Broadband's Success Will Require More Than Regulatory Clearance.

Business Editors & High-Tech Writers

LOS ANGELES--(BUSINESS WIRE)--Feb. 15, 2002

The cost of broadband to the home for Americans will be a leading challenge for the Federal Communications Commission's (FCC) Notice of Proposed Rule Making (NPRM), designed to promote greater deployment of broadband services, according to new research from the University of Southern California (USC). In a significant national high-tech policy announcement on Thursday, the FCC set a regulation-loosening agenda to encourage universal high-speed access, promote investment and spur competition for a market plagued by slow adoption and numerous technical and political obstacles.

"Our research suggests consumers will not pay more than $25 per month for high-speed access, which helps to explain why less than 5% of U.S. households currently have high-speed access," says Professor Elizabeth Fife, PhD, senior researcher at USC's Center for Telecommunications Management (CTM).

CTM, part of the Marshall School of Business, recently released a comprehensive industry-wide telecom study. Edited by Dr. Fife, the "Telecom Outlook Report: Millennial Edition" (TOR) surveyed senior level executives in communications firms and organizations, government authorities, and analysts in the U.S., Asia and Europe on the challenges facing telecom markets.

The study cites high prices and a lack of availability, as the main reasons U.S. households did not subscribe to broadband services.

The FCC tentatively proposed yesterday to minimize regulatory costs to lower pricing and speed deployment of new services to the public.

According to 60% of TOR experts, performance limitations and infrastructure costs remain serious impediments to broadband's success in the U.S.

"Content that provides a sense of community will drive increased Internet usage," says Morley Winograd, CTM Director and formerly Vice President Al Gore's Senior Policy Advisor in the National Partnership for Reinventing Government.

"If TOR experts are correct in that high-quality video, online movies, music and games will drive broadband usage, this will bring capacity and performance issues to the forefront," commented Winograd.

Beyond the regulatory issues cited by the FCC, a real boom in broadband deployment will only occur if the following issues identified by TOR experts are addressed. They vary by type of broadband access as follows:

-- Reducing installation delays and infrastructure costs for xDSL,

-- Upgrading infrastructure and eliminating costly and time-consuming
cable-laying bottlenecks for broadband access through cable,

-- Improving performance and service pricing for broadband access through
satellite, and

-- Resolving protocol standards and issues of spectrum for wireless access.

In late February, USC's Center for Telecommunications Management will host a closed executive roundtable with industry leaders on the future of broadband. Senior executives from such major players as Cisco, SBC, Lucent Technologies, Qualcomm, AT&T, and Verizon are expected to participate.

Later in this year, Researcher Fife will release results of a follow-up TOR study in which contributing experts will re-evaluate their original responses in light of the 9/11 terrorist attacks and its impact on the telecom industry.

The Center for Telecommunications Management, at USC's Marshall School of Business, may be reached at 213/740-0980.