2 QITCOM 2012 - Stagg Newman (Next Gen Broadband)

Lessons from
Connecting America:
The National Broadband Plan

Perspectives for the MidEast
Document type
Dr. Stagg Newman
Date
McKinsey Advisor
QITCOM QATAR 2012
CONFIDENTIAL2012
March 5, AND PROPRIETARY
Any use of this material without specific permission of McKinsey & Company is strictly prohibited

TRACKER
Goals

Congress’s charge in the Recovery Act led to the creation of the National
Broadband Plan
Unit of measure

Title A plan to encourage
Unit of measure private investment and
Congress said that the plan should: innovation

Working Draft - Last Modified 3/5/2012 4:09:42 AM
• “Ensure that all people of ______ have (w/ the exception of
access to broadband capability and establish subsidies for rural America)
benchmarks for meeting that goal.”
• “[I]nclude . . . a detailed strategy for
achieving affordability . . . and maximum
utilization of broadband infrastructure and
service”
• “[I]nclude . . . an evaluation of the status

Printed
of deployment of broadband service”
• “[I]nclude . . . a plan for use of
broadband . . . in advancing consumer
welfare, civic participation, public safety and
homeland security, community development,
health care delivery, energy independence
and efficiency, education, worker training,
private sector investment, entrepreneurial
activity, job creation and economic growth,
and other national purposes.”

1 Footnote

SOURCE: Source | 2

TRACKER
Goals

Goals of the National Broadband Plan
Unit of measure
Countries need pragmatic aspirational and achievable goals that
reflect their people, infrastructure, and government
Title
• Goal No. Unit ofleast 100 million U.S. homes should have affordable access to actual
1: At measure
download speeds of at least 100 megabits per second and actual upload speeds of at
least 50 megabits per second.

• Goal No. 2: The United States should lead the world in mobile innovation, with the
fastest and most extensive wireless networks of any nation.

• Goal No. 3: Every American should have affordable access to robust broadband
service and the means and skills to subscribe if they so choose.

Printed
• Goal No. 4: Every American community should have affordable access to service of
at least 1 gigabit per second to anchor institutions such as schools, hospitals and
government buildings.

• Goal No. 5: To ensure the safety of the American people, every first responder
should have access to a nationwide, wireless, interoperable BB public safety network.

• Goal No. 6: To ensure that America leads in the clean energy economy, every
American should be able to use broadband to track and manage their real-time
energy consumption by 2020.
1 Footnote

SOURCE: Source | 3

TRACKER
Goals

What the NBP is? What it is NOT? ….
Unit of measure

What the National Broadband Plan is:
Title
▪ Unit of measure
A fact driven analysis of the state of broadband in the U.S. and the
gaps between aspiration and reality

▪ A set of recommendations (>>100) for the FCC, the Administration
and Congress

What the National Broadband Plan is not:
▪ A self-actualizing plan.

Printed
▪ A new regulatory structure for the communications industry
Most recommendations have Nevertheless, a wealth of valuable
not been implement, many due analysis is available including the
to political stalemate… entire plan, supporting analysis,
Major breakthrough last month public input, workshops, etc at
on Spectrum Policy www.broadband.gov
1 Footnote

SOURCE: Source | 4

TRACKER
Goals

Gaps in the broadband ecosystem (circa 2010)
Unit of measure
In all but perhaps the most advanced Asian countries, the
gaps will be similar while the specifics differ
Title
Unit of measure
• Fourteen million Americans do not have access to broadband
Availability
infrastructure that can support today’s and tomorrow’s applications

gap
(Fixed wireless access w/ LTE is best way to close gap)

• 93 million Americans do not have broadband at home
Adoption gap

• Many Americans lack digital skills, even as many job openings are
Digital skills
posted exclusively online

Printed
gap

• The U.S. ranks in the bottom half of comparable countries on nearly
National
every metric used to measure the adoption of health information
purposes gap
technology
• Most of the U.S. electric grid is not connected to broadband
• First responders are using outmoded spectrally inefficient
narrowband communications technology that denies them access to
broadband applications for public safety and health.
1 Footnote

SOURCE: Source | 5

TRACKER Investment, and Competition
Innovation,

Several gaps may be hampering innovation, investment, and competition
Unit of measure
Policy gaps will likely be very country specific. Need for
more spectrum for broadband wireless is universal.
Title
Gaps measure
Unit of Issues
Need for spectrum • Spectrum for mobile competitors is likely to enhance mobile
competition

• More spectrum may also allow wireless technologies to
serve as closer substitutes to fixed broadband providers

• Current data (commission and external) lack detail to make
Lack of detailed data to
granular competition policy decisions
inform competition policy
• Existing data collection does not allow comparative
evaluation

