Private investment key to broadband build-out

Speaking at SuperCOMM, Frank Gallagher, managing director and group head of the communications and media group at Stifel Nicolaus, warned a panel of telecommunications service providers, "If you want broadband, that's fine, but don't expect us to fund it if you can't see a return." The panel agreed that private investment will be a key driver of broadband infrastructure build out and stressed the need for the Federal Communications Commission to move quickly on issues like inter-carrier compensation and the Universal Service Fund. Whether it's a wireline or wireless build out, broadband deployment is capital intensive, and it invariably requires a long wait for any return on investment (ROI), said Tom Tauke, executive vice president of public affairs, policy and communications at Verizon. ROI requires adoption by customers, which is proving to be a challenge. Tauke said Verizon is relying on monthly bills for access and services to support the capital investment, but with the price of access declining, the carrier is constantly looking for other sources of revenue from things like advertising. Compounding this issue is the fact that broadband expansion into the most rural areas is not economically feasible today, added Steve Davis, senior vice president of public policy and government relations at Qwest Communications. The capital expenditures required to provide services is significantly higher and must be spread upon a smaller number of customers. These rural areas should be top of mind for the FCC, he said.