BROADBAND BRINGING HOME THE BITS

Committee on Broadband Last Mile Technology

Computer Science and Telecommunications Board

Division on Engineering and Physical Sciences

National Research Council

NATIONAL ACADEMY PRESS
Washington, D.C.



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Broadband Bringing Home the Bits BROADBAND BRINGING HOME THE BITS Committee on Broadband Last Mile Technology Computer Science and Telecommunications Board Division on Engineering and Physical Sciences National Research Council NATIONAL ACADEMY PRESS Washington, D.C.

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Broadband Bringing Home the Bits NATIONAL ACADEMY PRESS 2101 Constitution Avenue, NW Washington, DC 20418 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. The majority of the support for this project was provided by the Defense Advanced Research Projects Agency under contract No. N00174-99-C-0052 and the National Science Foundation under grant No. ANI-9908155. Additional support was provided by the Association for Computing Machinery’s Special Interest Group on Data Communication, Hewlett-Packard, Intel Corporation, Interval Research Corporation, WorldCom, Sun Microsystems, Texas Instruments, and Qwest. Any opinions, findings, conclusions, or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the sponsors. International Standard Book Number 0-309-08273-0 Additional copies of this report are available from: National Academy Press 2101 Constitution Ave., N.W. Box 285 Washington, DC 20418 800-624-6242 202-334-3313 (in the Washington metropolitan area) http://www.nap.edu Copyright 2002 by the National Academy of Sciences. All rights reserved. Printed in the United States of America

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Broadband Bringing Home the Bits THE NATIONAL ACADEMIES National Academy of Sciences National Academy of Engineering Institute of Medicine National Research Council The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Wm. A. Wulf is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Kenneth I. Shine is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. Wm. A. Wulf are chairman and vice chairman, respectively, of the National Research Council.

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Broadband Bringing Home the Bits COMMITTEE ON BROADBAND LAST MILE TECHNOLOGY NIKIL JAYANT, Georgia Institute of Technology, Chair JAMES A. CHIDDIX, AOL Time Warner JOHN M. CIOFFI, Stanford University DAVID D. CLARK, Massachusetts Institute of Technology PAUL GREEN, Tellabs (retired) KEVIN KAHN, Intel Corporation RICHARD LOWENBERG, Davis Community Network CLIFFORD LYNCH, Coalition for Networked Information RICHARD METZGER, Lawler, Metzger & Milkman LLC ELIZABETH MYNATT, Georgia Institute of Technology ELI M. NOAM, Columbia University DIPANKAR RAYCHAUDHURI, Rutgers University BOB ROWE, Montana Public Service Commission STEVEN S. WILDMAN, Michigan State University Staff MARJORY S. BLUMENTHAL, Director JON EISENBERG, Senior Program Officer DAVID DRAKE, Project Assistant DAVID PADGHAM, Research Assistant

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Broadband Bringing Home the Bits COMPUTER SCIENCE AND TELECOMMUNICATIONS BOARD DAVID D. CLARK, Massachusetts Institute of Technology, Chair DAVID BORTH, Motorola Labs JAMES A. CHIDDIX, AOL Time Warner JOHN M. CIOFFI, Stanford University ELAINE COHEN, University of Utah W. BRUCE CROFT, University of Massachusetts at Amherst THOMAS E. DARCIE, AT&T Labs Research JOSEPH FARRELL, University of California at Berkeley JEFFREY M. JAFFE, Bell Laboratories, Lucent Technologies ANNA KARLIN, University of Washington BUTLER W. LAMPSON, Microsoft Corporation EDWARD D. LAZOWSKA, University of Washington DAVID LIDDLE, U.S. Venture Partners TOM M. MITCHELL, WhizBang! Labs, Inc. DONALD NORMAN, Nielsen Norman Group DAVID A. PATTERSON, University of California at Berkeley HENRY (HANK) PERRITT, Chicago-Kent College of Law BURTON SMITH, Cray Inc. TERRY SMITH, University of California at Santa Barbara LEE SPROULL, New York University JEANNETTE M. WING, Carnegie Mellon University MARJORY S. BLUMENTHAL, Director HERBERT S. LIN, Senior Scientist ALAN S. INOUYE, Senior Program Officer JON EISENBERG, Senior Program Officer LYNETTE I. MILLETT, Program Officer CYNTHIA PATTERSON, Program Officer STEVEN WOO, Program Officer JANET BRISCOE, Administrative Officer MARGARET HUYNH, Senior Project Assistant DAVID DRAKE, Senior Project Assistant JANICE SABUDA, Senior Project Assistant JENNIFER BISHOP, Senior Project Assistant DAVID PADGHAM, Research Assistant BRANDYE WILLIAMS, Staff Assistant

