Sixth Broadband Deployment Report

FCC – [Released: July 20, 2010]
Reproduced from the FCC document, FCC-10-129A1.pdf.
Short URL: http://wp.me/PNLb5-1pl

I. INTRODUCTION

1. This is the Commission’s Sixth Report issued under section 706 of the Telecommunications Act of 1996, as amended, which requires the Commission to determine annually whether broadband is being deployed to all Americans in a reasonable and timely fashion. Our analysis of broadband subscribership data and the broadband availability model constructed for the National Broadband Plan indicates that while a substantial majority of Americans have access to broadband connections capable of “originat[ing] and receiv[ing] high-quality voice, data, graphics, and video telecommunications,” roughly 80 million American adults do not subscribe to broadband at home, and approximately 14 to 24 million Americans remain without broadband access capable of meeting the requirements set forth in section 706. Notwithstanding tremendous efforts by industry and government, those Americans will not gain such access in the near future absent changes in policy.

2. Accordingly, we conclude that broadband deployment to all Americans is not reasonable and timely. This conclusion departs from previous broadband deployment reports, which held that even though certain groups of Americans were not receiving timely access to broadband, broadband deployment “overall” was reasonable and timely.

3. As a consequence of that conclusion, section 706 mandates that the Commission “take immediate action to accelerate deployment of [advanced telecommunications] capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.” The Commission will fulfill that requirement in part by addressing the proposals for Commission action set forth in the National Broadband Plan.

4. In determining whether broadband is being deployed to all Americans in a reasonable and timely fashion, this Sixth Report takes the overdue step of raising the minimum speed threshold for broadband from services in “excess of 200 kilobits per second (kbps) in both directions”—a standard adopted over a decade ago in the 1999 First Broadband Deployment Report. As anticipated in previous broadband deployment reports, “technologies, retail offerings, and demand among consumers”—or in other words, network capabilities, consumer applications and expectations—have evolved in ways that demand increasing amounts of bandwidth and require us to “[raise] the minimum speed for broadband from 200 kbps to, for example, a certain number of megabits per second (Mbps).” To put 200 kbps in context, in 1999, voice-over-broadband or interconnected voice over Internet protocol (VoIP) was just beginning to emerge as a consumer application, and web pages were almost entirely text-based, with little embedded graphics or video, making 200 kbps an arguably sufficient benchmark for broadband capability at the time. Today, interconnected VoIP is subscribed to by over 21 million Americans, most web sites feature rich graphics and many embed video, and numerous web sites now exist primarily for the purpose of serving video content to broadband users. As a result, and as predicted by previous broadband deployment reports, services at 200 kbps are not now capable of “originat[ing] and receiv[ing] high-quality voice, data, graphics, and video telecommunications,” as those capabilities are delivered by today’s technology and experienced and expected by today’s broadband users. As a result, we find that the 200 kbps threshold is no longer the appropriate benchmark for measuring broadband deployment for the purpose of this broadband deployment report.

5. As an alternative benchmark for this year’s report, and given that this year’s inquiry was conducted in conjunction with the National Broadband Plan proceeding, we find it appropriate and reasonable to adopt instead the minimum speed threshold of the national broadband availability target proposed in the National Broadband Plan. The National Broadband Plan recommends as a national broadband availability target that every household in America have access to affordable broadband service offering actual download (i.e., to the customer) speeds of at least 4 Mbps and actual upload (i.e., from the customer) speeds of at least 1 Mbps. This target was derived from analysis of user behavior, demands this usage places on the network, and recent experience in network evolution. It is the minimum speed required to stream a high-quality —even if not high-definition—video while leaving sufficient bandwidth for basic web browsing and e-mail, a common mode of broadband usage today that comports directly with section 706’s definition of advanced telecommunications capability. As the target for the broadband capability that the National Broadband Plan recommends should be available to all Americans, this speed threshold provides an appropriate benchmark for measuring whether broadband deployment to all Americans is proceeding in a reasonable and timely fashion. It is by this benchmark that we find that broadband remains unavailable to approximately 14 to 24 million Americans.

