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NETWORKED NATION:
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NETWORKED NATION:
BROADBAND IN AMERICA
2007
NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
United States Department of Commerce
Washington, D.C.
January 2008

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NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
Executive Summary
Broadband technology is changing our lives, our
economy, and our culture. By making it possible
to access, use, and share information, news, and
entertainment with ever increasing speed, broad-
band knits geographically-distant individuals and
businesses more closely together, increases our
productivity, and enriches our quality of life. In
so doing, it fuels economic growth and job crea-
tion that, in turn, provide unparalleled new
opportunities for our nation’s citizens.
Technology Policies
Technology Neutrality: Past experience teaches
that when government tries to substitute its judg-
ment for that of the market by favoring one
product or vendor over another, it can easily divert
investment and/or discourage research necessary
to bring new and better products or services to
market. Given the rapid pace of technological
change, such unintended effects can have long-
term and far-reaching adverse consequences that
extend across multiple sectors of the economy.
For this reason, the Administration has consis-
tently and strenuously advocated for technology
neutrality in order to take the government out of
decisions more appropriately left to the market-
place.
Recognizing this transformative power, four years
ago President Bush articulated a national vision:
universal, affordable access to broadband technol-
ogy. From its first days, the Administration has
implemented a comprehensive and integrated
package of technology, regulatory, and fiscal poli-
cies designed to lower barriers and create an
environment in which broadband innovation and
competition can flourish.
Spectrum Policy: To satisfy society’s increasing
desire to function “untethered,” new wireless
broadband services can only emerge if spectrum
resources exist to support them. Pursuant to the
President’s June 2003 Spectrum Policy Initiative,
The results have been striking. The last several
years have witnessed substantial growth in the
broadband marketplace punctuated by increases in
capital investment, innovation, and market entry.
Relative to other countries, the United States has
experienced superior productivity over the past
several years. Americans today enjoy an increasing
array of broadband services, available from a
growing number of service providers, using a va-
riety of technologies. Penetration continues to
grow, and prices continue to fall.
NTIA has promoted greater access to spectrum
by improving the spectrum efficiency of Federal
radio systems and operations. NTIA and the
FCC, working together and with the Congress,
have significantly increased the amount of spec-
trum available for advanced wireless services. The
Administration has also actively sought ways to
accelerate broadband deployment by facilitating
unlicensed uses and encouraging the use of prom-
ising new spectrum technologies such as
ultrawideband, and by implementing new spec-
trum management systems that afford non-
Federal users faster and easier access to spectrum.
A Broadband Strategy for the Twenty-
First Century
Building on the pro-competitive, deregulatory
policies Congress articulated in the Telecommuni-
cations Act of 1996, the Administration, through
the combined efforts of the National Telecom-
munications and Information Administration
(NTIA) of the U.S. Department of Commerce,
the U.S. Department of Agriculture (USDA), and
other agencies, and in cooperation with the Fed-
eral Communications Commission (FCC or
Commission), has executed a combination of ini-
tiatives to develop and rapidly deploy new
technologies, eliminate regulatory underbrush, and
remove economic disincentives for investment in
this critical area.
Regulatory Policies
The Administration has worked to clear away
regulatory obstacles that could thwart the invest-
ment that fuels development – and deployment –
of new technologies. It supported the FCC’s ef-
forts to modify legacy regulation in order to
expand incentives for local telephone companies
to invest in network upgrades and to stimulate
facilities-based investments by other providers.
The Administration has further encouraged ag-
gressive broadband deployment by favoring
policies to ensure that applications running on the
Internet, such as voice over Internet Protocol ser-
i

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NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
ii
vice, remain free from unnecessary economic
regulation. The Administration has also sup-
ported cable franchise reform efforts in order to
promote the video services competition that will
help to accelerate broadband deployment. In
April 2004, the President signed an Executive
Memorandum to give broadband providers more
timely and cost-effective access to rights-of-way
on Federal lands for their networks.
Fiscal Policies and Targeted Funding Efforts
Tax relief has given businesses powerful incen-
tives to invest in broadband technology.
Recognizing that taxes constrain growth, President
Bush on three occasions has signed legislation to
extend the Federal moratorium on State and local
taxation of Internet access and has consistently
urged that the moratorium be made permanent.
The President also signed into law legislation al-
lowing companies to accelerate depreciation for
capital expenditures, including those associated
with broadband deployment. The Administration
has also forcefully advocated extending and mak-
ing permanent the tax credit for research and
development spending. Further, the Administra-
tion has provided targeted seed-funding to
support more rapid deployment of broadband in
underserved rural areas, in particular through sev-
eral programs administered by the USDA.
Progress in Broadband Access
America’s consumers are now reaping the rewards
of the Administration’s pro-investment, deregula-
tory policies: a vigorous broadband marketplace in
which providers using various platforms compete
against one another on price, speed, mobility, con-
tent, and other service features. Currently
available data suggest that broadband availability
and subscribership have increased dramatically,
and that consumers – including those in rural and
remote areas – have more opportunities than ever
to choose the broadband solution (i.e., technology,
services, and provider) that best suits their needs
and budget.
Overall
Since President Bush took office, the total number
of broadband lines in the United States has grown
by over 1,100 percent from almost 6.8 million
lines in December 2000, to 82.5 million in De-
cember 2006 according to the most recent FCC
data. Over 58 million of these lines serve residen-
tial customers. FCC data also reveal that the
number of broadband service providers more
than tripled from December 2003 to December
2006, with the newest wired and wireless services
growing at the highest rates. Data from the U.S.
Census Bureau’s Internet Use Supplement to the
October 2007 Current Population Survey also
show that Americans’ use of broadband technolo-
gies has soared: home broadband usage has risen
substantially over the past six years, from 9.1 per-
cent of households in September 2001 to 50.8
percent in October 2007. Rural America has also
experienced impressive growth from 5.6 percent
of rural households in September 2001 to 38.8
percent in October 2007.
Digital Subscriber Line (DSL)
Used primarily by local telephone companies to
provide broadband services, DSL was available as
of year end 2006 to 79 percent of households in
areas where companies also offered local tele-
phone service according to FCC data. Not limited
to highly populated areas, DSL was among the
broadband services offered to 90 percent of the
carriers’ rural customer base according to recent
industry surveys. As DSL transmission speeds
have accelerated and prices have dropped, the
number of DSL subscribers has burgeoned.
FCC’s statistics reveal about 22.8 million residen-
tial “high-speed” asymmetric DSL (ADSL) lines in
service as of year end 2006, growing by more than
300 percent from December 2002.
High-Speed Cable
Research conducted by the cable television indus-
try suggests that high-speed cable service is now
available to some 92 percent of all U.S. house-
holds by the end of 2007. That same research
shows that as of year end 2006, there were 29 mil-
lion residential high-speed cable subscribers, up
more than 109 percent from the 13.8 million cus-
tomers in the second quarter of 2003.
Accompanying this growth, the industry’s trade
association reports that most cable broadband
operators now offer transmission speeds exceed-
ing five megabits per second (5 Mbps), with some
delivering as much as 50 Mbps.

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NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
Mobile Wireless
Fiber Optic and Broadband Over Power Lines
The wireless industry is currently the fastest grow-
ing segment of America’s broadband economy.
The FCC’s most recent data reveal that the num-
ber of broadband lines provided by wireless
operators increased from approximately 380,000
in June 2005 to almost 22 million at year end 2006
– a growth rate that dwarfs that of other broad-
band platforms. Moreover, a significant portion
of these (4.1 million, or almost 19 percent) pro-
vide “advanced” services capable of delivering
over 200 kilobits per second (Kbps) in both direc-
tions.
FCC data show that the total number of high
speed lines delivered over fiber and power line
connections grew 789 percent from December
2003 to December 2006, rising from 116,390 to
just over a million. Fiber optic lines, however,
appear to be almost entirely responsible for this
expansion. Industry data also show a steady ex-
pansion of fiber deployment (including fiber to
the home and interoffice fiber). As charted by the
Telecommunications Industry Association (TIA),
annual deployment of fiber in the United States
grew sharply over the last four years, from the 4.8
million miles deployed in 2003 to 13.1 million
miles in 2007. According to another industry es-
timate, fiber now passes almost 9.6 million homes
in North America (virtually all of these homes are
in the United States), up more than 50 percent
from
Fixed Wireless
Fixed wireless technologies have emerged both as
an important complement to mobile wireless and
as a potential “last-mile” broadband solution in
areas that other platforms do not reach. Accord-
ing to FCC figures, the number of fixed wireless
broadband lines in the United States grew 132
percent from 208,695 in June 2005 to 484,073 in
December 2006; an industry group estimated the
total number of fixed wireless subscribers in 2006
to be 800,000. The proliferation of one fixed
wireless technology – wireless fidelity (Wi-Fi) –
has increasingly enabled many consumers to cut
the tether to a home or office connection; based
on one estimate, there are 66,058 pub-
lic/commercial Wi-Fi access points, or “hot
spots”, currently in the United States, more than
double the next closest country. Another tech-
nology – worldwide interoperability for
microwave access (WiMAX) – can deliver fixed
wireless broadband access at distances as great as
five miles without line of sight and up to 30 miles
under ideal conditions. With potential data speeds
up to 70 Mbps, WiMAX has been identified as a
possible “last-mile” solution to deliver broadband
into currently unserved rural and remote areas.
September 2006.
Industry Investment
The accessibility of broadband technology to an
increasing number of Americans stems directly
from the substantial and growing capital invest-
ments made by service providers across all of the
subsectors of the broadband marketplace. TIA
estimates that overall spending to support broad-
band network infrastructure will rise over the next
four years from $15.2 billion in 2007 to $23 billion
in 2010. This includes: significant growth in fiber
deployment by cable operators to meet customer
demand for high-definition television channels
and video-on-demand services; continued invest-
ment for the deployment of advanced mobile
wireless services and fixed wireless technologies
such as WiMAX; and spending on fiber-related
telecommunications equipment that is estimated
to grow almost $13.5 billion annually in the next
three years.
Affordability
Satellite
Escalating competition among broadband plat-
forms and service providers has yielded both a
proliferation of new communications and enter-
tainment services and affordable broadband
pricing for American consumers. The rapid drop
in the prices for DSL broadband services in the
past five years, along with the deployment of fiber
infrastructure equipment, have resulted in lower
prices for high-speed cable services. Despite the
dramatic increase in usage, the average local
With coverage of virtually the entire continent,
satellite has become the default solution for areas
not covered by terrestrial sources of broadband.
Like those other broadband services, satellite
broadband has seen tremendous growth over the
past few years. From fewer than 50,000 subscrib-
ers in 2004, satellite providers were serving an
estimated 700,000 subscribers at year end 2006.
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NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
monthly bill for wireless services has remained
relatively stable, rising only a dime per year on
average over the past four years. Satellite broad-
band prices have also dropped as satellite
providers introduce alternative pricing models to
make their services more affordable.
iv

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NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
Introduction
A surgeon in Queensland, Australia, using an Internet-based laser technology, RoboLase,
performs microsurgery successfully on cells located in a laboratory in San Diego . . . 1
From over 6,000 miles away, an American soldier stationed in Iraq watches via live web-
cast as his 18-year-old daughter in Tennessee, his oldest child, walks across the stage to
accept her high school diploma . . . 2
With only a laptop and a wireless card, a farmer sitting in his onion field in Hermiston,
Oregon, can check e-mail, monitor the water level of his crops, and even conduct business
with his customers, all using the 700 square mile Wi-Fi “cloud” that covers his farm . . . 3
Using a national, interoperable communications service, public safety personnel and first re-
sponders in Dallas can communicate with one another with voice, data, and real-time live
video feeds to maintain situational awareness and coordinate response activities more effec-
tively . . .4
Students in Kotzebue, Alaska (66.53N, 162.39W), on Alaska’s Western shore facing
the Bering Strait, join with students in other remote communities on Alaska’s Southwest-
ern frontier, in a live “virtual field trip” to the Johnson Space Center in Houston and two
weeks later visit with an Alaskan astronaut aboard the space shuttle Discovery, all using
a state broadband Distance Learning network. 5
he foregoing examples illustrate only a
few of the ways in which broadband
technology is changing our lives, our
economy, and our culture. By making it pos-
sible to access, use, and share information,
news, and entertainment with ever increasing
speed, broadband technology knits geo-
graphically-distant individuals and businesses
more closely together, increases productivity,
and enriches the quality of life. In so doing, it
catalyzes economic growth and job creation
that, in turn, provide unparalleled new oppor-
tunities for our nation’s citizens.
Recognizing this transformative power and
realizing the benefits that broadband tech-
nologies can deliver for all Americans,
President Bush four years ago articulated a
national vision to carry the United States for-
ward: universal, affordable broadband access.
Even before advancing that goal, however, the
Administration had started to pursue it, im-
plementing a comprehensive and integrated
package of technology, regulatory, and fiscal
policies designed to lower barriers to competi-
tion and investment, and create an environ-
ment in which broadband innovation and
T
competition could flourish.
The results have been striking. The last sev-
eral years have witnessed substantial growth in
the broadband marketplace punctuated by
demonstrable increases in capital investment,
innovation, and entry, as well as superior pro-
ductivity relative to other countries.
Americans today enjoy an increasing array of
broadband services available from a growing
number of service providers across multiple
platforms – traditional wireline, cable, fiber,
wireless, satellite, Wi-Fi and WiMAX. Pene-
tration rates continue to grow, and prices
continue to fall.
This Report examines the concerted, pro-
market policies that the Administration has
implemented to remove regulatory obstacles,
foster economic incentives, and encourage
investment in the development and deploy-
ment of broadband technologies. It also
outlines steps the Administration has taken to
2

