Columbia to Conduct Independent Review of Telecom Capital Expenditures to Assist FCC (updated)

The Columbia Institute for Tele-Information (CITI) based at the Columbia Business School in New York will serve as an outside expert in reviewing projected deployment of new and upgraded networks to help inform the FCC's efforts in developing the National Broadband Plan. CITI will provide an analysis of the public statements of companies as to their future plans to deploy and upgrade broadband networks as well as an historical evaluation of the relationship between previous such announcements and actual deployment. "Broadband has the power to improve the lives of all Americans by creating jobs, spurring innovation and investment, and enhancing public safety," Chairman Julius Genachowski said. "As we begin the tremendous task of creating a National Broadband Plan, high-quality data on the state of broadband networks will help to inform and enlighten the activities of the agency. CITI's external review of network deployments will help provide the foundation for smart, data-driven decision-making. I appreciate CITI's assistance and look forward to seeing the results." Eli Noam, the Director of CITI and a Columbia Business School professor, said, "Too often, the debates over Internet policy have been driven by narrow agendas, with facts used selectively as ammunition rather than enlightenment. By focusing on data analysis -- of investment plans and deployment figures of upgraded broadband infrastructure, especially in this century -- CITI looks forward to helping the FCC to change the past culture and develop a National Broadband Plan grounded in facts."

Nate Anderson writes:

This analysis won't be a mere economic examination of work that might be paid for by the government, either; CITI "will provide an analysis of the public statements of companies as to their future plans to deploy and upgrade broadband networks" but will also do a "historical evaluation of the relationship between previous such announcements and actual deployment."

If today's press release sounds dry, it is—but ISPs have gotten the message and are already going public to defend their record of investment. Comcast points out that it previously pledged to upgrade 65 percent of its coverage area to 50Mbps DOCSIS 3.0 by the end of 2009; in an announcement today, the company raised that target to 80 percent (and it plans 100 percent coverage by the end of 2010). Translation: we're investing! (Which should be easy to do when you just announced a 4.5 percent increase in quarterly revenue, as the company did today.)

Most of the large cable companies are in a decent infrastructure position. Having already built out hybrid fiber/coax (HFC) systems a decade ago, there's plenty of bandwidth in the system, and relatively inexpensive DOCSIS upgrades at the headend can provide major speed boosts. That's one of the reasons that, for operators like Time Warner, broadband costs are going down even as revenue continues to rise. Nothing wrong with that, of course, unless you try to claim that broadband costs are soaring and thus prices must be raised.

Coming in for more criticism are the telcos, except for Verizon, which is deploying fiber to the home across its service area. But none of the other major players are doing so, at most offering some fiber to the node schemes increase speeds marginally. Yet companies like AT&T are basically minting money; the company pulled in $12.9 billion in profit in 2009 alone, up from $4.8 billion in 2005. As an AT&T customer, numbers like this always make me wonder why I'm not surfing the Internet from a 100Mbps fiber-optic line—or at least something faster than 6Mbps DSL.

CITI's analysis dovetails nicely with the work that the Berkman Center is doing. Together, the two reports should give us a nice picture of just how the US stacks up to other countries, what the true costs of broadband deployment and upgrade are, and whether some companies have gone into "harvest mode" on their lines.