6. We recognize that ensuring universal broadband is the great infrastructure challenge of our time and deploying broadband nationwide—particularly in the United States—is a massive undertaking. Therefore, we emphasize that our conclusion in no way diminishes the achievements industry has made deploying better and faster forms of broadband to most Americans, nor the Commission’s past efforts to foster broadband deployment. The fact remains, however, that to ensure the realization of section 706’s goal that all Americans may benefit from the full range of services described in the statute, much more remains to be done to foster broadband deployment.

7. As a consequence of our conclusion that broadband is not being deployed to all Americans in a reasonable and timely fashion, section 706 mandates that the Commission “take immediate action to accelerate deployment of [advanced telecommunications] capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.” The National Broadband Plan outlines a number of ways the Commission and others may accelerate broadband deployment. In compliance with section 706, we will consider the proposals for Commission action set forth in the National Broadband Plan for ways to remove barriers to infrastructure investment and promote competition in telecommunications markets. The Commission issued a proposed agenda for considering key recommendations of the National Broadband Plan. The Commission explained the purpose and timing of more than sixty rulemakings and other notice-and-comment proceedings that when completed “will accelerate deployment and adoption of robust, affordable broadband for all Americans.” Through proceedings already underway and those that are still to be announced, we will work to ensure that “every American has a meaningful opportunity to benefit from the broadband communications era” as envisioned by section 706.

II. BACKGROUND

8. Section 706 requires the Commission to annually “initiate a notice of inquiry concerning the availability of advanced telecommunications capability to all Americans (including, in particular, elementary and secondary schools and classrooms).” In conducting this inquiry, the Commission must “determine whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion.” Section 706 also requires the Commission to provide “demographic information for unserved areas” and include an international comparison in its annual broadband deployment report. The Commission must also conduct a consumer survey to evaluate “the national characteristics of the use of broadband” and make the results of the survey public at least once per year. If the Commission finds that broadband is not being deployed to all Americans in a reasonable and timely fashion, then the Commission “shall take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.” The Sixth Broadband Deployment NOI contains a more detailed discussion of background information relevant to the present inquiry.

III. STATUS OF BROADBAND DEPLOYMENT

A. Benchmarking Broadband

9. Section 706 defines “advanced telecommunications capability” as “high-speed, switched, broadband telecommunications capability that enables users to originate and receive high-quality voice, data, graphics, and video telecommunications using any technology.” Over a decade ago in the 1999 First Broadband Deployment Report, the Commission determined that “advanced telecommunications capability” and “advanced services”—and, in effect, “broadband”—are services and facilities with an upstream (customer-to-provider) and downstream (provider-to-customer) transmission speed of more than 200 kbps. At that time, the Commission rightly predicted “that as technologies evolve, the concept of broadband will evolve with it: we may consider today’s ‘broadband’ to be narrowband when tomorrow’s technologies are deployed and consumer demand for higher bandwidth appears on a large scale.” Nevertheless, all of the Commission’s subsequent broadband deployment reports have been based on the broadband speed threshold the Commission adopted in the 1999 First Broadband Deployment Report.

10. After considering the evidence in the record, we conclude that the Commission’s broadband speed threshold has not kept pace with the evolution of technology and consumer expectations. Although we continue to treat advanced telecommunications capability and broadband as synonymous terms in this report, we find that 200 kbps simply is not enough bandwidth to enable a user, using current technology, “to originate and receive high-quality voice, data, graphics, and video telecommunications,” as section 706 requires of such services. Today, Americans increasingly are using their broadband connections to access high-quality video, and we anticipate that this demand will only continue to grow in the future. For example, many Americans now communicate with their families and friends through desktop videoconference calls. Many users also now post their own videos and view others’ on such sites as YouTube and Hulu. Instead of reading articles online, Americans often watch videos of today’s top stories. The growth and demand for high-quality videos by Americans is substantial, and this demand is expected to grow at over 40 percent and 120 percent per year, respectively, through 2013.