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3
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NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
The role of government is not to create
wealth; the role of our government is to
create an environment in which the entre-
preneur can flourish, in which minds can
expand, in which technologies can reach
new frontiers.
ty that American consumers
enjoy as a result.
N ETWORKED N ATION : B ROADBAND IN A MERICA , 2007
NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
3
President George W. Bush,
Technology Agenda,
June, 2002
help jump-start market forces by providing
seed-funding to advance broadband deploy-
ment in underserved and rural areas. Finally,
it documents the statistical evidence that
demonstrates the burgeoning competitive
broadband marketplace that has emerged in
the United States over the last several years
and the commensurate increases in accessibil-
ity and affordabili
help jump-start market forces by providing
seed-funding to advance broadband deploy-
ment in underserved and rural areas. Finally,
it documents the statistical evidence that
demonstrates the burgeoning competitive
broadband marketplace that has emerged in
the United States over the last several years
and the commensurate increases in accessibil-
ity and affordabili
A Broadband Strategy for the Twenty-First Century
he Administration’s strategy to advance
broadband infrastructure and services
in the United States rests on a simple
tenet: A competitive environment – in which
the ingenuity of technologists, engineers, and
businessmen can fully express itself – pro-
vides the most effective and reliable tool to
identify the new technologies, products and
services that consumers need and want; and
to develop and deploy the most cost-effective
technical and commercial solutions to fill
those needs. This precept is not new: it is the
enduring legacy of a strong, bi-partisan con-
sensus forged over a decade ago.
he Administration’s strategy to advance
broadband infrastructure and services
in the United States rests on a simple
tenet: A competitive environment – in which
the ingenuity of technologists, engineers, and
businessmen can fully express itself – pro-
vides the most effective and reliable tool to
identify the new technologies, products and
services that consumers need and want; and
to develop and deploy the most cost-effective
technical and commercial solutions to fill
those needs. This precept is not new: it is the
enduring legacy of a strong, bi-partisan con-
sensus forged over a decade ago.
In enacting the Telecommunications Act of
1996, overwhelming majorities in both cham-
bers of Congress and the Executive Branch
enshrined the policy “[t]o promote competi-
tion and reduce regulation in order to secure
lower prices and higher quality services for
American telecommunications consumers and
encourage the rapid deployment of new tele-
communications technologies.”6
Mindful of
the remarkable potential of high-speed, high-
capacity, digital communications systems, the
Act specifically embraced as “the policy of
the United States . . .”
In enacting the Telecommunications Act of
1996, overwhelming majorities in both cham-
bers of Congress and the Executive Branch
enshrined the policy “[t]o promote competi-
tion and reduce regulation in order to secure
lower prices and higher quality services for
American telecommunications consumers and
encourage the rapid deployment of new tele-
communications technologies.”
to promote the continued development
of the Internet and other interactive
computer services and other interactive
media; . . . [and] preserve the vibrant and
competitive free market that presently
exists for the Internet and other interac-
tive computer services, unfettered by
Federal or State regulation . . . .7
Building on the policies Congress articulated
in the Telecommunications Act, the Admini-
stration has maintained a principled approach
to telecommunications policies, recognizing
that:
Building on the policies Congress articulated
in the Telecommunications Act, the Admini-
stration has maintained a principled approach
to telecommunications policies, recognizing
that:
▪ New technologies and services, such as
those supported by Internet Protocol
(IP)-based networks, are creating com-
petition in the telecommunications
market, allowing for deregulation;
▪ New technologies and services, such as
those supported by Internet Protocol
(IP)-based networks, are creating com-
petition in the telecommunications
market, allowing for deregulation;
▪ New technologies are making distance
irrelevant – and because the communi-
cations services supported by these
technologies are inherently interstate in
nature, jurisdiction over them should
reside at the Federal, rather than the
State, level;
▪ New technologies are making distance
irrelevant – and because the communi-
cations services supported by these
technologies are inherently interstate in
nature, jurisdiction over them should
reside at the Federal, rather than the
State, level;
▪ Specific social policy objectives – such
as support for 911 services, accessibility
for persons with disabilities or those re-
siding in rural or remote areas, and the
needs of law enforcement – may re-
quire regulation even in a competitive
environment; and
▪ Specific social policy objectives – such
as support for 911 services, accessibility
for persons with disabilities or those re-
siding in rural or remote areas, and the
needs of law enforcement – may re-
quire regulation even in a competitive
environment; and
▪ Telecommunications subsidies should
reflect the economics of new technolo-
gies and actual consumer needs.
▪ Telecommunications subsidies should
reflect the economics of new technolo-
gies and actual consumer needs.
These principles serve as the foundation for
three interlocking, mutually reinforcing ele-
ments that form the President’s broadband
strategy – technology policy, regulatory policy,
and fiscal/economic policy. The Administra-
tion, through the efforts of the National
Telecommunications and Information Ad-
ministration (NTIA) of the U.S. Department
These principles serve as the foundation for
three interlocking, mutually reinforcing ele-
ments that form the President’s broadband
strategy – technology policy, regulatory policy,
and fiscal/economic policy. The Administra-
tion, through the efforts of the National
Telecommunications and Information Ad-
ministration (NTIA) of the U.S. Department
T
The role of government is not to create
wealth; the role of our government is to
create an environment in which the entre-
preneur can flourish, in which minds can
expand, in which technologies can reach
new frontiers.
ty that American consumers
enjoy as a result.
6
Mindful of
the remarkable potential of high-speed, high-
capacity, digital communications systems, the
Act specifically embraced as “the policy of
the United States . . .”
to promote the continued development
of the Internet and other interactive
computer services and other interactive
media; . . . [and] preserve the vibrant and
competitive free market that presently
exists for the Internet and other interac-
tive computer services, unfettered by
Federal or State regulation . . . .7
T

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NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
4
of Commerce, the U.S. Department of Agri-
culture (USDA), and other agencies, and in
cooperation with the Federal Communica-
tions Commission (FCC or Commission), has
executed a combination of initiatives to has-
ten the development and deployment of new
technologies, eliminate regulatory underbrush,
and remove economic disincentives for in-
vestment in this critical area. Some of the
specific initiatives in each of these areas are
discussed more fully below.
Technology Policies
From the outset, fostering innovation and
technical invention as an engine for U.S. eco-
nomic growth has been a core priority of this
Administration. Consequently, promoting the
development and deployment of broadband
networks has been a centerpiece of the Presi-
dent’s technology policies. In June 2002, the
President released his Technology Agenda.8
In it, he observed that “[n]ew technologies are
revolutionizing the way we learn, work and
play – all while improving our quality of life,”
and that “high speed data networks known as
broadband offer great potential to increase
productivity, promote economic growth and
revolutionize how we deliver health care.”9
The Technology Agenda recognizes that
broadband technology draws momentum
from pro-technology policies, amplifies it, and
transfers that force to other sectors of the
economy to stimulate innovation, competi-
tiveness, and overall growth. To accelerate
that momentum, the President advanced a
number of initiatives including strengthening
research and development funding; education
reform, especially in the areas of math and
science; and support for entrepreneurship.
For example, to stimulate innovation, the
Administration championed increases in Fed-
eral research and development funding,
elevating it to almost $143 billion, an increase
Recommendations of the
President’s Council of Advisors on Science and Technology (PCAST):
TELEWORK
In its report to the President, the PCAST identified several measures that
it believed could contribute to more rapid deployment of next-generation,
high-speed systems. Among them, the panel specifically urged support
for telework, “with special attention to how broadband can enable and ex-
pand the scope and flexibility of telework opportunities.” Report on
Building Out Broadband, President’s Council of Advisors on Science and Tech-
nology at 3 (2002), http://www.ostp.gov/PCAST/FINAL%20Broadband%20
Report%20With%20Letters.pdf.
In this regard, a February 2007 Report by WorldatWork (based on re-
search by the Dieringer Research Group) found “a 25-percent one-year
increase [from 2005 to 2006], and a 63-percent two-year increase” in the
number of Americans whose employer permits them to work from home
at least one day a month. The Report concluded that this rising trend “is
likely [due to] a combination of factors, including the proliferation of high
speed/broadband and other wireless access (which has made it less expen-
sive and more productive to work remotely) . . . .” Telework Trendlines for
2006 – 2007 Survey Brief, WorldatWork (Feb. 2007),
http://www.workingfromanywhere.org/news/Trendlines_2006.pdf.
With respect specifically to broadband use by teleworkers, the WorldatWork study found that “[t]he number of
teleworkers using a broadband connection at home increased by more than 45 percent in the 2006 survey, fol-
lowing an even-larger 65 percent rise in the previous survey (2005).” The Report found that the number of
home-based employed teleworkers using broadband rose from 8 million in 2004 to 19.2 million in 2006. It
stated that such increases “are logical given the explosion in broadband and high-speed Internet usage in the past
several years” which, it observed, “has helped employees more productively work from a distance, especially in
accessing corporate networks.”

