Broadband and Universal Access/Service – Not By Wireless Alone

Interest in achieving universal access (UA) or even more ambitiously Universal Service (US) for broadband is widening and growing, including its incorporation in, or addition to existing Universal Service funding mechanisms.

These mechanisms and goals were originally aimed at expanding telephone service. They have often only been focused on fixed access, although the key role that can and must be played by wireless including mobile access has become recognized as increasingly valuable if not indeed essential, especially in emerging economies where numbers of mobile subscribers vastly exceed those of fixed access telephone users. The justification for setting or expanding the UA or US objective from narrowband to broadband access is based on the belief in, and evidence for the significant economic and social benefits that can now be generated by ensuring widespread access to broadband-based services, thanks to the internet and the development of powerful, inexpensive, interactive computing and entertainment devices. These benefits, or so it is argued, outweigh the costs involved in extending broadband to otherwise non-solvent customers as well as to regions where because of low population densities and/or difficult terrain it is not economical or commercially reasonable to deploy broadband networks, while charging prices for service that are affordable for the residents and organizations based there.

Initiatives aimed at achieving universal broadband access, or even service, are spreading through Europe, at both national and European Union levels, as well as in other regions of th world from Asia to the Americas. The U.K.'s much debated Digital Britain report (June 2009) proposed 22 recommendations to provide all households with a broadband service of at least 2Mbps by 2012. The Italian government is reportedly preparing a universal broadband plan while a public consultation on this topic has been launched in Spain. Austria's coalition government has set a target for access to broadband at a minimum speed of 25Mbps for the entire population before 2013, partly through legislation which promotes wholesale access and co-operative ventures among operators to reduce deployment costs. The most extreme version of this trend is found in Finland, where the government has passed legislation that will make broadband connectivity a fundamental right for every person in the country, at the same level as access to education or healthcare (or in the U.S. to guns). The regulator - the Ministry of Transport and Communications - has pushed through this law, which will oblige ISPs to offer connections of at least 1Mbps to all of Finland's approximately 5.3 million citizens by July 2010. Finland's Communications Markets Act, amended in July 2009, required operators subject to a USO (Universal Service Obligation) to provide broadband as a universal service at a reasonable price by December 2010. The new legislation has brought this obligation forward to July 2010 (while also increasing the minimum data rate from the dial-up speed of 50kbps). By December 2009 the regulator plans to assign a USO to an operator in each geographical area. On the other side of the world the Australian Government has announced a vary ambitions A$40 billion + plan to bring very fast broadband (100 Mbps) to 90 per cent of Australian homes, schools and businesses within eight years through FTTP (fiber-to-the premises).

In the U.K. it is foreseen that mobile broadband should serve the estimated 15% of homes in rural areas which are not expected to receive 2 Mbps via viable fixed line solutions. However universal broadband including mobile or wireless access in this country requires that mobile network operators reach a deal over re-apportioning the use of 900MHz wireless spectrum that was granted (the original digital GSM 2G frequencies) to the two original networks— now called Vodafone and O2 (owned by Spain’s Telefonica)—in the 1980s. This issue needs to be sorted out before the government can auction the 800MHz “digital dividend” spectrum that will become available for mobile communications when analog TV signals are switched off in 2012. The award of this spectrum may well be linked to the long delayed auction of 2.6GHz spectrum. These difficulties make the goal of reaching universal broadband in the U.K. by 2012 look over-optimistic. Historical experience and ongoing competitive, legal and regulatory controversies mean that delays of years in initial schedules for spectrum auctions tend to be the norm in many countries, both in Europe and other regions of the world.

However noble, worthy, and widely accepted the objective of broadband UA or US may be, there remain several controversial issues about how to achieve it, and even how broadband itself should be defined in light of the enormous increases over time in both demand for bandwidth and the capacities that fixed access (notably optical fiber) and radio access (e.g. emerging IMT-Advanced technologies) can deliver. Today’s high speed rapidly becomes tomorrow’s “dial-up”. Nevertheless deployments of new and improved broadband networks remain a capital-intensive business, since many contributions to their costs, e.g. civil engineering, as well as network operations and maintenance are not being driven by the same remarkable performance/cost multipliers as basic electronic and optical technologies. Hence the willingness of operators to make continuing investments in improved and new broadband networks is paced by their perspectives on whether they can achieve reasonable returns on these large investments in the regulatory environment in which they are operating as well as the revenues they can hope to obtain per Mbyte delivered. There is a growing concern that operators may be caught in a closing vise in which the costs they incur in delivering continually and rapidly increasing amounts of capacity, even though unit costs (per Mbyte and per Mbps) are falling thanks to technological progress, are outpacing the revenues generated by their broadband networks. The question of pricing of the use of broadband networks and how operators can avoid becoming squeezed in this way, and the role that public sector support could and should play to ensure that broadband investment is not stifled, are not the subject of this commentary and will be addressed separately. A more specific issue is highlighted here, namely the respective roles of wireless or mobile and fixed access in delivering broadband services.

