The FCC is preparing to propose up to $25 billion in additional federal spending to subsidize national broadband access as a part of its forthcoming national broadband plan, according to a number of sources. Technology like fiber to the home (FTTH) is said to be the primary target.
That would be enough to connect a bit less than 50 million homes according to our model, and would bring about a profound change in the broadband dynamic. The big question will be how the money would be spent. We remain convinced that the best approach would be to offer tax credits to operators who could deploy broadband and also to provide subsidies and loans to state and local governments.
However, it will be important to avoid the issues that have plagued programs like the Rural Utility Subsidies (RUS), which have tended to generate a lot of spending for relatively little incremental result. That is in part due to the fragmentation of the rural markets, and so fragmenting the broadband market by generating new “competitors” would be likely to create similar waste.
Some of the focus of the FCC is no doubt due to Genachowski’s fascination with the Google proposal for gigabit FTTH and to community and social pressure generated by that proposal—which is exactly what Google intended.