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Broadband Bringing Home the Bits Preface Since its inception, the Computer Science and Telecommunications Board (CSTB) has examined how the nation’s networked infrastructure has been evolving. At the close of the past decade, the popular appeal of the Internet was evident and growing, and with it the range and richness of the uses to which the Internet might be put. The vision of a popular Internet leads inevitably to thoughts about how people use it in their homes—and then to the arresting observation that most people get the best possible access to the Internet from outside their homes, if they can get it at all. That observation led CSTB to frame an assessment of broadband technologies in what the telecommunications industry has traditionally called the last mile—the link to homes (and small offices). This project complements prior CSTB studies of the core of the network—the backbone, the architecture, broad categories of applications, and specific categories of networking technology—in its concern to (literally) bring networking home. The key questions about broadband technology in the last mile are deceptively simple. First, what is feasible, technically and economically? But feasibility is a nuanced quality: it is in the eye of the beholder, and beholders differ considerably in terms of their assumptions and preferences. Those same conditions confound answering the second key question: how can public policy foster dissemination of broadband in the last mile? Many industries are involved in supplying broadband technology, and their existence and strategies are already shaped by public policy. And many outside those industries, trying to figure out what is going on,

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Broadband Bringing Home the Bits have their own views of what policy is or should be. Moreover, recent industry trends, from mergers to business failures, feed speculation of all kinds—except for an expectation that broadband deployment will accelerate. Thus, to have any claim to completeness, an assessment of broadband in the last mile must combine consideration of technology, economics, and law and policy. Accordingly, CSTB convened a committee of 14 people with expertise in the following areas: the different kinds of technology that could be used in the last mile; the economics, law, and policy of the telecommunications and networked content industries; and trends in the home and local use of various kinds of networks and their applications.1 The committee combined people with academic, other nonprofit, and commercial experience, and it embraced both supply- and demand-oriented perspectives. The committee met five times in plenary session and received extensive input through briefings, a workshop, and solicited white papers. In addition, it had two plenary conference calls and made extensive use of e-mail and a private Web site for electronic exchange and deliberation. The committee thanks the many people who helped to make this report possible, although of course the responsibility for the final result is its own. A number of individuals provided valuable information through briefings to committee meetings. Aubrey Bush and Rodger Ziemer of the National Science Foundation (NSF) presented the charge to the committee. Dale Hatfield, then chief of the Federal Communications Commission (FCC) Office of Engineering and Technology, and John Berresford, FCC antitrust attorney, presented the range of telecommunications policy concerns from a regulator’s perspective. Jeffrey Chester, executive director, Center for Media Education; Eugene Kimmelman, co-director, Consumers Union; and Mark Cooper, director of research, Consumer Federation of America, discussed concerns emerging from consumer advocates. Andrew Sharpless, then senior vice president of interactive media at Discovery Communications, described the perspective of an online content provider; David Kettler, then executive director and vice president of science and technology with Bellsouth, and C. Lincoln (“Link”) Hoewing, assistant vice president, Internet and Technology, Verizon, presented incumbent telephone company perspectives; William St. Arnaud, CANARIE, Inc., described the Canadian experience and the larger opportunities in local investment in deploying optical fiber; Milo Medin, chief technology officer and senior vice president of engineering, Excite@Home Network, discussed the cable industry’s approach to Internet service and broad 1   David Butler, who had recently retired from AOL at the time the study started, resigned from the committee for personal reasons in 2000.

