 | Issue: | North America 2011 |
| Article no.: | 3 | |
| Topic: | The foundation of a connected world | |
| Author: | Walter McCormick | |
| Title: | President & CEO | |
| Organisation: | USTelecom | |
| PDF size: | 257KB |
About author
Walter McCormick is the President and CEO, USTeleco. Prior to joining USTelecom, Mr McCormick served as President and CEO of the American Trucking Associations. His background also includes service as General Counsel of the U.S. Department of Transportation; as General Counsel of the U.S. Senate Committee on Commerce, Science and Transportation; and as a partner with Bryan Cave LLP, an international law firm of more than 500 lawyers, During his tenure on the professional staff of the U.S. Senate, he was recognized by Roll Call magazine as one of the 50 most influential staffers on Capitol Hill. Mr McCormck is a member of the President’s National Security Telecommunications Advisory Committee, the Board of Trustees of Rockhurst University, the Federal Communications Bar Association, the District of Columbia Bar, and the Missouri Bar. Walter McCormick holds degrees in journalism and law from the University of Missouri. Mr McCormick has studied international economics and political science at Georgetown University, and has completed the program for senior managers in government at Harvard University’s John F. Kennedy School of Government.
Article abstract
Broadband, the essential foundation of the growing Internet-based information economy, depends upon investment in a robust and continually innovating U.S. wireline broadband infrastructure. The health and growth of the Internet and the U.S. overall innovation economy are inescapably intertwined with the continued health of a vast, fibre-based broadband infrastructure. Investment in both fixed and mobile networks is needed to make this infrastructure work for all Americans and to aggressively pursue the next chapter of a strong, competitive U.S. innovation economy.
Full Article
The foundation of a connected world by Walter B. McCormick, Jr., President & CEO, USTelecom President Obama is right to place significant emphasis on connecting the nation to the many opportunities of the high-speed Internet. The State of the Union address set a goal of connecting 98 per cent of the country to the mobile Internet in the next five years. The President spoke of the importance of additional wireless spectrum to the Administration’s mobility goals, but there is another critical component, as well – the essential foundation that can only be met by continuing investment in a robust and continually innovating U.S. wireline broadband infrastructure. There is a broad public misperception about mobility. Some mistakenly believe that it’s all about wireless. But, for the high-speed Internet to thrive – and for additional spectrum to be leveraged to its full potential – there has to be vigorous, ongoing investment in the fixed wireline networks that tie together wireless communications. Simply put, understanding the nexus between wireline and wireless is essential to advancing the next generation of broadband-fuelled innovation and growth in this country. Rising bandwidth demand At the end of 2010, nearly 180 million Americans connected to the high-speed Internet. Americans have embraced broadband faster than multi-channel video, cell phones, home computers, and even the telephone. Today, the U.S. is among the global leaders in data usage (i.e. bandwidth consumed per user), and in network investment to keep pace with the soaring demand. As more Americans connect to the Internet via broadband, the more important those connections become for virtually every facet of modern life. From doing our jobs to maintaining our health, seeking entertainment to reducing our carbon footprint, broadband is an essential tool in our modern lives. The conventional wisdom is that broadband’s expansion is fuelled primarily by wireless data growth. While it’s an important part of the story, it misses two critical points. First, wireless growth cannot happen without high capacity wireline backhaul. And, second, online video – especially high-definition video – is by far the greatest bandwidth driver in absolute terms. Think of WiFi in our homes; it hops a few feet without a cord, and then goes right to a router, then into the wall, then into the wireline infrastructure. The same thing happens with wireless Internet in a hotel room or Starbucks. As demand, grows, quality connections depend in no small part on getting that wireless connectivity into the central wireline network as quickly and efficiently as possible. This is a well-understood fact in engineering circles. As Bob Pepper, who leads Cisco’s global policy efforts, explains: ‘‘there is no such thing as a mobile network. Networks are fixed. Devices are mobile.” This observation was backed up last year by the U.S. General Accountability Office, which noted that, “the majority of wireless traffic actually flows over the wireline telephone system”. So it’s important that as we talk about the possibilities of the future – whether it’s smartphones or the booming applications market, Facebook, YouTube or whatever comes next – that we acknowledge that all of this