11. Thus, for purposes of this report, we update the Commission’s broadband speed threshold. Specifically, we benchmark broadband as a transmission service that actually enables an end user to download content from the Internet at 4 Mbps and to upload such content at 1 Mbps over the broadband provider’s network. Of the many possible service characteristics that could be used for this purpose, we find this benchmark appropriate for several reasons. First, as discussed above, section 706 requires that broadband services enable users “to originate and receive high-quality voice, data, graphics, and video telecommunications.” Our examination of overall Internet traffic patterns reveals that consumers increasingly are using their broadband connections to view high-quality video, and want to be able to do so while still using basic functions such as email and web browsing. Indeed, we expect that it is not uncommon for more than one person to make use of a single Internet connection simultaneously, particularly in multi-member households that subscribe to a single Internet access service. The evidence shows that streaming standard definition video in near real-time consumes anywhere from 1-5 Mbps, depending on a variety of factors. The availability of broadband connections that actually enable an end user to download content from the Internet at 4 Mbps and to upload such content at 1 Mbps over the broadband provider’s network is therefore a reasonable estimate of the availability of “advanced telecommunications services” as defined by the statute.

12. We also believe the benchmark is a reasonable point at which to measure broadband availability because it has been updated to reflect current demand patterns. The record shows that approximately half of all broadband consumers today purchase service that is advertised to deliver download speeds of “up to” 7 Mbps (though evidence suggests that the actual speeds of these connections may be roughly half of advertised speeds). In addition, current trends indicate that consumers are likely to continue purchasing increasingly fast broadband connections in the future. In particular, the record shows that “the average advertised speed purchased by broadband users has grown approximately 20% each year for the last decade.” In contrast, when the Commission initially adopted a broadband speed threshold for purposes of complying with section 706, it estimated that only 0.4 percent of residential customers subscribed to a level of service meeting the adopted speed threshold.

13. Naturally, any benchmark the Commission might adopt to measure broadband availability could be criticized as being too low in some contexts and too high in others. Our present goal in selecting a benchmark to measure broadband availability is one shared with prior Commissions: to “giv[e] us a relatively static point at which to gauge the progress and growth in the advanced services market from one Report to the next.” The broadband benchmark takes estimated future demand into account, in part to minimize the risk of the Commission being forced to update its broadband benchmarks on an overly frequent basis. We find that the speed threshold we adopt today satisfies the historic purpose of this report by establishing a practical goal: one that is neither so lofty as to be merely aspirational, nor so minimal that consumers are consigned to rudimentary Internet access that does not support the high-quality services (including video) referenced in the statute. In any event, even if the Commission were to use a significantly slower speed threshold to measure broadband, we would still find that a significant number of Americans are unserved by broadband. For example, the evidence shows that 12 million Americans today lack access to terrestrial broadband services capable of delivering actual download speeds in excess of 768 kbps.

14. Finally, the benchmark we have selected mirrors the speed threshold the National Broadband Plan recommends as an initial national broadband availability target. The analysis that underlies the selection of the national broadband availability target is equally applicable to our obligation to select an appropriate benchmark for determining whether broadband is being deployed in a reasonable and timely fashion. In both cases, the selection of a speed threshold focused on end user demand for high-quality voice, data, graphics and video capabilities, not just as those services are used or experienced by current subscribers, but as we expect them to evolve in the next several years. Furthermore, the benchmark we have selected will allow the Commission to more easily measure progress towards accomplishment of the goals set forth in the National Broadband Plan, which recommends that the Commission publish an evaluation of plan progress and effectiveness as part of the annual broadband inquiry. Maintaining consistency with the National Broadband Plan will avoid the confusion that likely would result from the introduction of an additional speed threshold into the nationwide discussion of the National Broadband Plan.