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NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
of 56 percent above 2001 levels and the larg-
est Federal research and development budget
in history.
Central to this effort is the President’s Ameri-
can Competitiveness Initiative, which seeks to
lso implemented a
the 1996
s technology (ICT), such
ion “untethered,”
double investment in key civilian Federal sci-
ence agencies (the Department of
Commerce’s National Institute of Standards
and Technology, the Department of Energy’s
Office of Science, and the National Science
Foundation) that support innovation-enabling
basic research in physical sciences and engi-
neering.10
Over three billion dollars was
budgeted for the National Information Tech-
nology Research and Development (NITRD)
program, which includes research directly re-
lated to broadband technology.11
The
Technology Agenda also specifically charged
the President’s Council of Advisors on Sci-
ence and Technology (PCAST) to examine
consumer-demand issues and provide rec-
ommendations for steps to facilitate
broadband deployment.12
In addition to the general measures identified
above, the Administration a
number of targeted pro-growth telecommuni-
cations policies that have also contributed to
robust technological development in the
broadband sector. These include continuing
support for technological neutrality, efforts to
unlock the economic value and entrepreneu-
rial potential of U.S. spectrum assets, and
removing barriers to innovative new applica-
tions such as ultrawideband technology and
broadband over power lines (BPL).
Technology neutrality. A hallmark of the
competitive system embraced in
Telecommunications Act is consumer choice:
the consumer – not government – determines
what products and services are needed, the
acceptable price for those products or ser-
vices (i.e., what consumers are willing to pay
for them), and which vendor best satisfies the
consumer’s service needs. Experience teaches
that when government tries to substitute its
judgment for that of the free market, or oth-
erwise anticipate consumer demand by
favoring one product or vendor over another,
it can easily distort the marketplace, resulting
in the diversion of investment and/or dis-
couraging the research and innovation neces-
sary to bring new and better products or
services to market.
In a rapidly evolving area such as information
and communication
unintended effects can carry fundamental,
long-term adverse consequences that extend
across multiple sectors of the economy. Ac-
cordingly, especially in the area of ICT, the
government should exercise care not to dic-
tate standards, but instead should seek to
foster an environment in which the potential
of competitive forces can be fully realized to
maximize the choices (e.g., technologies, prod-
ucts, services, applications, providers)
available to consumers. For this reason, the
Administration has consistently and strenu-
ously advocated for technology neutrality in
order to remove the government from what
are more appropriately marketplace decisions.
Domestically, this policy has yielded an array
of competing broadband services offered
over an equally diverse variety of platforms –
wireless, wireline, cable, fiber, satellite, and
power line. Consumers need no longer buy
discrete services from monopoly providers
but can choose from among multiple service
providers based on price, performance, mobil-
ity, and other features and characteristics.
Internationally, the Administration has ex-
pressed great concern whenever countries
prescribe a standard for technology that im-
pedes competition, obstructs investment, or
hampers the creation of competitive markets.
The United States has actively worked to en-
courage all nations to open their markets, to
implement measures to protect intellectual
property, and to use widely adopted interna-
tional standards. The Administration has also
included technology neutrality principles in
U.S. free trade agreements.
Spectrum Policy. Recognizing society’s in-
creasing desire to funct
whether for convenience or improved effec-
tiveness, mobility stands out more and more
as a critical feature of broadband applications.
For example, achieving broadband access at a
meeting facility enables business travelers to
maintain connectivity with the office. Dis-
tributing broadband access via wireless
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technology to hundreds of meetings attendees
simultaneously multiplies its utility and in-
creases the productivity of the work force.
Such applications require spectrum access that
is fast, reliable and convenient.
While ensuring a level playing field for all
technological platforms, the Federal govern-
ment – as custodian and manager for a
significant amount of our national spectrum
assets – can play a major role in technological
advancement by making spectrum resources
available to engineers and entrepreneurs to
support development and implementation of
new technologies and services, including
broadband communications. The Administra-
tion has implemented a number of policies to
open up this limited resource by improving
spectrum management policies and practices
to increase spectrum efficiency, reallocating
Federal spectrum so that it can be used for
new applications, and maximizing opportuni-
ties for the unlicensed use of spectrum
wherever possible.
Improving Spectrum Management. In June
2003, the President issued a memorandum to
res to promote greater access to
Spectrum for New Uses
the heads of Executive Departments and
Agencies outlining his “Spectrum Policy for
the 21st Century.”13 The President’s Spectrum
Policy Initiative called for a critical review of
current spectrum management policies and
practices to establish a new U.S. spectrum
policy that will foster economic growth; en-
sure U.S. national and homeland security;
maintain our global leadership in communica-
tions technology and services; and satisfy
other vital U.S. needs in areas such as public
safety,
scientific
research,
Federal
transportation infrastructure, and law
enforcement.
Pursuant to this initiative, NTIA has imple-
mented measu
the radio spectrum by improving the effi-
ciency of radio systems and operations.
Specifically, NTIA has (1) modernized Federal
spectrum management processes with ad-
vanced information technology, aiming
toward fully-automated web-based analysis,
coordination, and record-keeping capabilities;
(2) enhanced spectrum engineering and ana-
lytical tools by developing best practices rec-
ognized by government and industry; and (3)
promoted the use of market-based economic
mechanisms in spectrum management by rec-
ognizing the role that spectrum value must
play in Federal procurement decision-making.
Improved and more efficient spectrum man-
agement processes provide a firm foundation
for an environment that will continue to ad-
vance new broadband networks in the
future.14
Reallocating
. In the
n only emerge, however,
past decade, wireless technologies have prolif-
erated at an astonishing pace across the globe.
Although the telecommunications sector con-
stitutes only approximately one percent of our
nation’s economy, experts estimate that it
generates up to 10 percent of U.S. economic
growth,15 and wireless services occupy an in-
creasingly important place in that sector.
High-Speed Downlink Packet Access
(HSPDA) is accelerating cellular data speeds
to multiple megabits per second.16
Mobile
phone content offerings supported by such
speeds – including music, gaming and video –
are coming to market at a breathtaking pace,
with revenues expected to rise from $5.2 bil-
lion in 2004 to $43 billion worldwide by
2010.17
Wireless competition in the United
States has resulted in a vibrant marketplace.
The U.S. wireless communications services
revenues are projected to be more than $141
billion in 2007 and are growing approximately
10 percent each year.18
Such new services ca
if the spectrum resources exist to support
them. Consequently, the Administration has
worked to ensure that commercial wireless
services have spectrum to compete with in-
cumbents and provide new services to
consumers, while at the same time preserving
spectrum access for critical Federal systems
and public safety services. NTIA and the
FCC, working together and with the Con-
gress, have significantly increased the amount
of radio spectrum available for advanced
wireless services, including wireless broad-
band, and other services.
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For example, the Administration supported
enactment of the Commercial Spectrum En-
hancement Act19 (CSEA), which facilitated
the reallocation of 45 megahertz (MHz) of
spectrum at 1710-1755 MHz from Federal
use to commercial use. The Commission
reallocated an additional 45 MHz at 2110-
2155 MHz. The resulting 90 MHz were allo-
cated for advanced wireless services including
third generation (3G) wireless broadband
services and auctioned in the summer of
2006.20 The $13.7 billion in auction revenues
reflects a significant investment in U.S. wire-
less broadband deployment, which will
further contribute to the accessibility and
affordability of such services.21
The digital television transition in February
2009 will also free up spectrum in the 700
MHz band. The Administration supported
adoption of a firm February 17, 2009, date
for completion of the transition from analog
to digital television broadcasting in order to
recover 108 MHz of analog broadcast spec-
trum for broadband services to support
critical public safety and commercial needs.22
The Administration has also taken steps in-
ternationally to promote the development of
advanced wireless services. (See inset box.)
Maximizing Spectrum Sharing. In addition to
freeing up spectrum for licensed use, the
Administration has also actively sought ways
to accelerate broadband deployment by facili-
tating unlicensed uses in bands with Federal
operations. For example, NTIA led efforts to
allow unlicensed users to share spectrum with
military radar operations in 255 MHz in the 5
GHz band.23
These efforts supported the
development of new technologies that em-
ploy innovative spectrum sensing and
avoidance techniques capable of preventing
radio interference to the radar operations.
This has resulted in unlicensed mobile broad-
band Wi-Fi devices with higher data speeds.
NTIA h
U.S. INTERNATIONAL AGENDA TO CLEAR THE PATH FOR
FUTURE BROADBAND GROWTH
The Administration’s technology initiatives to foster
broadband deployment do not stop at our borders.
Broadband occupies an important place on our in-
ternational telecommunications policy agenda as
well. Recently, at the 2007 World Radiocommuni-
cation Conference in Geneva, Switzerland (WRC-
07), the United States charted two important victo-
ries in its ongoing efforts to ensure global access to
spectrum for broadband wireless technologies.
➢ First, the United States succeeded in having
the WRC identify the 700 MHz band for use by ad-
vanced wireless systems such as International
Mobile Telecommunications 2000 or “IMT-2000” on
a regional basis expanding the potential market for
wireless broadband offered in the band from the
United States to the Americas and the largest
economies in Asia. The WRC’s actions to harmo-
nize frequency arrangements should, over time,
create a marketplace of over 3 billion people for
wireless broadband operating in the 700 MHz band.
The economies of scale created by the WRC’s ac-
tion, coupled with the 2007 Radiocommunication
Assembly action to include WiMAX in the IMT-2000
family of technologies, should result in a larger,
more competitive and open market ultimately bene-
fiting U.S. consumers by reducing prices and
increasing the availability of advanced wireless ser-
vices. ITU, infra note 143.
➢ The United States also secured international
agreement regarding protection of terrestrial sys-
tems in the 2500-2690 MHz band from satellite
interference. The 2500-2690 MHz band is globally
harmonized for the provision of advanced terrestrial
wireless services and is one of the key bands for
WiMAX deployment around the world. The United
States, like many countries, is implementing Wi-
MAX in the band and will be releasing products and
services in the near future to meet consumer de-
mands for broadband wireless access. Interference
from satellite systems could have impeded introduc-
tion of terrestrial services in the United States,
including WiMAX. WRC-07 agreed immediately to
place transmission power limits on new satellite
systems in order to protect the U.S. terrestrial envi-
ronment, ensuring stability to satellite-terrestrial
spectrum sharing in the 2.5 GHz band and the con-
tinued growth of the U.S. broadband wireless
market. ITU, Provisional Final Acts of WRC-07,
(forthcoming in 2008 at
as also performed tests and analysis
supporting the use of promising new ul-
trawideband (UWB) spectrum technology.
http://www.itu.int/md/R07-
WRC07-R-0001
24
The agency continues to work with the FCC
to review and modify UWB rules to permit
) (amending ITU Radio Regula-
tions, Article 21) (password protected).
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innovative technologies to operate while also
protecting Federal operations.
In February 2005, NTIA and the FCC
launched an online registration site for high-
speed wireless links sharing spectrum in the
70-80-90 GHz bands.25
Since the website
became operational, assignments submitted
using the website have increased substantially
each year. This automated coordination illus-
trates how information technology and
engineering analysis capabilities can be lever-
aged to afford non-Federal users faster and
easier access to spectrum.
Cooperative Testing and Support for New
Technologies. The Administration has also
studied new technologies and conducted sci-
entific testing to facilitate the use of existing
technology platforms and spectrum to deliver
innovative new broadband applications. For
example, the FCC and NTIA have worked
cooperatively to promote the development of
Broadband over Power Line (BPL) technol-
ogy, a potential “third broadband wire into
the home,” while safeguarding existing li-
censed radio services against harmful
interference.26
NTIA conducted a series of
measurements and computer simulation that
demonstrated that BPL should not pose an
interference problem for existing Federal ra-
diocommunication systems.27
Regulatory Policies
Encouraging research and development of
pioneering new technologies is critical, but the
resulting technological advances can only take
root and flourish if the landscape is properly
prepared. Accordingly, the Administration
has worked to clear away regulatory obstacles
that could thwart the investment that fuels
development – and deployment – of new
technologies.
Targeted Deregulation to Promote Facili-
ties-Based Investment. The Administration
supported the FCC’s efforts to modify legacy
regulations in order to expand incentives for
local telephone companies (incumbent local
exchange carriers, or “ILECs”) to invest in
network upgrades and to stimulate new facili-
ties-based investment by other providers.28
In a series of orders in its Triennial Review
proceeding, the FCC relieved ILECs of the
obligation to make their next generation
broadband facilities (e.g., residential fiber-to-
the-home (FTTH) and fiber-to-the-curb net-
works, and FTTH networks serving
residential multiunit buildings) available to
competitors at discounted rates, terms, and
conditions.29
The Commission determined
that these deregulatory measures would make
the ILECs more likely to upgrade their exist-
ing copper-based facilities “with fiber [that]
will permit far greater and more flexible
broadband capabilities.”30
Elimination of Artificial Distinctions
Among Similar Services. Convergence fu-
eled by broadband services has blurred the
lines that differentiated companies in various
sectors from one another and served as the
historical basis for legacy regulatory models.
Cable companies now provide voice and data
services over the same lines that carry their
video programming services. Telephone
companies do the same, as do satellite and
wireless providers. With the Administration’s
backing, the FCC has also moved aggressively
to end economic regulation of broadband
services. The Commission specifically elimi-
nated disparate treatment for competing
providers offering the same types of services,
ensuring that broadband services are treated
similarly whether they are provided by legacy
telephone or cable companies. This has
helped to stimulate vigorous competition
among these providers.
As an initial step, in 2002, the Commission
resolved marketplace uncertainties related to
the regulatory status of cable modem services
offered by cable television systems. The
Commission declared that although these ser-
vices are interstate in nature, they are
“information services” and therefore are nei-
ther subject to regulation under Title II of the
Communications Act nor to regulation by the
states.31
In 2005, in its order on DSL ser-
vices, the FCC brought the regulation of DSL
services into parity with that of cable modem
service by removing legacy regulations from
DSL providers that had required them to
share their networks with competing Internet
service providers (ISPs), tariff their DSL ser-
vices, and comply with other traditional
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telephone regulations.32
In so doing, Chair-
man Martin observed that the Commission’s
action constituted:
an explicit recognition that the telecom-
munications marketplace that exists
today is vastly different from the one
governed by regulators over 30 years
ago. . . . [T]he broadband Internet ac-
cess market today is characterized by
multiple platforms that are vigorously
competing for customers. Such changed
market conditions require, as the Su-
preme Court in the Brand X decision
phrased it, a “fresh analysis.” I am
pleased that the Commission so quickly
undertook this analysis, and, in so doing,
removed legacy regulation that applied
to only one of the platform providers -
the telephone companies.
Broadband deployment is vitally impor-
tant to our nation as new, advanced
services hold the promise of unprece-
dented business, educational, and health-
care opportunities for all Americans.
Perpetuating the application of outdated
regulations on only one set of Internet
access providers inhibits infrastructure
investment, innovation, and competition
generally.33
Since then, the Commission has established a
similar deregulatory framework for broadband
Internet access services provided by BPL
providers34 and wireless carriers.35
These
actions reflect the spirit of the Administra-
tion’s technology-neutral approach. Placing
competitors offering similar services on a
similar footing creates incentives for invest-
ment and helps to ensure that resources are
allocated according to competitive merit
rather than in response to regulatory con-
straints.
Voice Over Internet Protocol. The Ad-
ministration has further encouraged aggressive
broadband network deployment by support-
ing policies to ensure that major applications
running on the Internet remain free from un-
necessary economic regulation. In particular,
the Administration has endorsed FCC policies
to date not to impose traditional economic
regulation (such as rate regulation, tariffing,
and entry and exit regulation) on “voice over
Internet protocol” (VoIP) services, and to
ensure that states do not impose such regula-
tions. In particular, the Administration
strongly supported the Commission’s deter-
mination that VoIP services that do not utilize
the public switched telephone network are
unregulated “information services.”36
The
Administration also strongly supported the
FCC’s declaration that VoIP services are in-
terstate services that are not subject to State
economic regulation.37
Cable Franchise Reform to Stimulate
Competition in Video Programming Ser-
vices. The Administration has also strongly
supported efforts to promote competition in
the video services marketplace as an impor-
tant element of broadband policy. The
opportunity to deliver competitive advanced
programming services creates an incentive for
video service providers to deploy broadband
infrastructure which, in turn, helps to acceler-
ate broadband penetration. Recognizing this
fact, the Administration has, in particular,
supported video franchising reform in order
to promote competition in the multi-channel
video programming market.
38
Motivated by these same principles, the FCC
in 2006 adopted rules to ensure that local ca-
ble franchising processes do not unreasonably
interfere with rapid broadband deployment or
competitors’ entry into the cable market-
place.39
Specifically, the Commission’s
reforms removed regulatory barriers to new
video entrants by, among other things, requir-
ing franchising authorities to act on franchise
applications within a reasonable time period
and constraining franchise authorities from
imposing unreasonable build-out and/or un-
related service requirements as a condition for
awarding a franchise.40
In so doing, the
Commission paved the way for more rapid
growth of broadband access by removing im-
pediments that had “discourage[d] investment
in fiber-based infrastructure necessary for the
provision of advanced broadband services.”41
Opening Federal Land Resources. The
Administration has also sought to spur greater
broadband deployment by improving the
management of rights-of-way on Federal
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lands. In April 2004, the President signed an
executive memorandum that recognized the
need of broadband providers for “timely and
cost-effective access to rights-of-way so that
they can build out their networks.”42
The
memorandum has facilitated greater access for
service providers to rights-of-way on Federal
lands by directing Federal departments and
agencies to (1) streamline and standardize
applications to reduce the administrative
burden and costs on broadband providers, (2)
expedite their consideration of rights-of-way
applications, (3) ensure that the fees they
charge for right-of-way access are reasonable
and appropriate, and (4) ensure that they have
the proper tools to promote compliance with
rights-of-way grants or permits.43
Fiscal Policies and Targeted
Funding Efforts
As his Technology Agenda reflects, the Presi-
dent has long recognized that entrepreneurs
and small businesses constitute two of our
nation’s most important sources for techno-
logical innovation. Accordingly, from the
earliest days of his Administration, the Presi-
dent has advocated for economic policies to
nurture their growth.
In keeping with this view, the Administration
endorsed and implemented a number of ini-
tiatives specifically designed to stimulate
investment in broadband technology. These
include both fiscal policies to reduce tax bur-
dens and encourage investment, as well as
targeted loan and funding programs to accel-
erate broadband deployment in rural and
remote areas. Coupled with the technology
and regulatory policies outlined above, these
measures have exerted significant force to
advance broadband development and de-
ployment.
Reducing Tax Burdens. The implementa-
tion of certain tax provisions has given
businesses powerful incentives to invest in
broadband technology. Three elements com-
prise the core of these fiscal initiatives:
Internet Tax Moratorium. From the begin-
ning, preserving the tax-free status of Internet
access has been the cornerstone of the Presi-
dent’s broadband policy. First enacted in
1998, the Internet tax moratorium prohibits,
subject to limited grandfathering, state and
local governments from imposing taxes on
Internet access and multiple or discriminatory
taxes on online transactions. Recognizing that
such tax burdens reduce consumer demand
for new services, the President has signed ex-
tensions of this ban into law three times
(2001, 2004, and 2007) and has consistently
urged that the moratorium be made perma-
nent.44
This important legislation provides
the marketplace with a predictable environ-
ment for investment in new and better
technologies while ensuring that the critical
communications infrastructure of the Inter-
net remains free of unnecessary taxes.
Accelerated Depreciation. In a rapidly chang-
ing area such as the development of new
technologies, depreciation policies can also
impede investment. New technical advances
(and the assets that accompany them) often
become obsolete before their value can be
recaptured under the tax laws, thereby making
investment in new technologies more expen-
sive and uncertain. To combat this problem,
the President signed into law, as part of his
economic security package (the Jobs and
Growth Tax Reconciliation Act of 2003), re-
forms that allow companies to accelerate
depreciation for capital expenditures (includ-
ing those associated with broadband
deployment) and permit the depreciation of
as much as 30 percent of the basis in certain
property in the first year.45
These changes
have helped stimulate business investment in
critical networking infrastructure and broad-
band equipment.
Tax Credits for Research & Development.
Finally, the Administration has promoted tax
relief for private research and development.
The President signed into law the Tax Relief
and Health Care Act of 2006, which extended
and enhanced the “Research and Experimen-
tation (R&E) Tax Credit,” a long-standing
provision of the tax code that provided a 20
percent credit for private research and ex-
perimentation expenditures above a certain
base amount.46
Unfortunately, this provision
of the code expired at the end of 2007. The
President has long advocated making this tax
credit permanent and urges Congress to rein-
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state this provision, which has helped to fuel
more innovation across the economy.
47
Targeted Direct Support for Remote and
Rural Areas. To complement the market-
based initiatives outlined above, the Admini-
funding to support more rapid deployment of
broadband in unserved or otherwise under-
served rural areas. Since Fiscal Year 2001,
USDA has provided nearly $5 billion in loans
and grants to support telecommunication ex-
pansion and improvements which can
improve access to broadband technology.
stration has also provided targeted seed-
elopment Broadband
, over half
nal Rural Develop-
48
In particular, the USDA supports broadband
development in rural America through several
programs: the Broadband Loan and Loan
Guarantee Program, the “traditional” Tele-
communications
Infrastructure
Loan
program, the Community Oriented Connec-
tivity Broadband Grant Program (Community
Connect), and the Distance Learning and
Telemedicine Program.
Through the Rural Dev
Alaska Power & Telephone
Takes the High Ground:
Bringing Wireless Broadband to the
Rural Alaskan Village of Kasaan
KETCHIKAN, Alaska [November 19, 2007] -- Wireless broad-
band technology that will bring telemedicine, distance
learning and other benefits to the people of Kasaan is now a
reality with the completion of a successful collaborative effort
between Alaska Power & Telephone Company (AP&T), and
the Organized Village of Kasaan (OVK).
Completion of the work and delivery of wireless broadband
services to Kasaan, an Alaskan Native community located 25
miles west of Ketchikan on Prince of Wales Island, was an-
nounced today by AP&T and OVK.
OVK's persistence in pursuing Internet access for their rural
community led them to take note of AP&T's success in bridg-
ing the digital gap in other rural Alaskan locations. The
procurement of $1 million in grant funds under the Federal
"Community Connect Broadband Grant Program" fueled both
hope and a cooperative effort to build the infrastructure nec-
essary for the village to gain high-speed access to the outside
world.
Construction on the project began in early 2007. The scope
of the project and grant encompassed construction of a
mountain-top antenna site above the village on Kasaan
Mountain, formation of a community technology center, and
delivery of Internet service as well as more than a dozen
computers and the other equipment needed to move Kasaan
into the digital era. Richard Peterson, President of OVK,
states, "AP&T has come alongside us in a manner that has
been simply astounding. They have responded to our com-
munity in a way few others would."
Certain immediate key benefits to the community will be met
by access to broadband technology. These include access to
telemedicine, distance learning, connection to other tribal or-
ganizations, reduction of travel costs and personal skill-set
training in computer and data technologies. It is hoped that
by enhancing the local quality of life, business and tribal
members will be encouraged to return or stay in Kasaan.
"Coming together with the Village of Kasaan on this project
was a natural extension of who we are as an employee-
owned Alaskan company, as well as a keystone in AP&T's
broader plans for Southeastern Alaska," stated Michael
Garrett, Executive Vice President of AP&T and COO of
AP&T's Telecom Division.
AP&T provides a broad range of services to more than 30
communities stretching from the Arctic Circle to the south-
ernmost reaches of Southeastern Alaska. These include
local and long distance voice, Internet, wireless broadband
Wi-Fi, paging, two-way mobile radios, computer networking
and delivery of renewable resource based energy services.
# # # #
SOURCE: Alaska Power & Telephone Company (reprinted
with permission) http://www.aptalaska.com/upload/pdf/
KasaanPressRelease.pdf
FUNDING INITIATIVES AT WORK
Loan and Loan Guarantee Program, USDA
provides loans to finance technological solu-
tions tailored to the needs of individual
communities. Unlike the Community Con-
nect Grant Program (discussed below),
USDA’s loans can fund an additional provider
in an area. In the seven years of the Pro-
gram’s existence, USDA has approved 70
loans totaling $1.11 billion. The funds have
been used to bring a range of technologies
including fiber-to-the-premises, DSL, wireless,
BPL, and hybrid fiber/coaxial systems to over
1,200 communities in 40 states representing
582,000 household subscribers.49
At the time the loans were awarded
of these communities either received no
broadband service (40 percent) or were served
by only one provider (15 percent). To date,
eight projects have been completed in Kansas,
Louisiana, Michigan, Nebraska, North and
South Dakota, Texas, and Washington. In
addition, another 38 loans remain in progress
(and 15 in initial start-up phase) serving an-
other 987 communities.
In addition, the traditio
ment Telecommunications Infrastructure
Program provides loans to ILECs that are
successfully deploying advanced, high-speed
networks capable of providing broadband
services for their rural customers.50 Over the
past seven years, these borrowers have re-
ceived over $3.8 billion in loans from USDA
to construct and improve facilities designed to
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million for broadband projects.
offer broadband services.51 Based on a survey
of Rural Development's traditional telephone
loan program borrowers conducted in Octo-
ber 2006, approximately 92 percent of these
borrowers are providing high-speed Internet
service (broadband) to all of the telephone
exchanges in their service territories.
56
Most re-
cently, in October of 2007, USDA awarded
$10.3 million to support 19 projects in 13
states.57
52
In
addition, they have deployed over 107,000
miles of fiber optic cable.53
The Community Connect Grant Program
Community Connect Grants totaling $48.3
ages and
Examples include $834,881 to intro-
duce broadband service in Marcus,
Washington, and provide firefighters access to
training videos and reports; $603,200 to build
a community center and computer lab in
Darbyville, Ohio, that will offer high-speed
Internet access to universities and medical
centers state wide; and $205,416 to build a
wireless network in Navajo Mountain, Utah,
to provide online public safety notices, educa-
tional opportunities, and telemedicine services
in this community that is over 100 miles away
from the nearest hospital.
helps ensure that rural consumers receive the
same quality and range of telecommunications
service as do residents in urban and suburban
communities.54
Under the program, USDA
provides financial assistance to furnish broad-
band service in rural, economically-challenged
communities of up to 20,000 inhabitants as
yet unserved by a broadband provider.
Community Connect grants are awarded on a
competitive basis. Grant recipients may use
funds to deploy broadband service to “critical
community facilities [e.g., rural schools, librar-
ies, education centers, health care providers,
law enforcement agencies, and public safety
organizations], rural residents, and rural busi-
nesses and to construct, acquire, or expand,
equip, and operate a community center that
provides free access to broadband services to
community residents for at least two years.”
58
Through its Distance Learning and Telemedi-
cine Program, USDA encour
improves educational and health care services
in rural areas through the use of telecommu-
nications, computer networks and related
advanced technologies. The program pro-
vides funding through 100 percent grants; a
combination of grants and loans; or 100 per-
cent loans. Funding amounts start at $50,000.
In 2007, USDA awarded a total of $22.3 mil-
lion to 78 grantees in 31 states.59
Additionally, USDA awarded $35.9 million in
loans under this program to benefit projects
in eleven states.
55
Over the past five years, USDA has awarded
Progress in Broadband Access
his comprehensive and integrated
package of fiscal, technology, and
regulatory polices has had a real and
positive impact in the broadband marketplace.
American consumers are now reaping the re-
wards of President Bush’s vision to “create an
environment in which the entrepreneur can
flourish [and] in which technologies can reach
new frontiers:” a vigorous broadband market-
place in which carriers offering a host of
technological platforms compete against one
another on price, speed, mobility, content, and
other service features.
The lack of a single authoritative data set
makes it difficult to establish with certainty
whether broadband penetration has become
ubiquitous, and this Report acknowledges the
benefits of better data gathering tools.
T
60 Nev-
ertheless, a survey of data from the FCC and
other sources reveals a very clear pattern:
broadband services have become dramatically
more available and affordable across the
country. Although additional work remains to
be done, broadband penetration is increasing
sharply, and consumers – including those in
rural and remote areas – have more opportu-
nities than ever to choose the broadband
solution (i.e., technology, services, and pro-
vider) that best suits their needs and budget.
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13
Vigorous U.S. Platform Growth, Multi-Modal Competition, and Broad-
band Availability
Perhaps the clearest evidence of the success
of the Administration’s pro-competitive,
technologically-neutral approach lies in the
sheer growth in the number of broadband
service providers and the broad array of tech-
nological alternatives they represent. Over the
past few years, the numbers of providers and
broadband platforms have proliferated. As
Table 1 illustrates, the most current data from
the FCC show that the total number of high-
speed service providers more than tripled
from December 2003 to December 2006 (and
increased tenfold between December 2000
and December 2006).
While the data reflect steady increases in the
number of high speed cable service providers,
and somewhat stronger growth among asym-
metrical digital subscriber line (ADSL)
providers, it is noteworthy that the most vig-
orous expansion has occurred among “all
other” providers, which include symmetric
DSL (SDSL), mobile wireless services, fixed
wireless (e.g., Wi-Fi and WiMAX), satellite,
fiber optic, and BPL. As Table 1 displays, this
category grew by nearly 259 percent, from
246 providers in 2003 to 882 a year ago.
This remarkable growth in the number of
broadband service providers has brought with
it an even greater increase in the number of
broadband lines available to consumers. With
this increase in broadband lines, the numbers
of subscribers and users have also grown.
Chart 1 below reflects that since President
Bush took office, the total number of broad-
band lines across all modalities has grown by
over 1,100 percent, from almost 6.8 million in
December 2000 to 82.5 million in December
2006.61
According to other FCC statistics,
over 58 million of these lines serve residential
customers.62
Table 1
Nationwide Number of Providers of High-Speed Lines by Technology
(Over 200 kbps in at least one direction)
ADSL
Cable Modem
All Other 1
Total
Dec 1999
28
43
65
105
Jun 2000
47
36
75
116
Dec 2000
68
39
87
136
Jun 2001
86
47
98
160
Dec 2001
117
59
122
203
Jun 2002
142
68
138
237
Dec 2002
178
87
169
299
Jun 2003
235
98
217
378
Dec 2003
274
110
246
432
Jun 2004
298
129
281
485
Dec 2004
352
147
312
552
Jun 2005
758
227
779
1,270
Dec 2005
820
242
835
1,347
Jun 2006
832
254
814
1,324
Dec 2006
862
278
882
1,397
For data through December 2004, only those providers with at least 250 lines per state
were required to file. Some historical data have been revised.
1 All other includes SDSL, traditional wireline, fiber, satellite, fixed and mobile wireless,
and power line.
Source: High-Speed Services for Internet Access: Status as of December 31, 2006,
Federal Communications Commission (October 2007), Table 7 [“FCC Study”]