Printed
• Consumers often do not know true performance of services
Lack of transparency for purchased
consumers
• Consumers generally unaware how their own actions, along
with internet characteristics, can affect performance

• Well functioning wholesale markets can help foster retail
Patchwork of wholesale competition
regulations • Today's wholesale access policies were developed without
reference to a consistent analytical framework
1 Footnote

SOURCE: Source | 6

T
TRACKER
Spectrum

Trends in demand and supply suggest a looming spectrum gap
Unit of measure

Moreover with sufficient spectrum wireless BB is the best way to serve “unserved” areas.
Title
Unit of measure
Forecasted mobile data traffic in North America
Need to transform

spectrum policy to
meet wireless
broadband
demands
•300-500 MHz
more spectrum for
mobile broadband
•More spectrum

Printed
Mobile broadband spectrum pipeline
for unlicensed and
new paradigms
•Incentive
auctions
•Wider blocks of
spectrum

1 Footnote

SOURCE: Source | 7

TRACKER
Spectrum

Policy changes needed for a range of issues
Unit of measure

Title
Gaps Issues
Unit of measure
Lack of transparency in • Current allocation and utilization data is largely

allocation and utilization unattainable and often esoteric

Few spectrum reallocation • FCC needs at its disposal multiple tools for reallocating
tools underutilized spectrum to next-generation users

• Wireless broadband growth is causing network strain that
Insufficient capacity for will intensify with next-generation technologies
broadband
• Spectrum can take years to reclaim

Printed
• Growing need for expensive backhaul services, including
Suboptimal backhaul microwave
deployment • Access lacking in terms of capacity, flexibility and
affordability
Access models limited • Opportunistic access to spectrum is limited to certain bands
• Demand for unlicensed spectrum among key stakeholders

• There is no framework for identifying future spectrum bands
Policy scope too bounded and needs
1 Footnote • Coordination of multiple domestic and international
stakeholders
SOURCE: Source | 8

TRACKER
Infrastructure

Government regulation and policy affects deployment decisions.
Unit of measure
Enlightened policy can lower input costs and speed time to market.

Title
Gaps measure
Unit of Issues
Too costly to access poles • Pole rental rates affect cost of broadband in rural areas—up
to 20% of a rural subscriber’s bill

and other infrastructure
• “Make ready” charges for poles can constitute >10% of cost
of deployment
• Multiple sets of sometimes inconsistent rules and policies

• Different rates for pole attachments based on category of
Policies affect deployment service offered affects upgrade and service decisions
decisions
• Failure to consider broadband as part of public works
projects at planning stage can drive up costs substantially

Printed
Time to access and resolve • Disputes over poles and ROW access linger for months,
years; many states have better policies and timelines
disputes
• Near-constant litigation on scope of privately-owned pole,
duct and conduit access rights

Lack of information and data • Data on infrastructure availability not uniformly kept or
on infrastructure updated
• Processes and fees for use of public rights-of-way and gov’t
1 Footnote facilities for broadband facilities disparate and varied

SOURCE: Source | 9

TRACKER
Inclusion

Making broadband available
Unit of measure
Availability policy must be driven by deep analysis of a country’s people

Title
Unit of measure
Create a new Intercarrier
Create a new

Connect America compensation
Mobility Fund
Fund reform

Support universal availability Target funding to states that are Eliminate inefficient and
of broadband and high-quality significantly lagging national irrational economic
voice grade service with at average for 3G coverage behavior
least 4 Mbps actual download/ Encourage transition to IP-
1 Mbps upload speeds to-IP interconnection

Printed
Develop expedited process to Staged transition away from
target funding to unserved per minute rates to allow
areas, shifting funds from companies and investors to
legacy programs prepare
Provide support where there is Provide opportunity for
no private sector business adequate cost recovery
case to offer affordable service
Encourage innovation with a
technology- and provider-
neutral program
1 Footnote

SOURCE: Source | 10

TRACKER
Adoption

Adoption by demographic & socioeconomic segment –in-depth surveying
Unit of measure
Key reasons for non-adoption

Title Cost – 36%
▪ 15% - monthly fee for service
Relevance – 19%
▪ 5% -- content with dial-up
▪ 10% cannot afford a computer
Unit of measure --- activation fee/contract ▪ 5% -- internet is a waste of time
▪ 9% ▪ 4% -- Nothing to see
Digital literacy – 22% ▪ 4% -- Don’t use it much
▪ 12% -- lack of comfort with computers Remaining reasons:
▪ 10% -- hazards of online life ▪ 15% -- other or combination of several reasons

▪ 5% -- not available where they live
Percent of American adults ▪ 3% -- can use the internet all they want at work
100%
93
90 86
84
80 77
75 74
68 69
70
64
60 59 59
55