15. The Commission’s broadband speed threshold benchmarks are not static, and we expect that in the future consumers will demand other service features, perhaps including higher upload and download speeds, service that meets specific functional criteria such as particular latency or jitter thresholds, a symmetrical broadband connection, or the ability to stream high-definition video. We recognize that “as technologies evolve, the concept of broadband will evolve with it.” Thus, we will continue to monitor available technology and consumer expectations and modify our broadband benchmarks accordingly. For the reasons described above, however, we find it appropriate for the purposes of this report to benchmark broadband as a transmission service that actually enables an end user to download content from the Internet at 4 Mbps and to upload such content at 1 Mbps over the broadband provider’s network.

B. Evidence of Broadband Availability

16. This year’s broadband deployment report is based on more comprehensive broadband data than any of the Commission’s prior reports. Our specific estimates of broadband availability are based primarily on two sources of data: the Model that Commission staff created in conjunction with the development of the National Broadband Plan and, consistent with previous broadband deployment reports, the broadband subscribership data the Commission collects on FCC Form 477. For the first time, we also used Census Bureau data to help us understand how broadband availability varies by particular demographics, such as income level and population density. To gain further insight into the “national characteristics of the use of broadband service capability,” the Commission conducted a consumer survey. Finally, we have conducted an international comparison of the extent of broadband service capability, which will be released shortly.

17. Comprehensive broadband data are essential to determining whether broadband is being deployed to all Americans in a reasonable and timely fashion. Congress, the Commission, and other federal agencies all have taken steps to improve broadband data collection efforts. Because these efforts are on-going, the full range of new broadband data are not yet available. For example, February 2011 is the deadline for the NTIA to post on its web site “a comprehensive nationwide inventory map of existing broadband service capability and availability.” In addition, the National Broadband Plan recommends that the Commission collect and analyze detailed market-by-market information on broadband pricing and competition. We therefore expect that future broadband deployment reports will benefit from the continued progress being made to better understand broadband availability, which in turn should help the nation reach its goal of universal broadband deployment.

1. Model

18. As part of the development of the National Broadband Plan, Commission staff developed a nationwide model for broadband availability for both wired and wireless technologies. The output of that model shows that approximately 14 million Americans, living in 7 million housing units, cannot get residential broadband service that meets the benchmark adopted in this report.

2. Subscribership Data

19. Consistent with previous broadband deployment reports, we also estimate broadband availability by analyzing the residential broadband subscribership data the Commission collects on Form 477. Every six months, the Commission collects on Form 477 basic service information from broadband providers. Form 477 requires a provider to report, by Census Tract, the total number of subscribers, the proportion of these subscribers that are residential subscribers, and the number of subscribers broken down by speed tier (i.e., the bandwidth of the Internet access connection provided to that customer) and technology. Our analysis of the Commission’s subscribership data confirms the overall levels of broadband availability indicated by the Model.

a. Unserved Areas

20. Before presenting our estimates, we highlight several key features of our analysis. First, although the Commission’s subscribership data are collected by Census Tract, we have aggregated providers’ residential subscribership totals for the whole county (or county equivalent) due to questions about the accuracy of the most recent data collected at the Census Tract level on Form 477. We emphasize this decision is driven by the data and does not represent a Commission conclusion that counties necessarily always are the best way to determine the “geographical areas that are not served” by broadband under section 706. Second, because the speed tiers used to collect broadband information on Form 477 do not match exactly the broadband benchmark adopted for purposes of this report, we must select a reasonable proxy to conduct our analysis. Of the 72 combinations of upload and download advertised transmission speeds for which the Commission collects data, the tiers closest to the benchmark adopted in this report are those beginning at 3 Mbps or 6 Mbps download speed and 768 kbps or 1.5 Mbps upload speed. Because both OBI analysis and Form 477 data indicate that higher speeds are available to more subscribers than elect to purchase them, and because the Form 477 data reflects subscriber purchasing choices rather than availability, we take a conservative approach and select 3 Mbps download speed and 768 kbps upload speed as the cutoffs for the subscriber choice likely to indicate that service offering actual speeds of 4 Mbps download and 1 Mbps upload is available to the subscriber.