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NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
14
Competition among the various platforms has
also increased sharply. In December 2003,
over half (54 percent) of zip codes had three
or fewer competitors. (See Table 2.) By De-
cember 2006, 91.5 percent of zip codes had
three or more competing service providers
and more than 50 percent of the nation’s zip
codes had 6 or more competitors. By con-
trast, fewer than 3 percent of the nation’s zip
codes now have one provider or less.
Recent survey data collected by the United
States Census Bureau on behalf of NTIA
provides further evidence that broadband is
experiencing strong growth in the United
States. In October 2007, the Census Bureau
surveyed approximately 54,000 households,
with information on 128,395 persons, as a
special Internet use supplement to the Cur-
rent Population Survey (CPS).63 Based on its
scientific design and size, the survey provides
a broad-based and statistically reliable look at
Americans’ use of the Internet and, more par-
ticularly, their use of high-speed technologies
to connect to it.
The data reveal that Americans’ use of broad-
band technologies has soared: home broadband
usage has risen substantially over the past six
years, from 9.1 percent of households in Sep-
tember 200164 to 50.8 percent in October
2007.65
Rural America has also experienced
impressive growth. In September 2001, 5.6
percent of rural households had broadband at
home;66 six years later, the rate had reached 38.8
percent, more than a six-fold increase.67 Natu-
Table 2: Percentage of Zip Codes with High-Speed Lines in Service
1999
2000
2001
2002
2003
2004
2005
2006
Number of Pro-
viders
Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec
Zero
40.3 33 26.8 22.2 20.6 16.1
12
9
6.8
5.7
4.6
2
1
0.7
0.4
One
26 25.9 22.7 20.3 19.3 18.4 17.3 16.4 14.9 13.8 12.5
9.3 5.6
3.7
2.4
Two
15.5 17.8 18.4 16.7 15.7 16.2 16.8 16.9 17.1 16.8 16.3 14.1 11.9
8.2
5.7
Three
8.2 9.2 10.9 13.2 13.1 13.3 14.4
14 14.9 14.9 15.1
15 14.8 11.3
8.9
Four
4.3 4.9
6.1
8.2
9.1
9.6 10.3 10.6 11.2 11.6 12.2 12.6 13.5 12.9 11.4
Five
2.7 3.4
4
4.9
6.1
6.9
7.3
7.7
7.8
8.4
8.9
9.7 10.3 12.2 12.5
Six
1.7 2.5
3
3.6
4.2
4.6
5
5.3
5.8
6.1
6.3
6.8 7.8 10.4 11.7
Seven
0.8 1.7
2.3
2.8
3.2
3.2
3.9
4
4.2
4.4
4.6
5.3 5.7
8.7
10
Eight
0.3 0.8
2
2.2
2.5
2.8
2.7
3.1
3.3
3.6
3.6
4 4.6
7.1
8.3
Nine
0.2 0.4
1.6
1.9
2
2.4
2.2
2.5
2.6
2.8
3.1
3.8
4
5.8
6.7
Ten or More
0 0.4
2.4
3.9
4
6.4
8 10.5 11.4 11.8 12.8 17.5 20.7 19.1
22
For data through December 2004, only those providers with at least 250 lines per state were required to file. Figures may not
add up to 100% due to rounding.
Source: FCC Study, Table 15
Chart 1: Total High-Speed Lines
Source: FCC Study, Chart 1

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NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
rally, while use of broadband has grown robus-
tly, dial-up use has declined as the significant
advantages of an increasingly-available and af-
fordable broadband connection have gained
favor.
Importantly, evidence suggests that this pro-
gress is not restricted to the more populated
areas of the country. An April 2007 survey by
the Organization for the Promotion and Ad-
vancement of Small Telecommunications
Companies (OPASTCO) revealed that ILECs
offer broadband services to more than 90
percent of their rural customer base, chiefly
via DSL.
68
Households in many states have en-
joyed rising levels of broadband use: adoption
rates today equal or surpass the 40th percentile
for at least 41 states and the District of Colum-
bia.69
New Hampshire and Alaska have usage
levels approximating 60 percent of their house-
holds.
73
Similarly, based on December
2006 data, the National Exchange Carrier As-
sociation (NECA) found that 511 of its
member companies (representing 462,000
DSL lines located in 47 states and Guam) av-
eraged 91 percent DSL availability.
70
The foregoing data demonstrate that broad-
band usage has grown dramatically in the
United States. As detailed in the following
sections, information from within each of the
broadband modal sectors, which shows vi-
brant growth in deployment and subscriber
uptake, reinforces this conclusion. As usage
continues to grow, providers will be driven to
make further investments to ensure that
broadband networks and services are widely
available to meet expanding consumer de-
mand.
74
In the
study, 352 of the companies offered DSL to
between 91 and 100 percent of their custom-
ers, while another 80 provided such coverage
to between 81 and 90 percent of their cus-
tomer base. In all, 84 percent of the
companies made DSL available to more than
80 percent of their customers.75
ILECs re-
sponding to a 2006 survey by the National
Telecommunications Cooperative Association
(NTCA) indicated that all offered broadband
service to some part of their rural customer
base, up from 58 percent of the respondents
in 2000. Again, DSL was the primary broad-
band service offering.
Digital Subscriber Lines (DSL)
Wireline communications service providers,
such as ILECs and competitive local exchange
carriers (CLECs), primarily offer broadband
services using DSL, a technology that allows
them to derive a separate high capacity trans-
mission channel from the copper loop used to
provide conventional voice service. There are
two basic varieties of DSL service – “asym-
metric,” for which the transmission speed in
one direction (typically the “downstream”
path from the network to the customer) is
faster than the other, and “symmetric,” for
which the transmission speed is equivalent in
both directions.
76
As DSL service has been extended to more
and more households, service speeds have
accelerated and prices have dropped. Accord-
ing to Verizon, in the past three years, the
major DSL operators have increased their top
downstream speeds from under 1 Mbps to 2-
3 Mbps.77 AT&T notes that wireline provid-
ers currently offer their DSL customers a
variety of transmission speeds, typically rang-
ing from 768 Kbps up to 6 Mbps.78
Ninety
percent of the responding rural ILECs in the
OPASTCO survey could deliver data speeds
of at least 1 Mbps in one direction.79
Industry data demonstrate significant growth
in the availability and affordability of DSL
services. According to the FCC, as of year
end 2006, broadband DSL was available to 79
percent of the households in areas where
ILECs offer local telephone service.
The increasing speed of DSL services has not
been accompanied by increased costs for con-
sumers. By one estimate, the average monthly
revenue per user of DSL service decreased
from $40 in 2002 to $31 in 2006.
71
More
than 82 percent of the homes served by the
largest ILECs – Verizon, AT&T, and Qwest –
can obtain DSL service.
80 Between
2004 and 2007, AT&T cut its monthly rate for
1.5 Mbps DSL service nearly 60 percent, from
$49.95 to $19.99.81
According to the FTC,
between May 2005 and April 2006, the price
72
15

