WASHINGTON - The Federal Communications Commission convened the first in a series of meetings Wednesday (May 22) designed to probe where the United States stands in the race to deploy broadband networks, which some see as the telecom sector's way out of its current slump.
Broadband deployment has become technology Topic A among policy makers, politicians and industry lobbyists, touching on a range of issues from copy protection to spectrum allocation. Against this backdrop, the FCC is looking to see what the United States has done right, where it has failed, and what it may learn from others.
The United States ranks near the top of the global broadband pack, industry surveys have found. But it is also believed to have much more pent-up demand than Asian or European countries. Hence, the growing debate here over how to stimulate broadband deployment and consumer demand.
South Korea may have one of the highest per capita penetration rates for broadband, with the government estimating that 57 percent, or 8.3 million households, having access to broadband services.
Government role
"The importance of the government's role in deployment of broadband cannot be underestimated," said Jeong Seon Seol, information and communications counselor at the Korean Embassy.
Through a combination of public subsidies and private loans, Seoul has stimulated broadband deployment to the point where the government estimates that 70 percent of Korea's 24.3 million Internet users log on to broadband networks. What's not clear is whether parts of the Korean model of government subsidies and incentives to stimulate private investment would work in the United States. "I'm not sure that the broadband policy of Korea will work in every country," Seol told the FCC seminar.
High-bandwidth Internet networks are treated as value-added services in South Korea, and are hence free of most regulations. In addition, Seol said South Korea has had few copyright disputes since record companies, recording artists, and other content providers there are happy to have their works distributed online.
That's not the case in the United States, where the movie and recording industries have been fighting with the consumer electronics and PC industries over copy protection schemes aimed at preventing online pirating of new films and music. Some observers said the copyright disputes have stymied development of compelling applications, thereby depressing U.S. demand for broadband services.
The current digital rights management debate focuses on whether industry can work out a compromise and whether the threat of government intervention is needed to forge an agreement.
Subsidized deployment
Several countries have heavily subsidized broadband deployment. The Korean government, for instance, has made about $77 million in loans available to fund private networks since 1998. The Korean government plans to invest about $926 million by 2005 to help deploy broadband networks around the country.
The Korean broadband market is dominated by three major carriers: Korea Telecom, with 49 percent of the broadband market; Hanaro Telecom, with 26 percent; and Thrunet with 17 percent. Among countries with the highest penetrations rates, South Korean carriers offer some of the lowest prices, about $25 a month for broadband access through DSL and other networks.
Japan, Singapore and Hong Kong are among the other Asian leaders in broadband deployment. Canada, Sweden and Germany are also among the global leaders.
Far back in the pack is the United Kingdom, which is seeking to transform its languishing broadband market into the biggest in Europe by 2005.
"We want to stimulate demand by educating consumers," said Simon Towler, telecommunications attach at the British Embassy. "There's been some lousy marketing of broadband. We believe there is a lot of pent-up demand [for broadband] in the U.K."
Britain is also reshaping its regulatory framework through a proposal to create a single regulatory agency for telecommunications modeled after the FCC.
Towler acknowledged that the U.K. broadband strategy is a "tall order," noting that it currently ranks last among G7 countries in per capita broadband subscribers. About 2 percent of British households currently use broadband service. The government offered 42 broadband licenses at auction and received bids on only 14, he added.
What lessons U.S. policy makers can draw from Asian and European competitors remains unclear. Policy makers are increasingly looking to the FCC to lead the way toward stimulating deployment and demand. FCC chairman Michael Powell said that's an unusual role for a regulatory agency, especially one that has adopted a hands-off approach on technology issues.
Indirect route
Observers said the agency and the rest of the Bush administration may take an indirect route to greater deployment by coming up with ways to stimulate private investment in broadband networks. Powell told the broadband seminar that the FCC would work to "empower any technology."
Whether the government adopts tactics used by other countries to promote broadband deployment also remains to be seen, but industry pressure to come up with a national strategy is sure to build as the telecommunications sector looks to capitalize on broadband deployment.