innovation is supported by strong, nimble wireline networks. The benchmark for what makes a robust network will continually move. Between 2000 and 2009, data traffic on wireline networks increased by a compound annual rate of nearly 80 per cent. That pace will continue to climb briskly, in the 30-40 per cent annual range, for the next five years. Much attention is focused – and rightly so – on rapidly expanding mobile data traffic, but the lion’s share of data traffic today – by several orders of magnitude – is being fuelled by online video. A majority of Americans watch at least some television content online. So much so, that the volume of video traffic is the fastest growing category (measured by volume) of Internet traffic, – it is expected to quadruple from 2009 to 2014 alone. To get a sense of the difference in scale, mobile data traffic is expected to growth from 16 to 795 Petabytes (one billion megabytes) per month from 2009 to 2014. By comparison, consumer and business data usage will nearly double to close to 4,000 PB/month, while online video is expected to more than quadruple to 12,650 PB/month. One sign of the changing times: Netflix is now the second largest video subscription service in the U.S. With 20 million subscribers, it trails only Comcast. Unprecedented value proposition Yet despite this rapidly rising usage, what we pay for broadband has held steady over the past decade. The value of broadband service has vastly expanded. Americans now spend as much time online as they do watching television – a 120 per cent increase since 2005. Yet they pay nearly 50 per cent per megabit less than they did in 2008. While U.S. consumer usage of various communications services has soared, the percentage share of disposable income for related bills has remained flat for a decade. It should come as no surprise then that Americans are quite happy with their broadband service. According to a recent Federal Communications Commission survey, 91 per cent of Americans say they are “satisfied” with their service, an enviable number for any heavily used service. Next wave of innovation Looking ahead, there is growth coming with new technology applications. Data storage is moving to the cloud, remote online holders of all the information in our personal and professional lives. As these fast-emerging cloud technologies become more popular, leading to a nearly US$150 billion market by 2014, they will continue to require high-quality bandwidth to the data centres, so applications can be run and stored. Robust underlying fixed connections are critical to cloud computing’s reliability and scale. Broadband also makes possible smart grid technologies to enhance energy efficiency and help consumers and businesses save on their monthly utility bills. Broadband is also driving profound change in American medicine – vastly improving the quality of care and empowering patients to take charge of their health, while significantly reducing medical costs. Investment matters What makes all of this progress possible? Investment in the network. We start from a strong position today. Despite a weak economy, U.S. broadband providers have steadily invested more than US$50 billion annually in high-speed infrastructure throughout the nation – all to keep pace with the growing appetite of consumers and the need to support the new and more bandwidth-intensive offerings utilized throughout our society. In fact, the broadband community is one of the single largest investors in the U.S. economy today and, its related sectors – information and communications and other advanced technology sectors technology – create jobs that pay on average 52 per cent more than the national mean. Constructive, connected policy Rare in the world, the U.S. has actual choices among competing broadband infrastructure – and our networks benefit from about a third more annual investment than those of our more heavily regulated European counterparts as a result. To keep our competitive edge, we need to safeguard this advantage and build on our progress to date. Federal policy makers need to ensure there is integrity to the financial fundamentals that underlie network investment, including intercarrier compensation and universal service. Congress needs to make sure that there is a focused effort from the regulatory agencies to separate out archaic uneconomic regulation from the kind of targeted consumer protection rules that the president wants to remain in place. In the case of the communications industry, we have a build-up of regulation that has accumulated over almost 100 years. It will be a big job for the Federal Communications Commission to undertake this review, but it is important work and the broadband community stands ready to constructively engage with regard to this effort. It’s the network At the end of the day, the continued health and growth of the Internet and our overall innovation economy are inescapably intertwined with the continued health of our vast, fibre-based broadband infrastructure. We need robust investment in both fixed and mobile networks to make this infrastructure work for all Americans and to aggressively pursue the next chapter of a strong, competitive U.S. innovation economy.
