees on the phone can locate enough cablecos needing upgrades to make an enormous difference. RUS is ready to sign checks for any carrier with a decent proposal to reach the unserved. Note added later: Stagg Newman tells me some old analog systems might cost $1,000 to upgrade. Yet one more reason we need better data.

About 1/3rd of those not reached by DSL can already get cable modems, and hence aren't "unserved." Another third can get cable TV and can inexpensively be upgraded with data. That leaves 2-4M homes that require expensive upgrades. That corresponds to the FCC slide 41 that identifies 1-2% of homes as requiring $2,000 and up to serve.


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