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16
Chart 4
Note: Total housing units passed figures have been adjusted to avoid double
counting of estimated housing units passed by both incumbent cable operators
and overbuilders.
Source: NCTA (SNL Kagan) (used with permission)
http://www.ncta.com/Statistic/Statistic/CableBroadbandAvailability.aspx
of AT&T’s 3.0 Mbps DSL offering dropped
from $29.95 to $17.99.82
With availability and speeds up and prices
down, DSL subscribership has burgeoned.
According to the FCC’s most recent statistics,
there were about 22.8 million residential
“high-speed” ADSL lines in service as of year
end 2006, up over 300 percent from Decem-
ber 2002.83 (See Chart 2.)84
Adding commercial customers would increase
the number to some 25.4 million.85 The FCC
data depict even larger subscriber gains for
“advanced” ADSL services; there were nearly
19 million residential advanced lines in service
at year end 2006, up more than 933 percent
from December 2002.86
Including commer-
cial users would boost the subscriber count to
more than 21.1 million lines.87
Evidence also suggests that this growth in
DSL deployment has been fueled by FCC
decisions reducing competitors’ rights to gain
access to ILECs’ next generation networks
and relaxing regulation of ILECs’ broadband
services.88
Professor Thomas Hazlett has
shown that DSL subscribership grew more
rapidly after the FCC’s 2003 Triennial Review
Order than prior year growth trends would
have suggested.89
(See Chart 3) Similarly,
Jeffrey Eisenach of Criterion Economics has
argued that the FCC’s deregulatory decisions
since 2003 have stimulated investment in
communications equipment, helping the in-
dustry recover from the technology sector
“meltdown” of 2001-2002.90
High-Speed Cable
Data from the cable industry also reflect sig-
nificant growth in deployment and consumer
uptake of cable-delivered high-speed data
services. The FCC’s statistics, set forth in
Table 1, above, indicate that the total number
of cable modem service providers grew by
over 150 percent in the three years from De-
cember 2003 to December 2006 (rising from
110 to 278).
Cable industry research conducted by Kagan
Research (now SNL Kagan) reveals that, dur-
ing that same interval, cable operators
increased the number of housing units they
pass with broadband service by 15.9 million.
(Chart 4) Based on these figures, NCTA es-
timates that high-speed cable service currently
reaches 92 percent of all U.S. households as
of the end of 2007.91
This same research also reflects significant
increases in uptake of broadband services. At
Chart 2
0
50
00
10
000
15
000
20
000
25
000
30
000
2002
2003
2004
2005
2006
ADSL Growth 2002-2006
No. of High-Speed Lines (Thousands)
[Note: Total High-Speed Lines consist of "Basic" High-Speed plus
"Advanced" Service Lines]
Basic High-Speed (Residential)
Advanced (Residential)
Basic High-Speed (Business)
Advanced (Business)
Source: NTIA (data from FCC Study, Tables 1-4)
Chart 3
-5
0
5
10
15
20
25
30
1Q
99
3Q
99
1Q
00
3Q
00
1Q
01
3Q
01
1Q
02
3Q
02
1Q
03
3Q
03
1Q
04
3Q
04
1Q
05
3Q
05
1Q
06
DSL
Cable
DSL 'Line Sharing'
Dereg
54%
above
trend
N
u
m
b
er
o
f S
u
b
sc
rib
er
s (in
m
illio
n
s)
DSL and Cable Modem Subs, 1Q1999 - 1Q2006
10%
above
trend
Source: Legg Mason
Source: T. Hazlett, Legg Mason,
http://mason.gmu.edu/~thazlett/Conferences/LessonsfromtheTelecomW
arsPresentations.html

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NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
17
the end of 2006, the cable platform was deliv-
ering high-speed data services to over 31
million customers – an increase of over 125
percent from the 13.8 million customers
served in the second quarter of 2003. (Chart
5) Residential customers comprised 30.2 mil-
lion of these high-speed data customers.
According to SNL Kagan, by mid-year 2007,
the total number of cable high-speed data
customers had grown to 33.5 million.
Accompanying this growth in subscribers has
been an increase in the performance cable
operators are delivering to their customers.
The industry’s trade association reports that
most cable broadband systems now offer
transmission speeds that exceed 5 Mbps, with
some delivering as much as 50 Mbps.92 With
the growth of competition across technical
platforms, evidence suggests that cable opera-
tors are developing next generation wideband
systems capable of delivering transmission
speeds of over 100 Mbps in order to respond
to the competitive challenge presented by
other alternative broadband providers.93
These actions, in turn, exert competitive
forces on others.
For example, exemplifying the importance of
facilities-based competition emphasized in the
Commission’s Triennial Review Order, cable
operators have leveraged their existing broad-
band capabilities to seize a significant share of
the residential landline market.94
The cable
industry reports that it had 9.5 million VoIP
subscribers in 2006, a 61 percent increase over
a year earlier.95
According to the Telecom-
munications Industry Association (TIA), cable
VoIP services held almost 10 percent of that
market in 2006, and the share is expected to
exceed 33 percent by 2010.96 Noteworthy in
its own right, this development holds even
greater significance for broadband deploy-
ment and accessibility. To compete with
cable’s bundled offerings, landline telephone
operators have accelerated their deployment
of fiber capacity in order to add high defini-
tion and multi-channel video and other
bandwidth-dependent entertainment applica-
tions to their own service offerings.97
This
trend is detailed more fully below in the sec-
tion on fiber.
Mobile Wireless
The wireless industry is the fastest growing
sector of America’s broadband economy.
According to industry data, from 2000 to
2007 the total number of subscribers in-
creased from 97 million to 243 million, and
the revenues in the industry grew from $45
billion to $132 billion. (See Table 3, Chart 6)
Table 3
ANNUALIZED WIRELESS INDUSTRY SURVEY RESULTS - JUNE 2000 TO JUNE 2007
Reflecting Domestic U.S. Commercially-Operated Cellular, ESMR and PCS Providers
Date
Estimated
Total
Subscribers
Twelve-Month
Total Service
Revenue
(in $000s)
12-Month
Roamer
Revenues
(in $000s)
Cell Sites
Direct Service
Provider
Employees
Average Local
Monthly Bill
(June Survey
Periods)
Average Local
Call Length
(June Survey
Periods)
2000
97,035,925
$45,295,550
$4,134,626
95,733
159,645
$45.15
2.48
2001
118,397,734
$58,726,376
$3,698,683
114,059
186,317
$45.56
2.62
2002
134,561,370
$71,117,599
$3,872,035
131,350
186,956
$47.42
2.6
2003
148,065,824
$81,185,272
$3,874,488
147,719
187,169
$49.46
2.63
2004
169,467,393
$95,515,593
$3,956,823
174,368
212,186
$49.49
3.06
2005
194479364*
$108,534,727
$4,136,492
178,025
225,162
$49.52
3.04
2006
219652457*
$118,299,682
$3,558,052
197,576
238,236
$49.30
2.94
2007
243,428,202
$132,893,824
$3,611,049
210,036
257,401
$49.94
3.13
*Restated
© 2007 CTIA-The Wireless Association ®
Source: Semi-Annual Wireless Industry Survey, 2007, CTIA (used with permission.)
Chart 5
Note: Figures include business cable modem customers; the most recent
estimate of residential-only HSI customers is 30.2 million at 4Q06.
Source: NCTA (SNL Kagan) (used with permission)
http://www.ncta.com/Statistic/Statistic/ResidentialCableHighSpeedDataSubscribers.aspx

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NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
Chart 6
Estimated Subscribers
97,035,925
118,397,734
1
34,561,370
148,065,824
169,467,393
194,479,364
219,652,457
243,428,202
0
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
J
un-00
J
un-01
J
un-02
J
un-03
J
un-04
J
un-05
J
un-06
J
un-07
Mid-Year 2007 Estimated Subscribers Up 24 Million From June 2006
Source: Semi-Annual Wireless Industry Survey, 2007, CTIA (used with permission.)
Fueled in large part by demand for non-voice
applications (e.g., video services, multimedia
and text messaging, wireless games, and mu-
sic), mobile broadband services have
contributed significantly to the growth of the
mobile wireless sector.
On an inter-modal basis, mobile wireless
competes primarily on the basis of its conven-
ience and portability. However, to a
somewhat greater extent than other broad-
band sectors, the mobile wireless market also
exhibits a significant degree of intra-modal
competition. As four major national service
providers – AT&T, Sprint Nextel, T-Mobile,
and Verizon Wireless – and a score of re-
gional providers compete aggressively for
customers, all of the carriers face pressure to
introduce new and attractive features and ser-
vices on a rapid basis. In this context,
broadband applications (and the faster trans-
mission speeds they require) constitute an
important battlefront. Spurred by competitive
pressures, each of the major carriers has taken
steps to develop and deploy third generation
(3G) architectures to deliver these advanced
services and features.
98
The FCC’s most
recent data reveal that the number of broad-
band lines provided by mobile wireless
operators increased from less than 380,000 in
June of 2005 to almost 22 million at the end
of 2006 – a growth rate that dwarfs that of
other broadband platforms.99
(Chart 7)
Moreover, a significant portion of these lines
(4.1 million, or almost 19 percent) provide
“advanced” services capable of delivering
over 200 Kbps in both directions.100
Chart 7
9.1
8.1
21.5
1.2
0
5
10
15
20
25
B
roa
dba
n
d L
ine
s
(M
illio
ns
)
ADSL
Cable
Modem
Mobile
Wireless
Other*
Broadband Line Growth Jun 2005-Dec 2006
ADSL
Cable Modem
Mobile Wireless
Other*
The FCC’s analysis confirms this trend. In its
most recent analysis of competition in the
commercial mobile radio services (CMRS)
marketplace, the Commission observed that
“the record indicates that competitive pres-
sure continues to drive carriers to introduce
innovative pricing plans and service offerings,
and to match the pricing and service innova-
tions introduced by rival carriers.” 101
Moreover, with respect to mobile broadband
services, the FCC 11th Annual CMRS Compe-
tition Report found that:
* Includes Fiber, Satellite, Fixed Wireless, and Power Line
Source: NTIA (data from FCC Study, Table 1)
18

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[i]n addition, the deployment of next-
generation networks based on compet-
ing technological standards continues to
be an important dimension of non-price
rivalry in the U.S. mobile telecommuni-
cations market. In December 2005,
Cingular Wireless [now AT&T] com-
mercially launched UMTS [universal
mobile telecommunication system] (or
WCDMA [wideband code-division mul-
tiple access]) with HSDPA [High-Speed
Downlink Packet Access] in 16 U.S. cit-
ies to compete with the EV-DO
[Evolution Data Optimized]-based wire-
less broadband services previously
launched by Verizon Wireless, Sprint
Nextel, and some regional CDMA carri-
ers such as Alltel. Because the speeds on
EV-DO and WCDMA/HSDPA net-
works are much faster than the speeds
on European WCDMA networks, it has
been argued that the deployment of
these next-generation technologies by
U.S. wireless carriers has given the
United States an edge over Europe in
wireless data networks for the first time
in years.102
The FCC’s study, released in September 2006,
examined data from 2005 and early 2006.
More recent information from the companies
themselves reflects the significant progress in
these deployment activities that has transpired
in the last year.
For example, AT&T reports that its HSDPA-
based BroadbandConnect network is now
available in over 200 major metropolitan areas
in the United States and provides average
download speeds of 600 Kbps to 1.4 Mbps.103
Verizon Wireless recently announced that it
has upgraded its entire EV-DO network to
Revision A (Rev. A) technology, making aver-
age download speeds of 600 Kbps to 1.4
Mbps and average upload speeds of 500-800
Kbps available to over 210 million people
across the United States.104
Sprint Nextel
similarly states that its EV-DO Rev. A service
offers download speeds of 600 Kbps to 1.4
Mbps, and upload speeds of 350-500 Kbps.
Its network presently reaches 212 million
people, and the company expects to reach up
to 280 million people (92 percent of the na-
tion’s population) by the end of 2008.106
T-Mobile, the fourth major national wireless
service provider, is preparing to deploy its
own HSDPA-based 3G network infrastruc-
ture in the first half of 2008.107
T-Mobile’s
network will utilize the 1.7 GHz/2.1 GHz
spectrum the company acquired in the AWS
auction (Auction No. 66) in 2006 – which
effectively doubled its available spectrum as-
sets in the top 100 markets – and will deliver
download speeds of 0.8 Mbps to 1.1 Mbps.108
In addition, T-Mobile – among the nation’s
largest operators of fixed wireless public ac-
cess points (hot spots) – in 2007 launched the
first nationwide commercial unlicensed mo-
bile access (UMA) based service in the United
States. The service, T-Mobile Hot-
Spot@Home, is discussed more fully in the
section on the fixed wireless sector below.109
The diversity of competing technological
standards (i.e., UMTS, EV-DO, HSDPA) that
has emerged in the wireless broadband market
can be traced directly to technology-neutral
regulatory policies intended to foster innova-
tion. Likewise, T-Mobile’s forthcoming 3G
deployment in the AWS band is an immediate
consequence of Federal efforts to make addi-
tional spectrum available for commercial uses.
Fixed Wireless
Fixed wireless technologies – i.e., wireless sys-
tems or devices that are deployed in fixed
locations as distinguished from mobile devices
such as cell phones or personal digital assis-
tants – have also emerged as an important
complement to the mobility afforded by
CMRS,110 and as a potential “last-mile” solu-
tion to deliver broadband to currently
unserved areas111
According to FCC figures,
the number of fixed wireless broadband lines
in the United States grew 132 percent be-
tween June 2005 and December 2006 – from
208,695 to 484,073.112
TIA estimated the
total number of fixed wireless subscribers in
2006 to be 800,000.
105
113
19