21. Third, we have applied a “de minimis threshold,” under which we find broadband to be available in a county only if at least 1 percent of the households in that county subscribe to broadband. We do not believe it is appropriate to assume that broadband is available to everyone in a county merely because a single person in that county subscribes to broadband. At the same time, we recognize that not everyone for whom broadband is available elects to purchase it. For example, many consumers today obtain Internet access via transmission services slower than the 4 Mbps upload and 1 Mbps download speed threshold adopted in this report, even if a transmission service meeting this threshold is available. Given current subscription rates for Internet access transmission services of various speeds, we find applying a 1 percent de minimis threshold in our availability analysis appropriately balances these concerns. In particular, a 1 percent threshold will treat every county that literally is “not served by any provider” of broadband as unserved, as well as those counties in which only a small fraction of the households subscribe to broadband service. At the same time, because the 1 percent threshold is low, we minimize the risk that we classify an area as unserved when broadband service in fact is available to a majority of households, even if household adoption rates in that area happen to be relatively low.

(i) 1,024 Counties are Unserved Areas

22. Based on the analysis described above, we estimate that 1,024 out of 3,230 counties in the United States and its territories are unserved by broadband. These unserved areas are home to 24 million Americans living in 8.9 million households. As set forth in more detail in Appendix B, the 1,024 unserved areas have, on average: (1) a population of 23,479; (2) a population density of 138.3 people per square mile; and (3) a per capita income of $14,565 measured in 1999 dollars. In contrast, a typical U.S. census area has, on average: (1) a population of 95,481; (2) a population density of 283.5 people per square mile; and (3) a per capita income of $17,232 measured in 1999 dollars.

(ii) Unserved Areas Appear to Have Lower Income Levels
23. The unserved areas appear to have lower income levels than the U.S. as a whole. To measure economic well-being, we examined Median Household Income and the percent of the population living in poverty. We find that, when measured in 1999 dollars, on average, the 1,024 unserved areas have a Median Household Income of $28,626 compared to $34,809 for the U.S. as a whole. We find that, when measured in 2008 dollars, for 934 of the 1,024 unserved areas for which we have this information, the unserved areas have a Median Household Income, on average, of $37,785 compared to $44,172 for the U.S. overall. Moreover, based on the percent of the population estimated by the Census Bureau to live in poverty in 2008, we find, on average, 18.4 percent of the population live in poverty in the 934 unserved areas for which we have data, compared to 15.2 percent of the population for the U.S. overall.

(iii) Unserved Areas Appear to Be More Rural

24. The unserved areas also appear to be more rural than the U.S. as a whole. To determine whether the unserved areas we identified were in urban or rural areas, we examined both household density and housing units categorized as rural by the Census Bureau. On average, these 1,024 unserved areas have a household density of 46.8 households per square mile and have 73 percent of the housing units categorized as rural by the Census Bureau. In contrast, for the U.S as a whole, the typical county has a household density of 108.2 households per square mile and has 59 percent of housing units categorized as rural by the Census Bureau.

b. Subscription Rates Are Lower in Native Homeland Areas

25. The Commission has in past broadband deployment reports examined broadband availability for various demographic groups, such as minorities, persons with disabilities, and Americans living in Tribal areas. In particular, the Commission has recognized that certain categories of these Americans are particularly vulnerable to not having access to broadband. In 2008, the Commission required Form 477 filers to report broadband connections by Census Tract permitting the Commission to conduct a demographic analysis of subscription patterns. This change enables us to examine the subscription rates in Native Homeland areas for the first time. We find that counties where at least half the population lives in a Native Homeland area or where at least half the land mass is a Native Homeland area also tend to have lower broadband subscription rates than the U.S. as a whole. We find that only 12.5 percent of all households on Native Homeland areas subscribe to a broadband service faster than dialup compared to 56 percent of all households nationwide.