As noted it is becoming accepted that wireless or mobile operators can and should play a significant part in meeting a goal of universal access for telephone service. Mobile operators can make significant direct contributions to extending telephone service to un- and under-served areas and populations instead of being looked at, as they have been in some countries, as simply a source of financial contributions to Universal Service Funds (USF) from which they do not receive any disbursements. However, there is a potential misconception concerning the different and more limited role that wireless can be expected to play in deploying broadband access affordably and universally, as contrasted to its contributions to expanding the coverage and affordability of telephone service. Intrinsically (the laws of physics and engineering) wireless access networks cannot match the capacities of fixed access. The metric to consider is Mbps/km2, the total capacity that can be provided to all users collectively within a given area. Comparisons of the theoretical maximum speeds of future LTE networks of 100+ Mbps with those offered over FTTH (fiber to the home) are misleading, because this wireless capacity has to be shared between simultaneous users in a cell or an area, whereas in fixed access network architectures capacities can be dedicated to an individual connection. Furthermore the speeds a mobile user enjoys are lower at the edges than at the centers of cells, as well as being dependent upon the number of simultaneous users. In contrast the total fixed access capacity available within an area in some network architectures can be a direct function of the number of fixed connections provided. Even though sharing is intrinsic to some fixed network designs, such as a typical cable operator’s network architecture, the potential area capacity available in such deployments is much larger than that of wireless networks by virtue of the wide usable bandwidths within coaxial and, even more so, fiber cable. Hence provided there is sufficient capacity throughout the networks that provide end-to-end connections, which requires major investments of their own to ensure, a fixed access network is much more capable of delivering consistently high user speeds than a wireless network, as well as speeds that can be much higher than the capabilities of the latter.

Although, as has already begun to occur in some countries, the number of mobile broadband customers may exceed, and even greatly, the number of fixed broadband customers, the bulk of broadband traffic will therefore have to be carried over fixed access networks. The practical speeds available to fixed broadband customers will lie beyond the capabilities that broadband wireless networks can support (even IMT-Advanced or LTE-Advanced), except perhaps in areas with very low user densities.

In short, broadband wireless access will be an essential complement to fixed broadband access, offering the inestimable distinctive capabilities of mobility and free-ranging nomadicity with continuous coverage throughout wide areas. But wireless or mobile broadband cannot hope to be a substitute or comprehensive alternative to fixed broadband to the same extent as mobile telephony can be to fixed telephony for a significant proportion of telephone subscribers. This conclusion presents a challenge that is particularly acute for emerging economies which never developed significant fixed access networks for telephony, where penetration of telephone services to the majority of the population has been built on mobile networks. Achievement of future widespread broadband access and capacity to meet future usage of broadband services and applications as economies become wealthier will require the deployment of substantial new fixed access infrastructure. This infrastructure should be based on fiber optic technology, rather than on copper cable. The investments required will be formidable, and for a long time purely commercial business models will be hard to justify if serving large numbers of low income consumers, especially if the latter are able to receive popular broadcast TV and other video programming economically via satellite, thereby depriving the terrestrial broadband infrastructure of this source of revenues.

Broadband policies and public sector-supported broadband initiatives in emerging economies will have to be realistic about the economics and capabilities of optical fiber and wireless access networks, both of which depend on accompanying investments in broadband regional or backhaul, as well as national and international fiber optic links. Radio access networks can deliver DSL-like speeds and perhaps a few times more in 4G deployments to many users, but they cannot be the basis for delivering tens of Mbps or more to customers on a reliable basis or in frequently- or always-on modes of operation. Emerging economies will eventually have to modify an overwhelming emphasis on mobile access networks in order to deploy entirely new widespread fixed access infrastructure, based on fiber optics, if they are to enjoy all the benefits that broadband services and applications can provide.