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As outlined below, fixed wireless technologies
have contributed significantly to the rapid
growth of broadband accessibility and usage
in the United States, and recent technological
advances position the sector for further
growth.114
The two principal technologies in
this market segment are Wi-Fi and Wi-
MAX.115
Wi-Fi. In its 2006 CMRS Competition Re-
port, the FCC noted that
Wireless Local Area Networks (WLANs)
and Wireless Metropolitan Area Net-
works (WMANs) are playing an
increasingly important role as a competi-
tor and supplement to the services
offered by the CMRS industry. WLANs
are already widely deployed and enable
consumers to obtain high-speed wireless
Internet connections within a range of
150 to 250 feet from a wireless access
point (AP). The most prevalent WLAN
technology is equipment manufactured
in accordance with the IEEE 802.11
family of standards, commonly known as
“Wi-Fi,” short for wireless fidelity. Basic
WLAN data transfer rates range from
speeds of up to 11 Mbps for 802.11b
and up to 54 Mbps for 802.11a and
802.11g. New “SpeedBoost” or “Super
G” routers, marketed as “pre-802.11n,”
employ MIMO (Multiple Input Multiple
Output) technology, making them capa-
ble of providing speeds from 108 to 240
Mbps.116
The increasing penetration of broadband
DSL and cable, discussed above, has stimu-
lated a commensurate climb in Wi-Fi
adoption as people deploy home WLANs to
share broadband connections among several
computers.117
Moreover, the proliferation of
Wi-Fi access points, or “hot spots,” in public
venues such as book stores and coffee shops
has increasingly enabled consumers to cut the
tether to a home or office connection alto-
gether.
And the number of hot spots has grown –
considerably. According to JiWire.com, the
United States currently ranks first in the world
in the number of public/commercial Wi-Fi
hot spots, with an estimated 66,058 – more
than double the next closest country. (Table
4) An earlier estimate from TIA placed the
figure at 53,000 in 2006.118
TIA noted that
this reflected an almost 36 percent increase
from 39,000 in 2005, and TIA projects that
the number will grow further to 83,000 in
2010.
Table 4
Top 10 Countries for availability of Wi-Fi Service
United States
66,058
United Kingdom
31,055
France
22,959
Germany
21,347
South Korea
15,635
Japan
8,348
Spain
5,792
Italy
5,133
Taiwan
4,391
Switzerland
3,108
Source: JiWire WiFi HotStats™ (as of December 21, 2007)
119
Competition in the wireless hot spot market-
place is brisk. According to TIA, AT&T
presently operates approximately 11,000 hot
spots in the United States;120 T-Mobile oper-
ates 8,600, with over 700 more accessible
under the company’s roaming agreements;121
and a range of providers including Boingo,
Wayport, Fiberlink, and ipass, also provides
access through wireless hot spots.
With this rise in penetration and usage, Wi-Fi
has also become a fertile ground for technical
innovation and entrepreneurship. With tech-
nology neutral policies as a catalyst, engineers
and service providers seeking to strengthen
their competitive position have devised system
architectures that employ Wi-Fi technology in
new and creative ways to exact maximum
value from available spectrum resources and
deliver it to consumers. Two examples illus-
trate this phenomenon well: the emergence of
UMA technology and municipal Wi-Fi de-
ployments.
UMA technology, as its name implies, facili-
tates access to commercial cellular networks
(in particular, those using global systems for
mobile communication (GSM) and general
packet radio service (GPRS)) using unlicensed
http://www.jiwire.com/search-hotspot-locations.htm
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spectrum technologies such as Bluetooth and
Wi-Fi.122
Using dual-mode mobile handsets,
UMA allows subscribers to roam and hand-
off calls between public and private unli-
censed wireless networks and conventional
cellular networks.123
As noted above, T-Mobile has been an early
advocate for UMA technology in the United
States. Its “Hotspot @Home” service,
launched in 2007, supports both voice and
multi-media applications124 and enables users
to connect calls directly through the Internet
from a home wireless network or public hot
spot using voice over Internet Protocol
(VoIP).125 Outside of a Wi-Fi coverage area,
handsets can function as conventional cellular
phones using the carrier’s mobile wireless
network.126 In the highly competitive wireless
sector, technology firms Qualcomm and
Nortel recently announced that they are col-
laborating on a competing “fixed-wireless
convergence” technology, IP Multimedia Sub-
system (IMS) Voice Call Continuity.127 These
innovative approaches to bridging the gap
between traditional CMRS and fixed wireless
services have thrived under the current regula-
tory scheme.
Municipal Wi-Fi efforts also evince the inno-
vative use of Wi-Fi technology to expand
broadband access for the American people.
In its study of broadband competition re-
leased in 2007, the Federal Trade Commission
(FTC) took notice of the increasing interest
of many municipalities in Wi-Fi fixed wireless
technology as a less expensive means to de-
liver broadband Internet access to their
residents.128
Observing that “[l]ow-cost mu-
nicipal broadband services reduce the digital
divide separating more affluent consumers
from less affluent ones,” TIA estimated that
over 250 municipal Wi-Fi networks are being
operated or developed throughout the United
States.129
A more recent study by ABI Re-
search places this number at over 400.130 The
projects employ a variety of models including
public-private partnerships, contracted ser-
vices, and municipally-owned facilities.131
While some early municipal Wi-Fi projects,
especially in larger cities, have encountered
difficulties, systems are also taking root in
smaller communities, where smaller geo-
graphic scale can prove to be an advantage.133
For example, in Alamance County, North
Carolina, the town of Graham has budgeted
$80,000 in 2007-08 to develop a system that
would support local police and provide free
Internet access.134 Fueled by a $190,000 grant
from USDA, Pinal County, Arizona, also re-
cently announced that it will deploy a Wi-Fi
mesh network to provide broadband service
to the rural outskirts of the county by
2009,135 and in Glendora, Mississippi, a small
northwestern Mississippi Delta village of 285
people, a $325,405 USDA grant is being used
to develop a fixed wireless technology project
that will bring broadband connectivity to the
community. The project will connect the
public library, health clinic, police department,
and volunteer fire department.136
Such small
communities’ municipal Wi-Fi efforts have
often enjoyed greater success than those in
large cities,137 and many analysts believe that
the new business model reflected in some of
these projects, which provides broadband ac-
cess for residents by leveraging a Wi-Fi system
built primarily to support municipal govern-
ment services, represents the best future for
municipal Wi-Fi.138
WiMAX. As the inventive use of Wi-Fi has
contributed to expanding broadband penetra-
tion and usage in the United States, WiMAX
offers yet another emerging technological tool
with the potential to deliver even greater gains
in broadband accessibility in the future. Wi-
MAX can deliver fixed wireless broadband
access across much wider geographical areas
than Wi-Fi; covering distances as great as five
miles without line of sight and up to 30 miles
under ideal conditions.139
With potential data speeds up to 70 Mbps,
WiMAX has been identified as a possible
“last-mile” solution to deliver broadband into
rural and remote areas where high-speed cable
service and DSL are not available.140 Verizon
Communications has been testing fixed Wi-
MAX for this purpose.141
AT&T has also
been evaluating WiMAX technology with test
deployments in Alaska, Georgia, Nevada,
New Jersey, and Texas.142 However, WiMAX
is also being developed for mobile applica-
tions and, in October 2007, the International
132
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Telecommunication Union approved WiMAX
for inclusion in the International Mobile Tele-
communications 2000 (IMT-2000) family of
standards for next generation mobile wireless
communications.
Working with Intel and Motorola, Sprint
Nextel has also built its next-generation strat-
egy on mobile WiMAX technology.154 In
August 2006, it announced its intention to
employ mobile WiMAX as the foundation for
its fourth generation (4G) wireless broadband
network, which will use the company’s con-
siderable spectrum resources in the 2.5 GHz
band.
143
In the United States, Clearwire Corporation
of Kirkland, Washington, has been among the
earliest and strongest proponents for WiMAX
technology, for both fixed and mobile ser-
vices. Clearwire commenced service in its
first market in August 2004.
155
Sprint Nextel had indicated that it
would invest up to $5 billion to deploy the
new network and planned to reach a potential
100 million customers by the end 2008.
144 Clearwire now
serves 53 urban and rural markets in 16
states,
156
Although it is reexamining that investment
budget and its original deployment schedule,
the company has said it remains committed to
its WiMAX 4G strategy and plans to move
forward with a “soft launch” of WiMAX ser-
vice in the Baltimore-Washington and
Chicago areas.
145 and served approximately 258,000
subscribers as of the end of the first quarter
of 2007 – a 161 percent expansion over a year
earlier.146
Its present service uses pre-
WiMAX, or “WiMAX-ready,” proprietary
non-line-of-sight orthogonal frequency divi-
sion multiplex (OFDM) technologies
operating in the 2495-2690 MHz band to de-
liver wireless broadband access at downstream
transmission speeds up to 1.5 Mbps.
157
Satellite
147
Clearwire reports, however, that it intends to
deploy full WiMAX networks (i.e., compliant
with IEEE standard 802.16e-2005) for fixed,
portable, and mobile applications when mo-
bile
WiMAX
equipment
becomes
commercially available, and the company has
established strategic partnerships with Intel
and Motorola to develop that equipment.
Satellite technology also represents an im-
portant conduit for the delivery of broadband
access to the nation. Indeed, the FCC’s most
current data show satellite to be the most
ubiquitous of the nation’s broadband tech-
nologies, delivering service to at least one
customer in 91 percent of U.S. zip codes at
the end of 2006.158
148
At present, satellite broadband is primarily
provided utilizing one or two geostationary
satellites (satellites with high orbits that re-
main in the same virtual point in the sky) to
deliver service to subscribers using small re-
ceiving “dishes” at fixed locations. Fixed
satellite service (FSS) providers such as Wild-
Blue Communications, Inc., Hughes, and
Gilat (operator of the StarBand service) have
been able to blanket virtually the entire United
States with near DSL speeds.
Indeed, reports indicate that Intel has built its
wireless strategy around the mobile WiMAX
standard.149
This past autumn, the company
announced that it will launch its next genera-
tion Centrino mobile platform, called
Montevina, in the middle of 2008.150 Monte-
vina will include an integrated Wi-Fi/WiMAX
module, and Intel has already secured com-
mitments from several laptop makers,
including Acer, Lenovo, Panasonic, and To-
shiba, to use Montevina.
159
(Table 5).
Inmarsat, through its Broadband Global Area
Network (BGAN) service, uses its constella-
tion of geostationary satellites to deliver
integrated voice and satellite broadband access
as a mobile service to customers using port-
able terrestrial equipment, though at
comparatively lower speeds.
151
This penetration
is expected to increase the potential market
for WiMAX service.152
Reflecting similar
confidence in the growth potential for Wi-
MAX, Cisco Systems, Inc., recently
announced plans to spend $330 million to
acquire Navini Networks, a developer of
technologies to enhance the range and per-
formance of WiMAX-based services.
(Table 5)
160
153
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Table 5
‘Up to’
Upload
Speed
‘Up to’
Download
Speed
Monthly
Service
Price
Satellite
CPE
Cost
Satellite Broadband Company /
Service Offering
Installation
Cost
Hughes (www.hughes.com
Like its earthbound competitors, satellite
broadband has seen tremendous growth over
the past few years. From fewer than 50,000
subscribers in 2004, satellite broadband pro-
viders were serving an estimated 700,000
subscribers by 2006.161 Hughes Network Sys-
tems reported that it had over 350,000
residential subscribers as of October 2007,162
and was adding more than 11,000 new cus-
tomers each month.163 The ubiquity of its
coverage, makes satellite well-suited to deliver
service to rural, remote, and otherwise under-
served areas of the country normally not
covered by traditional sources of broadband
Internet services such as cable, DSL, fiber, or
wireless.164
Next-generation satellite broadband offerings
by TerreStar,165 Inmarsat,166 and Mobile Satel-
lite Ventures (MSV)167
are also in
development. Inmarsat and TerreStar both
plan to launch new satellites in mid-2008,
which will greatly enhance availability of
broadband services, number of simultaneous
users, and total bandwidth. By incorporating
more powerful transmitters and an ancillary
terrestrial component (ATC), next generation
providers will be able to offer services that
more closely resemble those of terrestrial
fixed and mobile wireless services.168
Fiber Optic Cable and Broad-
band Over Power Lines
Fiber optic cable and electric power transmis-
sion and distribution lines represent
technological alternatives to other traditional
wireline-based broadband platforms. In its
May 2006 report on broadband deployment,
the Government Accountability Office
(GAO) characterized “deep fiber deployment”
and BPL as potentially important broadband
delivery platforms “in the coming years.”169
However, the most recent data from the FCC
and other sources reflect more rapid emer-
gence of these technologies.
According to the Commission’s most recent
study, the total number of high speed lines
delivered over fiber or power line connections
grew 789 percent from December 2003 to
December 2006, rising from 116,390 to just
over a million.170
Data from June 2005 (the
first point at which fiber and power line statis-
tics were disaggregated) forward show that
optical fiber deployments to subscribers’
)
HughesNet Home Service
128 Kbps
700 Kbps
$59.99
$299.99
Included
HughesNet Professional
200 Kbps
1.0 Mbps
$69.99
$299.99
Included
HughesNet Professional Plus
200 Kbps
1.5 Mbps
$79.99
$299.99
Included
HughesNet Business for Small Office
300 Kbps
1.5 Mbps
$99.99
$599.98
Included
HughesNet Business Internet
500 Kbps
2 Mbps $179.99
$599.98
Included
StarBand (www.starband.com)
Residential
128 Kbps
1.0 Mbps
$69.99
$299.99
Not Included
Small Office
256 Kbps
1.5 Mbps
$99.99
$299.99
Not Included
WildBlue (www.wildblue.com)
WildBlue for Home Value Pak
128 Kbps
512 Kbps
$49.95
$249.00
Included*
WildBlue for Home Select Pak
200 Kbps
1.0 Mbps
$69.95
$249.00
Included*
WildBlue for Home Pro Pak
256 Kbps
1.5 Mbps
$79.95
$249.00
Included*
WildBlue for Office Select Pak
200 Kbps
1.0 Mbps
$69.95
$249.00
Included*
WildBlue for Office Pro Pak
256 Kbps
1.5 Mbps
$79.95
$249.00
Included*
* In some cases , WildBlue charges a $79.95 installation fee.
Inmarsat (www.inmarsat.com)
Pricing depends on individual distribu-
tor’s offering and what value-added
services are included
Inmarsat BGAN
492 Kbps
492 Kbps
Source: Satellite Industry Association (compiled from industry websites)
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premises (i.e., FTTH) comprise the largest
portion of this expansion.171
Fiber Optic Cable. Data compiled by indus-
try sources also document the steady
expansion in fiber growth evident in the
Commission’s findings not merely for FTTH
deployments, but also elsewhere in the pro-
viders’ networks. TIA has charted patterns in
fiber deployment dating back more than a
decade.172
Its data show that, following a
steep decline from 2000 to 2003 to absorb
overcapacity from earlier build-outs, annual
deployment of fiber in the United States grew
sharply over the last four years, from 4.8 mil-
lion miles fielded in 2003 to 13.1 million miles
in 2007.173
Moreover, TIA expects deploy-
ment to continue to rise, with operators laying
an estimated 58.4 million miles from 2007 to
2010.174 (See Chart 8)
TIA’s data further reveal that telephone com-
panies have led the way in this resurgence,
nearly quadrupling their deployment of fiber
from 2003 to 2006.175 (See Table 6)
As noted in the cable discussion above, tele-
phone companies’ aggressive deployment of
fiber has been motivated by the competitive
need for a platform that will enable them to
deliver higher-speed data services and digital,
high-definition television in order to compete
with cable operators’ bundled packages.176
For this reason, TIA expects fiber deployment
and accessibility to continue to grow as these
companies build out FTTH (also called fiber-
to-the-premises (FTTP)) and fiber-to-the-
node (FTTN) networks.177
Chart 8
Fiber Miles Deployed in the United States
(Millions)
15.8
15.9
15.2
14.3
13.1
12
11
7.8
4.8
6
19.6
14.3
9.9
7.6
5.8
0
5
10
15
20
25
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
As noted above, FTTH systems consist of
fiber optic transmission facilities running
from the telephone company’s central office
to the customer’s premises.
Source: TIA Market Study, Figure II-4.2 (KMI Research)(used
with permission)
178
FTTH gives
the service provider significantly more capac-
ity than traditional copper infrastructure and
supports significantly higher transmission
speeds (between 100-500 Mbps).
Table 6
179
Like the
other broadband platforms discussed above,
FTTH has experienced remarkable expansion.
A recent study prepared by RVA Market Re-
search for the Fiber-to-the-Home Council
(FTTH Council) and TIA shows that FTTH
networks now pass 9.55 million homes in
North America (TIA indicates that virtually all
of these homes are in the United States),
Annual Fiber Deployment in the United States
(Thousands of Miles)
Cable
System
Operators
Private
Campuses/
Telephone
Companies
Utilities/
Municipalities Buildings
Year
Total
2000
14,435
3,505
839
777
19,556
2001
10,009
4,163
932
652
15,756
2002
3,224
1,926
466
373
5,989
2003
2,464
1,367
516
466
4,813
2004
5,567
1,212
606
435
a
more than 50 percent increase from Septem-
ber 2006.
7,820
2005
8,816
994
746
466
11,022
2006
9,737
994
808
482
180
Subscribership – at 2.14 million
homes – also grew by nearly 112 percent over
that period.
12,021
2007
10,666
1,056
870
497
13,089
2008
11,741
1,118
932
528
14,319
181 Perhaps most significant, how-
ever, is the fact that the “take rate” (the
number of households that actually subscribe
after being offered the service) has increased
to 26.8 percent from 22.3 percent only six
months earlier.
2009
12,434
1,181
994
559
15,168
2010
12,972
1,243
1,056
590
15,861
Source: TIA Market Study, Table II-4.1 (used with permission)
182
At present, there are approximately 370 pro-
viders delivering FTTH services, including
public utilities, municipalities, small and me-
dium size telephone companies, and cable
operators.183
However, Verizon Communica-
tions remains the primary operator.184
Verizon Communications’ fiber-to-the-
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premises network (FiOS) delivers asymmetric
connections of either up to 50 Mbps (up-
stream)/20 Mbps (downstream) or up to 30
Mbps/15 Mbps depending on the state where
the service is sold.185 As of November 2007,
Verizon began offering high speed symmetric
FiOS Internet services to consumers in 16
states with connections of 15 Mbps or 20
Mbps depending on the state where the ser-
vice is sold.186
At the end of September
2007, Verizon had passed about 8.5 million
homes and businesses in 16 states with its
FTTP network, and the company plans to
pass 3 million premises annually with its
FTTP network through 2010.187
In contrast to Verizon’s FiOS network, which
runs fiber end-to-end (from Verizon’s central
office to the customer’s premises), AT&T is
investing heavily in developing a network that
supplements some FTTP capacity with FTTN
infrastructure. 188
FTTN employs fiber from
the central office to neighborhood “nodes”
3,000 to 5,000 feet from the customer’s home
or business, but uses existing copper lines for
the last mile between the node and the cus-
tomer’s premises.189
AT&T plans to deploy approximately 40,000
miles of new fiber to enhance its existing
network.190
The platform will support
AT&T’s “U-verse” package of services, which
includes an IP-based digital video service
(IPTV); U-verse enabled high-speed Internet
access offering speeds ranging from 1.5 to 6.0
Mbps downstream and 1.0 Mbps upstream;
and, ultimately, VoIP service as well.191 As of
the end of the third quarter of 2007, AT&T
served approximately 126,000 U-verse TV and
Internet subscribers, and passed about 5.5
million homes with its service.192
However,
the company was adding approximately
10,000 subscribers per week at that time and
expects to expand its service area to cover 17
million homes by the end of 2008.193
Build-out of the FiOS and U-verse platforms
is expected to dominate fiber deployment
over the next several years. However, fiber
accessibility is likely to grow even further as a
consequence of deployment activities by
other cable operators, utilities, and municipali-
ties.194
After a period of significant activity from
2000 through 2002, fiber deployment by cable
operators fell off somewhat from 2003 to
2006. (Table 6, Chart 8) However, as offer-
ings from competing providers achieve greater
penetration, cable operators will likely re-
spond with service improvements of their
own, such as increased data speeds and more
and better video offerings like expanded high
definition television and video on demand.195
To add the capacity necessary to provide these
bandwidth-intensive applications, cable opera-
tors are expected to field almost 4.6 million
miles of fiber between 2007 and 2010.196
(Table 6)
Chart 9
0
200
400
600
800
1,000
1,200
1,400
M
ile
s
(Thous
a
nd
s
)
2003
2004
2005
2006
2007
2008
2009
2010
Cable, Utility/Municipality, Private
Fiber Deployment 2003-2010
Cable
Utilities/Municipalities
Private
Source: NTIA (data from TIA Market Study, Table II-4.1)
In contrast to cable, fiber deployment by utili-
ties and municipalities has undergone
continued growth since 2003. (Chart 9)
From 2007 to 2010 these entities are forecast
to deploy almost 3.9 million miles of fiber as
utilities ramp up activities associated with
broadband over power lines (discussed be-
low), and municipalities continue efforts to
ensure their citizens have access to high-speed
Internet access to their citizens. (Table 6)
197
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Broadband Over Power Lines. As Table 6
and Chart 9 above illustrate, utilities and mu-
nicipalities also contributed to the growth in
fiber deployment and will likely continue to
do so. Fiber deployment by utilities has been
fueled in part by efforts to prepare to deliver
broadband over power lines.198
BPL offers
the potential to leverage the nearly ubiquitous
electricity infrastructure to provide broadband
services to areas unserved by the more com-
mon wired and wireless technologies surveyed
above. BPL uses the medium voltage (MV)
and low voltage (LV) portions of the electrical
grid to provide broadband Internet access to
homes via radio frequency signals over the
same facilities used to deliver electrical
power.199
BPL subscribers access the net-
work using a modem plugged into a
conventional electrical outlet.
While BPL has yet to make significant inroads
in the broadband marketplace, it holds prom-
ise for the future. According to the United
Power Line Council, there are about 35 BPL
deployments in the United States, varying in
size from pilot projects to large commercial
developments.200
(Map 1) The City of Ma-
nassas, Virginia has operated a BPL system in
the city since 2005. Today, it provides 500-
800 Kbps Internet access to about 1,000 cus-
tomers, although the city plans to increase
speeds to 1-4 Mbps.201 Duke Energy report-
edly deploys BPL to about 50,000 homes in
Cincinnati and neighboring portions of Ken-
tucky.202
The company has not released
subscribership figures, but analysts estimate
Duke Energy had some 7,500 customers as of
October 2005.203
TXU Electric Delivery has
recently agreed to pay $150 million over 10
years to deploy BPL technology to about 2
million homes in the Dallas area.204
Reliable BPL subscribership figures are diffi-
cult to find. The FCC’s most recent data
identify fewer than 5,000 BPL customers as of
year end 2006.205
That figure appears low,
however. TIA estimates 200,000 current BPL
subscribers, increasing to 700,000 by 2010.206
Another source forecast about 400,000 cus-
tomers by the end of 2007, growing to 2.5
million by year end 2011.207
Some analysts suggest that BPL may have
difficulty competing in areas where cable
broadband or DSL is also available.208
A
manufacturer of BPL equipment indicates
that the “sweet spot” for BPL may be com-
munities with between 25,000 and 100,000
people, populous enough to yield economies
of scale but not large enough to attract more
Map 1
Source: United Power Line Council (updated as of July 10, 2007) (used with permission),
http://uplc.utc.readyportal.net/file_depot/0-10000000/0-10000/7966/conman/2007+BPL+Update.pdf
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than one or two other broadband provid-
ers.209
BPL may also be an attractive option
for ISPs seeking alternatives to cable and
DSL. Thus, EarthLink, a prominent non-
facilities-based ISP, has invested in Current
Communications, a major BPL equipment
manufacturer, and has conducted BPL trials in
several markets.210
DirecTV recently an-
nounced plans to deliver Internet access via
BPL in the Dallas-Fort Worth area.211
n summary, the statistical data outlined in
the discussion above document the re-
markable growth in broadband
deployment that has occurred across all plat-
forms over the last several years and the
commensurate increase in adoption and usage
of broadband technologies. The picture that
emerges from those numbers becomes evi-
dent in the FCC’s broadband coverage maps
that appear on the following pages. A com-
parison of the maps from December 2003
(Map 2) and December 2006 (Map 3) graphi-
cally illustrates the geographic spread of
broadband accessibility across the national
landscape.
The December 2006 map – which does not
account for growth over the last twelve
months – depicts virtually ubiquitous territo-
rial coverage of the United States by at least
one broadband provider and makes evident
the very high percentage of the nation served
by at least four, and in many cases seven or
more, providers. (Map 3)
Some gaps in territorial coverage continue to
appear. However, a comparison of territorial
broadband coverage (Map 3) relative to the
nation’s population density as reported by the
United States Census Bureau (Map 4) and
topography (Map 5) helps to place these gaps
into proper context. Considering these fac-
tors, it appears clear, at least at the level of
analytical granularity that the present data will
support, that a vast majority of Americans
(well over 90 percent) have access to broad-
band communications through one or more
modality.
I I
212
It is also the case, however, that pockets of
America exist where broadband service is not
as robust, deployment has not been as rapid,
and fewer choices are available. As the maps
reflect, this is most likely the case in rural,
mountainous, or otherwise remote areas of
the country, where the population is most
diffuse. Work remains to be done to identify
these communities. To this end, improving
the quality of our broadband penetration data
will provide greater visibility into deployment
patterns and specific challenges that need to
be overcome.
The trend lines for investment in and build-
out of new infrastructure and service capacity,
discussed above and in the investment section
that follows, provide a foundation for opti-
mism. The surging competition that has so
quickly brought broadband service to so
much of the country can be expected to drive
further deployment to presently underserved
areas.
27