Printed
50 49
50

40
40
35

30
24
20

10

0
Less High Some College Less $20K $40K $75K Non- Rural 18-29 30-49 50-64 65+ White Black Hispanic*
than School college + than to to + rural
High $20K $40k $75K
School
1 Footnote
*Hispanics includes both English and Spanish speaking Hispanics;

SOURCE: Source | 11

TRACKER
Adoption

Framework for recommendations – an example
Unit of measure

Title
Unit of measure
1 Launch a three-part National Digital Literacy Program

Expand low income universal service support to
2
broadband (see USF)

3 Focus on “relevance” through public/private partnerships

Printed
Improve focus on evaluation, measurement, best
4
practices, and state-level initiatives

Accelerate efforts among low-adopting groups facing
5
significant social or physical barriers

1 Footnote

SOURCE: Source | 12

TRACKER
National Purposes

The national purposes mandate
Unit of measure

Title
American Recovery and
Reinvestmentof measure
Unit Act, §6001(k)(2)
(D): Healthcare

“a plan for use of broadband infrastructure
and services in:
▪ advancing consumer welfare Education
▪ civic participation
▪ public safety and homeland security
▪ community development
▪ health care delivery
▪ energy independence and efficiency Energy and
▪ education the environment
▪ worker training
▪ private sector investment

Printed
▪ entrepreneurial activity Government performance
▪ job creation and economic growth
▪ and other national purposes.” and civic engagement

Economic opportunity

Public safety and
homeland security

1 Footnote

SOURCE: Source | 13

TRACKER
Public Safety

Gaps persist in fully utilizing broadband for public safety and homeland
security purposes
Unit of measure

Gaps
Title Issues
No nationwideof measure
Unit public safety No nationwide, interoperable broadband wireless network
that is ubiquitous, redundant, and resilient
network Few public safety agencies have access to commercial

wireless mobile broadband
Commercial broadband does not support public safety
requirements and is not cost effective

Outmoded 9-1-1 system 9-1-1 services utilize varied legacy communications
networks
Few public safety agencies have access to broadband
services to support next-generation 9-1-1

Printed
Outmoded alerting system Current distribution technology limits amount of audio/visual
to Americans over broadcast channels
FEMA has taken steps to develop IPAWS but clear
implementation milestones are needed

Critical infrastructure Companies reported $265M+ in cyber crime-related losses
Communications providers subject to frequent attacks on critical
vulnerabilities IP-based infrastructure
Insufficient incentives and safeguards for security of critical
1 Footnote communications assets

SOURCE:Internet Crime Complaint Center
Source: Source | 14

TRACKER
Public Safety

Innovative public private partnership can lower the costs of a nationwide
Unit of measure
broadband public network from >>$20 Billion to < $10 Billion
Feb. 2012: Congress passes enabling legislation for BB PS network with public/private partnership
Title
Unit of measure
Solution for Reliable, High Coverage Mission Critical Voice, Data, & Video 4G Services

For exceptional times and
places when PS &
Deployable Equipment Caches commercial infrastructure is
insufficient (e.g. wilderness)
Deployed and controlled by PS
or has been destroyed
Coverage deep inside large
DAS and Picocell Systems buildings and capacity for high
pedestrian density (e.g., shopping
In-Building/Underground Coverage in PS centers) can only be provided by
Spectrum in-building solutions

Printed
Provides access to
additional capacity
Commercial Wireless Networks during emergencies, as
Public Safety Roaming and Priority Access well as increased
network resiliency
Enables high coverage
Public Safety Broadband Wireless Network communications, resilient
coverage and guaranteed
Public Safety’s Dedicated RAN using Commercial cell sites and core access in a cost effective
manner leveraging
commercial assets
1 Footnote

SOURCE: Source | 15 4

TRACKER for all countries
Implications

Lesson for all upon reflection 2 years later
Unit of measure
• Realizing the public good from BB requires addressing a complex set of
factors that include availability, adoption, and national purposes that
Title
are country specific and political.
Unit of measure

• Wireless will drive the next “Big Wave” of innovations, provide exciting
applications and services and be the most capex efficient way to provide
broadband to “unserved” people and areas but …

• Spectrum policy must be dramatically changed to realize this potential:
More licensed spectrum and More unlicensed

Printed
Innovative approaches (e.g. incentive auctions) to create more efficient
usage
Wider blocks of spectrum

• Understanding the barriers and solutions to greater adoption and
requires deep analysis of both users and non-users of broadband
• Innovative public private partnerships provide more capex efficient
methods to meet national purposes (e.g. BB Public Safety).
1 Footnote

SOURCE: Source | 16

2 QITCOM 2012 - Stagg Newman (Next Gen Broadband)

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