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Broadband Bringing Home the Bits band deployment; Jorge Reina Schement, professor of telecommunications and co-director of the Institute for Information Policy, Pennsylvania State University, provided context for considering universal service issues by describing the big picture of communications and information consumption across different population segments; Ted Darcie, director, AT&T Labs Research, analyzed the merits of different broadband technologies and explained AT&T’s thinking about its choices; Douglas Sicker, FCC Office of Engineering and Technology, discussed perspectives on DSL and HFC technologies; James Hannan, vice president of network technology, Sprint Broadband Wireless, discussed wireless broadband; James Stratigos, vice president and general manager of EchoStar Data Networks, discussed satellite broadband; Kevin Lu, executive director of the Integrated Access and Operations Department, Telcordia, discussed fiber in the last mile; George Abe, venture partner, Palomar Ventures, characterized venture capitalists’ view of investment opportunities; Thomas G. Krattenmaker, senior counsel at Mintz Levin, outlined challenges in thinking about regulatory options; Glenn Woroch, a University of California at Berkeley economist, presented an economic model of asymmetric regulation of the broadband race; Andrew Cohill, director of the Virginia Tech Communications Network Services and director of the Blacksburg Electronic Village, outlined concepts for a comprehensive municipal fiber plan; Richard Esposto, director of market activation, Western Integrated Networks, discussed conditions and options confronting local government, drawing on his immediately previous work of many years with the Sacramento cable commission; Joseph Van Eaton, principal partner with Miller & Van Eaton, discussed local franchises and licensing; and Richard Civille, Washington director for the Center for Civic Networking, discussed economic development and aggregating demand for rural telecommunications. Some of these individuals and a number of other people provided white papers to the committee (these are available online at <http://www.cstb.org> and are listed in Appendix C). This project owes its existence to the support of its sponsors, in this instance an unusually large and diverse group, reflecting combined public and private interest in the topic. The majority of funds came from government or nonprofit sources: the National Science Foundation, the Defense Advanced Research Projects Agency, and the Special Interest Group on Data Communication of the Association for Computing Machinery. Small contributions—from Hewlett-Packard, Intel Corporation, Interval Research Corporation, WorldCom, Sun Microsystems, Texas Instruments, and Qwest—were developed by members of the Computer Science and Telecommunications Board, who recognized that without those resources the project could not be undertaken. In view of the politics of broadband, it is important to note and emphasize that as is typical

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Broadband Bringing Home the Bits of CSTB projects, the sponsors enabled but did not influence the outcome of the project. From among these, the consistent encouragement of NSF’s Aubrey Bush and members of CSTB are especially noted. CSTB committees are often assembled with experts from very different backgrounds, and this committee was certainly no exception. It is to the credit of our distinguished members that they constantly derived strength from the diversity in their team and realized an end result characterized by a substantial, and in some ways unexpected, degree of consensus. My thanks to each and every member of the team for their diligence and commitment. On behalf of the team and myself, I extend special thanks to David Clark, who played a major role in launching this study and served as its “virtual co-chair,” contributing to and inspiring the work of the committee on many occasions. The CSTB staff, by now well known for its standards of broad excellence, performed once again with supreme distinction. Thanks to D.C. Drake for facilitating our work in every way possible and to Marjory Blumenthal for relentlessly challenging the committee to be comprehensive as well as creative, and finally, many thanks to Jon Eisenberg for his role in anchoring the report of the committee and for representing its work with remarkable timeliness and sophistication. Nikil Jayant, Chair Committee on Broadband Last Mile Technology

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Broadband Bringing Home the Bits Acknowledgment of Reviewers This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the NRC’s Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following individuals for their review of this report: Robert Broderson, University of California at Berkeley, Eugene Cacciamani, Hughes Network Systems, Vincent Chan, Massachusetts Institute of Technology, Andrew Cohill, Blacksburg Electronic Village and Virginia Polytechnic Institute, David Kettler, H.I.G. Capital, Tom Krattenmaker, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Milo Medin, Excite@Home, Sharon L. Nelson, University of Washington Law School, Andrew Odlyzko, University of Minnesota, Paul W. Shumate, IEEE Lasers and Electro-Optics Society, Marvin Sirbu, Carnegie Mellon University, and David Waterman, Indiana University.

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Broadband Bringing Home the Bits Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations, nor did they see the final draft of the report before its release. The review of this report was overseen by Lewis Branscomb, Harvard University (emeritus). Appointed by the National Research Council, he was responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.