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Map 3

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Robust industry investment – Creating Momentum for Further
Growth
The explosion of network development and
deployment that has made broadband tech-
nology accessible to so many more Americans
was not fortuitous; it stems directly from de-
liberate and massive increases in capital
investment made by service providers across
all subsectors of the broadband marketplace.
The previous section discussed many of the
purposes for which this capital was used. The
figures below document how much was spent
and the economic impact of this investment
in real dollars. More importantly, analysts’
forecasts, based on trend patterns and market
drivers, provide some indication of expected
future investment and the direction in which
the broadband services market is moving:
toward accelerating growth and further acces-
sibility. TIA forecasts that spending to
support broadband network infrastructure
will rise over the next four years from $15.2
billion in 2007 to $23 billion in 2010. (Table
8, infra.)
Since 2003, overall industry investment in in-
frastructure and equipment has increased
significantly. According to TIA, spending by
carriers on telecommunications equipment,
including central office, fiber, asynchronous
transfer mode (ATM), and frame relay equip-
ment, rose from $15.2 billion in 2003 to $24.4
billion in 2007. (Table 7) Verizon reports
that “[i]n the three years since federal regula-
tors began dismantling network sharing and
pricing regulation of broadband networks,
Verizon’s total capital expenditures were more
than $45 billion, including $12.8 billion in
2004, $15.0 billion in 2005, and $17.1 billion
in 2006.”213
Other segments of the broad-
band market have exhibited similarly strong
investment patterns.
High-Speed Cable. From 1996 through
2006, according to NCTA, cable companies
spent more than $117 billion in capital expen-
ditures to develop their broadband
networks.214
(Chart 10, infra) The industry
reports that it has invested $23 billion in the
last two years alone to enhance and improve
its advanced, interactive, hybrid-fiber coaxial
network.”215
During 2007, cable operators
were expected to spend another $13.7 billion
on infrastructure – a 10 percent increase over
2006 – continuing an upward trend. 216
Table 7
Spending by Carriers on Telecommunications Equipment by
Category in the United States ($ Millions)
Year
Central Office
Equipment
Fiber
ATM
Frame
Relay
Total
2000
27,000
20,100
2,690
1,815
51,605
2001
26,600
14,100
2,050
1,800
44,550
2002
12,000
5,270
1,150
1,780
20,200
2003
8,100
4,235
1,100
1,750
15,185
2004
7,500
6,840
1,130
1,730
17,200
2005
7,650
9,640
1,075
1,710
20,075
2006
9,400
10,460
1,000
1,650
22,510
2007
10,600
11,320
925
1,575
24,420
2008
11,700
12,310
850
1,500
26,360
2009
12,700
12,970
750
1,400
27,820
2010
13,500
13,480
650
1,300
28,930
Source: TIA Market Study, Table II-4.4
(FCC, TIA, Wilkofsky Gruen Assoc.) (used with permission)

