Tuesday, April 7, 2009

Universal Broadband: Not Cheap

People who talk about broadband infrastructure investment in the United states need to read this story about Australia's decision build a nationwide broadband network. The government will spend $43B AUS ($30.6B USD) to get the equivalent of a Verizon FIOS subscription to 90% of Australian households. This in a country with one fifteenth the population of the United States. When you consider that expensive part of a broadband network lies in the "last mile"—the cable running from telephone exchanges to the home—odds are that the tab for an equivalent investment in the United States would run into the hundreds of billions of dollars. Even spread out over ten years, this is no small undertaking; $15B a year for ten years is on par with the budget for NASA ($17.4B), so we are talking about creating a fairly large agency or drastically expanding the FCC in order to oversee the buildout.


spavis said...

can't the gov't subsidize satellite internet and call it a day?

Nick Beaudrot said...

You can't push enough data through satellites.

The new wireless standards (3G/WiMAX/LTe) are getting close, but as demand for audio and video over the internet increases they would have trouble coping. It's actually a difficult problem at the moment.

dr said...

It seems like a good balance would be for government to build a high capacity trunk, and let the private sector build out the last mile. Probably this has already been thought of and is totally unworkable.

Nick Beaudrot said...

In effect, we sort of have that already via local loop unbundling. However since state regulation governs the wholesale rates that incumbents charge their competitors they can price them out.

Not to mention the fact that while we had a brief explosion of telco providers in the wireless space (though now we are down to Sprint, AT&T, Verizon Wireless, and T-Mobile), in terms of landline internet it's still mostly a cable/DSL duopoly for residential customers. If you're lucky both AT&T and Verizon operate in your area.

dr said...

Actually, that reminds me of a less often discussed phenomena of broadband coverage. Namely, that in many places you can't get fast internet without subscribing to something else. Or, at the very least, you pay more for fast internet when you don't bundle it with something else.

Where I live, I have basically two broadband choices -- DSL through the phone company or cable internet through Comcast.

God how I hate Comcast.

And yet, my broadband comes from them. For while I could and would live without cable TV, at least I have use for it. Which is more than I can say for a land line.