3. Consumer Survey

26. In October and November 2009, the Commission conducted its first periodic survey of end-users of the Internet “[f]or the purpose of evaluating, on a statistically significant basis, the national characteristics of the use of broadband service capability.” On February 23, 2010, in compliance with our new annual obligation, we released the results of our first survey, which was “an effort to understand the state of broadband adoption and use, as well as barriers facing those who do not have broadband at home.” The survey is novel in that it focused on the non-adoption of broadband at home so that its results will help provide insight into factors associated with Americans who do not subscribe to an Internet access service, even if one is available. With respect to non-adopters, the consumer survey found that 35 percent or 80 million American adults do not use broadband at home and these Americans fall into three categories, each with distinct demographic characteristics: (1) 22 percent of all American adults do not use the Internet at all; (2) 6 percent of all American adults use the Internet but do not have access at home, and (3) 6 percent of all American adults use dial-up Internet connections to go online from home. The Commission will periodically conduct other consumer surveys, some of which may focus on other aspects of the “national characteristics of the use of broadband service capability.”

4. International Report

27. Section 1303 requires the Commission to include an international comparison in its annual broadband deployment report. Specifically, section 1303 requires the Commission to “include information comparing the extent of broadband service capability (including data transmission speeds and price for broadband service capability) in a total of 75 communities in at least 25 countries abroad for each of the data rate benchmarks for broadband service utilized by the Commission to reflect different speed tiers.” We are incorporating by reference a report from our International Bureau that will be released shortly. This inaugural International Broadband Data Report will present data and information on international broadband service capability, which is based on information submitted to the Commission and data gathered by Commission staff. The forthcoming International Broadband Data Report also will provide information on, for example, actual prices advertised to consumers for broadband services, community-level data, and information about the broadband market and broadband regulations in various countries around the world.

IV. BROADBAND IS NOT BEING DEPLOYED TO ALL AMERICANS IN A REASONABLE AND TIMELY FASHION

28. Based on our analysis, we conclude that broadband is not being deployed to all Americans in a reasonable and timely fashion. Our analysis shows that roughly 80 million American adults do not subscribe to broadband at home, and approximately 14 to 24 million Americans do not have access to broadband today. The latter group appears to be disproportionately lower-income Americans and Americans who live in rural areas. The goal of the statute, and the standard against which we measure our progress, is universal broadband availability. We have not achieved this goal today, nor does it appear that we will achieve success without changes to present policies. The evidence further indicates that market forces alone are unlikely to ensure that the unserved minority of Americans will be able to obtain the benefits of broadband anytime in the near future. Therefore, if we remain on our current course, a large number of Americans likely will remain excluded from the significant benefits of broadband that most other Americans can access today. Given the ever-growing importance of broadband to our society, we are unable to conclude that broadband is being reasonably and timely deployed to all Americans in this situation.

V. IMMEDIATE ACTION TO ACCELERATE DEPLOYMENT

If the Commission finds that broadband is not being deployed in a reasonable and timely manner, it must “take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.” We have already begun. The National Broadband Plan, which also seeks to ensure that all people of the United States have access to broadband, proposes a number of ways to accelerate broadband deployment by removing barriers to infrastructure investment and by promoting competition. Several proceedings currently before the Commission provide a means to address some of these recommendations.

29. Through these proceedings, and others still to be commenced, we will work to ensure that broadband is being deployed to all Americans in a reasonable and timely fashion.

VI. ORDERING CLAUSES

30. Accordingly, IT IS ORDERED that, pursuant to section 706 of the Telecommunications Act of 1996, as amended by the Broadband Data Improvement Act, 47 U.S.C. § 1301 et seq., this Report IS ADOPTED.

FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch
Secretary

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