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Chart 10
Source: NCTA (SNL Kagan) (used with permission)
http://www.ncta.com/Statistic/Statistic/InfrastructureExpenditures.aspx
There is reason to expect cable investment to
increase in the future. TIA’s analysis predicts
that spending on services in support of cable
network infrastructure equipment will almost
double from $7.8 billion in 2003 to $15.2 bil-
lion by 2010. (Table 8) TIA notes that,
although the present capacity of most cable
systems is sufficient, the expected increase in
customer demand for high-definition televi-
sion channels and video-on-demand (VOD)
services will require cable operators to expand
their infrastructure to deliver those services.217
Accordingly, TIA projects significant growth
in fiber deployment by cable operators from
2007 through 2010 with a cumulative addi-
tional deployment during that period of 4.6
million miles.218
Fixed and Mobile Wireless. As noted
above, broadband-fueled growth in the fixed
and mobile wireless services markets has been
especially strong over the past few years, and
capital investment in these sectors has been
correspondingly vigorous. According to data
from TIA and CTIA, factors such as the AWS
auction, deployment of 3G networks, and the
build-out of additional infrastructure needed
to support additional capacity for new, ad-
vanced services helped spur U.S. wireless
providers to increase capital investment
spending from $18.9 billion in 2003 to $30
billion in 2007.219 (See Chart 11, infra)
As these factors persist, and new develop-
ments such as WiMAX deployment emerge,
TIA expects this level of investment to con-
tinue with carriers expected to spend nearly
$100 billion over the next three years.220 Mu-
niWireless LLC, predicted 2007 investment in
municipal wireless systems in the United
States to rise 35 percent, surpassing $329 mil-
lion,221
and TIA expects revenues for
WiMAX infrastructure to increase from $175
million in 2006 to $4.4 billion in 2008.222
Fiber. Table 7, above, reflects the investment
trends with respect to fiber-related telecom-
munications equipment. As the table
Table 8
Spending on Services in Support of Network Infrastructure
Equipment in the United States ($ Millions)
POTS
(Plain Old
Telephone
Service)
Year
Cable
Broadband
Total
1999
19,200
4,800
1,000
25,000
2000
21,800
5,800
3,200
30,800
2001
24,200
6,900
7,000
38,100
2002
23,900
8,300
9,700
41,900
2003
22,800
7,800
8,700
39,300
2004
24,900
8,800
10,500
44,200
2005
27,400
10,200
12,500
50,100
2006
30,300
11,700
14,700
56,700
2007
32,900
13,000
15,200
61,100
2008
32,200
13,800
18,000
67,000
2009
37,300
14,500
20,700
72,500
2010
39,500
15,200
23,000
77,700
Source: TIA Market Study, Table II-4.6 (D.F. Blumberg & Assoc.,
TIA, Wilkofsky Gruen Assoc.) (used with permission)
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Chart 11
18.9
27.9
24.1
30
30
31.2
32
32.5
0
5
10
15
20
25
30
35
2003
2004
2005
2006
2007
2008
2009
2010
Wireless Capital Expenditure in the United States ($ Billions)
Source: TIA Market Study, Figure IV–1.6
(TIA; CTIA – The Wireless Association; Wilkofsky Gruen Associates)
indicates, after an intensive period of invest-
ment and deployment at the outset of the
decade, fiber spending decreased somewhat
through 2003 but has been on an upward
trend since then. TIA estimates that spending
on fiber equipment will reach $11.3 billion in
2007 and will grow to almost $13.5 billion
annually by 2010, representing a total invest-
ment in excess of $50 billion over the period.
(See Table 7)
As discussed above, in addition to actions by a
host of other companies (including smaller
telephone companies, cable operators, utilities
and municipalities), the Verizon FiOS and
AT&T U-verse platforms will likely drive sig-
nificant investment. Verizon is planning to
spend $23 billion to make fiber available to 18
million homes by the end of 2010.223
Simi-
larly, in its effort to reach 17 million
households by the end of 2008, AT&T plans
to spend between $4.5 billion and $5.0 billion
on U-verse, to deliver broadband, IP-enabled
high-definition video, ultra-high speed Inter-
net, and voice services.224
The third major
ILEC, Qwest Communications International,
has also stated that it plans to spend $300 mil-
lion over the next year to deploy fiber
upgrades to its network to deliver 20 Mbps
connectivity to 1.5 million more homes.225
These capital investment figures, and the
trends they reflect, demonstrate the confi-
dence that exists – on the part of service
providers, equipment manufacturers, applica-
tion developers, and, perhaps more
importantly, on the part of the stockholders
and financial institutions that fund them – in
the strength and potential of the U.S. broad-
band marketplace. These investment
initiatives will help to ensure that the accom-
plishments of the last four years in securing
broadband access for all Americans do not
languish, but instead contribute to continued
growth in the future.
Affordability: Competition Driving Down Prices
Escalating competition among broadband
platforms and service providers, coupled with
sustained business investment, has clearly
yielded a proliferation of innovative new
communications and entertainment services
for consumers. Less evident, but equally im-
portant, this competition is also making those
services more affordable.
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As the FTC reported in its broadband compe-
tition study:
Prices for DSL broadband services have
also fallen rapidly as the telephone com-
panies have competed aggressively to
take market share from the cable com-
panies. By one estimate, the average
monthly revenue per user of DSL ser-
vice decreased from $ 40 in 2002 to $ 31
in 2006. From May 2005 to April 2006,
AT&T reduced the monthly price of 3.0
Mbps DSL service from $29.95 to
$17.99.”226
Moreover, analysts have noted that competi-
tion from DSL has also exerted price pressure
on high-speed cable services. The FTC noted
that, adjusting for quality of service, the price
of cable broadband has fallen. 227
TIA has
tracked a similar trend, noting steady de-
creases in the average price of high-speed
cable access since 2004 corresponding to
lower average prices for DSL service. (Chart
12)
TIA expects competition between cable op-
erators and telephone companies to continue
to exert downward pressure on cable modem
rates, forecasting that the average monthly bill
for cable modem service to drop to $38.49 by
2010.228
FTTH deployments are also affect-
ing cable prices. Verizon, citing research
conducted by Bank of America, notes that
cable operators in FiOS markets have lowered
their prices or increased the quality of service
packages in response to the competition.229
Pricing data from CTIA as shown in Table 3
above reflect that average local monthly bills
for the wireless market have remained rela-
tively stable, rising on average less than a dime
per year from $49.46 in 2003 to $49.94 in
Chart 12
Average Monthly Broadband Fees
in the United States ($)
38.49
38.05
63.13
73.55
80.46
49.90
40.10 37.6035.75
36.59 37.26
39.54
40.59
42.06
42.13
38.67
39.15
38.86
44.07
44.00
46.50
42.12
30.00
40.00
50.00
60.00
70.00
80.00
90.00
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
DSL
Cable Modem
Source: TIA Market Study, Figure II–2.17
(In-Stat; TIA; Wilkofsky Gruen Associates)
How does broadband pricing
compare to other bundles of
goods and services?
From 2002 through 2007, the nation’s Con-
sumer Price Index (CPI) increased from
179.9 to 205.7 (first half of 2007). U.S. De-
partment of Labor, Bureau of Labor
Statistics, Branch of Economic Analysis and
Information, Consumer Price Index, Histori-
cal Data Tables for the CPI-U and CPI-W,
All Items (1982-84=100), Summary of Annual
and Semi-annual Indexes
(http://www.bls.gov/ro3/fax_9125.pdf).
The CPI is a measure of the average
change over time in the prices paid by
urban consumers for a market basket of
consumer goods and services. The broad-
est, most comprehensive CPI is the
Consumer Price Index for All Urban Con-
sumers (CPI-U) for the U.S. City Average for
All Items, 1982-84=100.
While pricing for broadband decreased or
stabilized, pricing for many other basic
goods and services has increased. For
example, CPI data from 2002 to 2005 show
the following price trends in other major
consumer cost centers:
FOOD
up 10.3 percent
FOOD (AWAY FROM HOME)
up 15.7 percent
TRANSPORTATIONN
up 7.5 percent
ENTERTAINMENTT
up14.9 percent
EDUCATIONN
up 25.0 percent
Source: U.S. Department of Labor, Bureau
of Labor Statistics, Consumer Expenditures
Annual Reports, 2004
(http://www.bls.gov/cex/csxann04.pdf)
and 2005
(http://www.bls.gov/cex/csxann05.pdf).
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2007. However, during the same interval,
overall usage grew from just under 400 billion
minutes in June 2003 to almost two trillion
minutes by June of 2007, with a staggering
increase of over 200 billion minutes in the last
year alone. (Chart 13) The relative stability
of prices juxtaposed against this dramatic in-
crease in usage demonstrates a significant
decrease in relative costs for consumers.
Table 5 above reflects that satellite broadband,
although ubiquitous, remains among the more
expensive of the broadband service options
available to consumers when compared
against the relative costs and transmission
speeds offered by competing terrestrial plat-
forms. A significant factor contributing to
this disparity is the cost associated with the
purchase and installation of the customer
premises equipment (CPE) required to receive
the satellite broadband service.230
However, even in the satellite sector, prices
are coming down. For example, WildBlue last
year reduced the price for professional instal-
lation by over 55 percent, from $179.95 to
$79.95.231 The industry expects that prices will
begin to fall more quickly when satellite pro-
viders reach a “critical mass” of subscribers
and begin to deploy new systems such as the
hybrid satellite/ATC networks discussed
above.232
Citing the example of direct-to-
home satellite television providers, DirecTV
and DISH Network, SIA indicates that these
developments will enable satellite providers to
leverage economies of scale that will enable
them fully to subsidize their CPE or, at least,
price it in a range more typical for other con-
sumer electronics equipment.
Chart 13
Annualized Minutes of Use (July 1- June 30)
0
400,000,000,000
800,000,000,000
1,200,000,000,000
1,600,000,000,000
2,000,000,000,000
J
un-95
J
un-96
J
un-97
J
un-98
J
un-99
J
un-00
J
un-01
J
un-02
J
un-03
J
un-04
J
un-05
J
un-06
J
un-07
Source: CTIA, Wireless Industry Indices, Midyear 2007 Results (November 30, 2007),
Section 6.3 "MOU Trend Analysis," Table 85 (used with permission).
233
Providers are working aggressively to achieve
this critical mass. WildBlue has established
partnerships with the NRTC, AT&T,
DirecTV, and DISH Network to distribute its
service.234
Similarly, Hughes recently an-
nounced an agreement with Wal-Mart for the
low-price retailer to resell HughesNet broad-
band services in 800 of its stores.235
Noting
that Wal-Mart’s entry into a new market often
“tends to push down prices,” some analysts
believe that the arrangement with Hughes
could similarly affect other broadband service
providers.236
Satellite providers are also exploring other
pricing models to make their services more
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affordable to consumers. For example,
Hughes offers residential subscribers a pricing
option that rolls the up-front charges into the
monthly service fee; thus, instead of paying
$299.98 for equipment and installation (after
rebate) plus the $59.99 monthly charge for
basic HughesNet Home Service (or $69.99 or
$79.99 for HughesNet Professional or Profes-
sional Plus, respectively) (see Table 5), the
customer can pay $20.00 more per month (i.e.,
$79.99/$89.99/$99.99) for 24 months and
eliminate the up-front charge.237
This option requires a 24-month service
commitment (after which the monthly fee
returns to the standard amount), but custom-
ers also receive an additional $100 mail-in
rebate.238
While the resulting service fee is
still appreciably higher than those for compa-
rable terrestrial services, this type of pricing
approach helps to mitigate the disincentive to
subscribership that presently exists and should
help to stimulate consumer uptake.
Accelerating technological evolution and the
emergence of innovative and attractive new
applications and services are kindling con-
sumer interest and stoking demand for
broadband services across multiple platforms.
That strong demand, coupled with a prolifera-
tion of service providers seeking to satisfy it,
is generating competition that is producing
lower prices and more choices for consumers
in all sectors.
Conclusion
The swift growth in broadband technologies
and services that has occurred over the last
several years – and the correspondingly rapid
economic and cultural changes that have at-
tended it – underscore the importance of
broadband communications as a transforma-
tive resource for the nation. The capacity to
manage large amounts of information
(whether voice/audio, data, or video) and to
quickly and efficiently exchange it with others
down the street or across the globe is no
longer a luxury but, like the telephone over a
century ago, is quickly becoming an essential
tool for life and commerce in the modern
world. The same technology that enables
governments, banks, corporations and other
institutions to manage affairs of state and
international finance and trade now makes
critical contributions to health care, education,
public safety, and the productivity of indi-
viduals and small businesses, as well as a host
of other activities. For this reason, the Presi-
dent has made it a priority to ensure that all
Americans have affordable access to this im-
portant resource by harnessing the power of
the competitive marketplace.
As this report demonstrates, a reasonable as-
sessment of the available data indicates that
the nation has, to a very great degree, realized
this objective. The FCC reports that, as of
the end of 2006, over 99 percent of all U.S.
zip codes received broadband service from at
least one provider, and those zip codes en-
compass over 99 percent of the nation’s
population.239 In addition, recent Census Bu-
reau data and the individual growth patterns
in each of the broadband modal sectors,
documented above, make it likely that broad-
band accessibility, penetration and usage have
grown further since the Commission collected
its information and are continuing to do so.
Finally, pricing and usage information for the
major broadband sectors also indicate that
these services are becoming more affordable
for consumers as time passes.
Nevertheless, it is also clear that more work
remains to be done both by the government
and by the private sector to improve broad-
band data. The FCC’s most current
broadband coverage map continues to show
areas of potential service gaps, albeit primarily
in sparsely populated remote areas. Anecdotal
reports also contain stories of individuals who
report being unable to access a broadband
connection for one reason or another. In this
regard, the general nature of the present data
necessarily makes it difficult to identify pre-
cisely the specific characteristics of
broadband service available in particular areas.
The U.S. Government is taking action to im-
prove its data collection tools to obtain more
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granular information that will provide a more
detailed view into these issues.
The recent history of broadband deployment
in the United States stands as a strong en-
dorsement for the principles embodied in the
1996 Telecommunications Act. The remark-
able array of broadband access technologies,
applications, and services that our nation en-
joys today flows from past ingenuity and
capital investment, but it is also carries the
momentum that will further propagate these
technologies and services and stimulate in-
vestment in the future. Copper and coaxial
cable are yielding to optical fiber, and even as
deployment of 3G wireless technologies pro-
ceeds, planning is already underway for 4G
systems. Each new roll-out of a technology
or service increases adoption, which fuels
demand among other consumers, and which,
in turn, provides the business case for further
investment to meet demand and provision for
future growth.
This cycle is the natural outgrowth of fervent
competition embraced in the Telecommunica-
tions Act of 1996 and cultivated through
effective technology, regulatory, and fiscal
policies. The evidence is clear: The pro-
competition telecommunications policies un-
derpinning the Administration’s broadband
strategy has stabilized the market for planning
and investment, provided needed spectrum
resources to expand existing services and
support new innovations, and spurred the
development and deployment of technologies
and infrastructure necessary to deliver them.
These policies have delivered outstanding re-
sults and hold great promise for the future.
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Endnotes
R. Jaques, Doctors Perform Surgery Over the Web, VNUnet.com (Aug. 9, 2005),
1
http://www.vnunet.com/articles/print/2140922 (last visited Jan. 15, 2008).
Associated Press, Soldiers Abroad to Watch Graduations Online (May 18, 2006), http://www.msnbc.msn.com/id/12861456/
2
(last visited Jan. 15, 2008).
R. Callimachi, Biggest Wi-Fi Cloud is in Rural Oregon (Oct. 16, 2005), reprinted in USA Today,
3
http://www.usatoday.com/tech/products/services/2005-10-16-oregon-wi-fi_x.htm (last visited Jan. 15, 2008).
Dallas Launches Citywide Interoperability Network, Government Technology (Nov. 16, 2006),
4
http://www.govtech.com/gt/articles/102406 (last visited Jan. 15, 2008).
B. Ipsen, Last FrontierLlinks with First Frontier, First Alaskans (Jan./Feb. 2007), at 23-24.
5
6
Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996) (amending the Communications Act of 1934, 47
U.S.C. §§ 1-714).
Id. § 509, codified at 47 U.S.C. § 230(b) (1)-(2).
7
Promoting Innovation and Competitiveness: President Bush’s Technology Agenda, the White House (June 2002),
8
http://www.gcrio.org/OnLnDoc/pdf/technology_agenda.pdf.
Id. at 1.
9
10
American Competitiveness Initiative (Feb. 2, 2006), the White House,
http://www.whitehouse.gov/stateoftheunion/2006/aci/index.html.
11
Id. at 3.
12
Id.
13
Memorandum for the Heads of Executive Departments and Agencies, Subject: Spectrum Policy for the 21st Century, 39
Weekly Comp. Pres. Doc. 726, 727 (May 23, 2003), http://www.whitehouse.gov/news/releases/2003/06/20030605-4.html (Presi-
dent’s Spectrum Policy Memo). See also Presidential Memorandum on Spectrum Policy for the 21st Century, 69 Fed. Reg. 1569 (Jan.
9, 2004).
14
Spectrum Management for the 21st Century: Plan to Implement Recommendations of the President’s Spectrum Policy Initiative, U.S. Depart-
ment of Commerce, NTIA (2006), http://www.doc.gov/osmhome/reports/ImplementationPlan2006.htm; Transcript of Hearings,
Improving Spectrum Management through Economic and other Incentives (Feb. 28, 2006),
http://www.ntia.doc.gov/forums/2006/specman/spectrumworkshop_022806.pdf, and (March 1, 2006),
http://www.ntia.doc.gov/forums/2006/specman/spectrumworkshop_022806.pdf.
15
D. Jorgenson, The Telecommunications Challenge: Changing Technologies and Evolving Policies, Concluding Remarks at 158 (Charles
W. Wessner, ed., The National Academies Press, 2006).
16
E. J. Rutkowski, 3GSM 2007: Video Review of I-mate Ultimate 5150 (Feb. 13, 2007),
http://msmobiles.com/news.php/6059.html (last visited Jan. 15, 2008); tgdaily, Broadcom Announces 7.2 Mb/s Single-chip HSDPA Mobile
Phone Processor, (Apr. 6, 2006), http://www.tgdaily.com/content/view/25579/107/ (last visited Jan. 15, 2008).
17
Cellular-News, Mobile-phone Premium Content Market to Reach $40 Billion by 2010, (March 8, 2006), http://www.cellular-