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Broadband Bringing Home the Bits Contents     ABSTRACT   1     SUMMARY AND RECOMMENDATIONS   5 1   SETTING THE STAGE   43     The Broadband Challenge,   43     Perspectives on Broadband,   45     A Brief History of the Communications Infrastructure,   47     From Promise to Broad Deployment: What Has Changed Since the Mid-1990s?,   50     Broadband Deployment Trends,   52     Reaching All Americans,   54     Access Economics and Evolving Applications,   57     Scope of This Report,   60 2   WHAT IS BROADBAND?   62     Why Define “Broadband”?,   62     Overview of the Technical Characteristics of Broadband,   65     Speed,   65     Latency and Jitter,   67     Symmetry Between Upstream and Downstream Capacity,   67     Always-On,   69     Connectivity Sharing and Home Networks,   71     Addressability,   74

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Broadband Bringing Home the Bits     Controls on Applications and Content,   75     Implications of Network Design/Architecture,   77     Approaches to Defining Broadband,   78 3   BROADBAND APPLICATIONS AND CONTENT   82     Broadband Applications: Promise and Reality,   82     Classes of Broadband Applications,   83     Faster General Internet Access and General Internet Applications,   84     Browsing and Related Activities,   84     Messaging,   85     Fast File Downloading,   85     Games,   87     Speed and Response-Time-Sensitive Internet Applications,   87     Application Rental,   87     Network Storage,   88     Static Image Delivery,   88     Audio,   89     Audio Delivery,   89     Compression-Quality Trade-offs,   91     Specific Audio Applications,   93     Video,   98     The Mechanics of Video Delivery,   102     Telepresence,   103     Telemetry,   105     New Kinds of Publishing,   105     Peer-to-Peer Applications,   105     “Local Interest” Content, Including Video,   107     Home Content Hosting,   107     Push Content,   109     Multiplexing Applications Demand in Homes,   109     Internet Appliances,   111     Distributed Work and Education,   112     “Tele-webbing,”   113     Communities and Community Networks,   113     Social Factors and Impacts of Broadband,   114     Availability of Content,   114     Broadband Impacts,   116

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Broadband Bringing Home the Bits 4   TECHNOLOGY OPTIONS AND ECONOMIC FACTORS   120     Local Access Technologies in Context,   120     Essential Features of the Local Access Technology Options,   121     Wireline Options,   122     Hybrid Fiber Coax,   123     Digital Subscriber Line,   125     Advanced Wireline Offerings—Fiber Optics in the Loop,   129     Powerline,   135     Wireline Roadmap,   136     Wireless Options,   139     Fixed Terrestrial Wireless,   139     Mobile Wireless,   142     Satellite,   144     Wireless Roadmap,   146     The Diverse Technology Landscape,   148     Layering and Unbundling,   149     Economics of Infrastructure Investment,   152     Understanding Costs,   152     Take-Rate Tyranny,   153     Paying for Broadband,   155     Focus on the Consumer,   156     The Pace of Investment,   158     Investment, Risk Taking, and Timelines,   160     Uncertain Investment Prospects in the Private Sector,   161     Investment Options for the Public Sector,   162     Moore’s Law and Broadband,   163     Economics of Scaling Up Capacity: Congestion and Traffic Management,   163 5   BROADBAND POLICY AND REGULATION   167     The Context for Broadband Policy,   167     Policy Implications of Technological Change,   171     Regulation in the Face of Rapid Change,   171     Asymmetrical Regulation and Achieving Technology Neutrality,   174     Competition,   177     Unbundling and Resale Mandates,   180     When Unbundling Works,   182     Implications for Investments by Incumbents,   184     Facilities-Based Competition,   184     Structural Separation,   185

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Broadband Bringing Home the Bits     How Much Competition Is Enough?,   186     Assessing the Degree of Competition,   188     Open Access and Evolving Complements to Facilities-Based Competition,   189     Access Issues in Multidwelling Units,   192     Access to Poles, Conduit, and Rights-of-Way,   193     Expanding Access and Universal Service Policies,   194     Rationales for Intervention,   194     Implicit Transfer Mechanisms Used for Universal Telephone Service,   197     Other Mechanisms for Increasing Access to Broadband,   200     Loans and Grants,   200     Tax Incentives,   202     Vouchers,   203     Research to Develop Technology Alternatives,   204     Looking Forward,   205     The Local Role in Broadband,   206     BIBLIOGRAPHY   216     APPENDIXES         A Broadband Technologies   245     B A Brief History of Telecommunications Regulation   296     C List of White Papers Received   307     D Biographies of Committee Members   309     E List of Acronyms   318