Thank you for your comment. We recognize and endorse the legislative intent of the broadband stimulus, and have said so repeatedly. We also recognize that it is more expensive to serve sparse populations dispersed over a very wide area; both Moe and I have spent decades working on novel business models for broadband.

Our concern is the the cost-effectiveness of this proposal, and the opportunity cost.

Optical fiber is a high-fixed cost, very high capacity technology, whose cost of deployment is directly related to distance. As such it is a ruinously expensive technology to serve small numbers of people dispersed over very long distances.

Given finite funding, the money spent providing connectivity to the few people in these communities this way means that many other people in other rural and unserved or underserved areas will remain disenfranchised. The goal is not to connect every American, regardless of location; it is to extend connectivity and as such the key question is what is the best way to spend the money and serve these communities.

@William

Thank you for your thoughtful comment.

While we agree with your characterization of the program, and the potential benefits to the people that would be served by the Kodiak Kenai Northern Fiber Optic Link, we question only the cost effectiveness of this proposal and the opportunity cost. Is this way of doing it really the highest and best use of finite funds, given alternative approaches and competing uses for the funds?

Perhaps this might also be an opportunity for us to learn from examples elsewhere in the world; what approaches have proved effective in bridging connectivity to communities in unserved or underserved areas of Latin America, Africa and Asia for example? Might these suggest some solutions?

And let’s not forget the stated objectives of the Stimulus Act in supporting the creation of jobs during these difficult economic times. So, it strikes me that the more appropriate measure for evaluation of proposals will be applications that generate jobs for our economy AND provide broadband services for fellow Americans living in unserved rural areas.

Other key attributes not discussed in your degradation of the Alaska projects are additional uses of the cable system that spans:
a. Transport of data from future ocean observatories to assess the rate of global warming impacts on our environment,
b. Surveillance systems tracking new vessels transiting the now opened Northeast Passage,
c. Monitoring of marine mammal populations now threatened, and
d. Provisioning of diverse routing path for DOD and Coast Guard’s telecommunications requirements into Alaska.

In preparing your blog, you may not be aware of programs being planned by federal agencies for undersea ocean observatories in the Chukchi and Beaufort Seas and Bering Straits that will use a fiber based, real-time transport system for access of data by research teams located at Universities throughout the US. Do not shortchange the significant impact that such a broadband data collection system will contribute toward our understanding of the challenges of global warming.

Access to scalable low latency, broadband networks is a fundamental cornerstone for communities to complete on both national and international levels. In addition to a focus on the number of households, other essential elements of the Western Alaska region include hospitals, schools, university campuses, companies, research institutions, Indian Tribes, national defense entities and other segments of communities that must have access to broadband transport. The current telecom backbones serviced only by satellite services represents a real and significant constraint on the economic growth of these communities. Your reference to an “undersea bridge to nowhere” may be effective in capturing public attention, but represents a stake through the hearts of the great people and institutions of Western Alaska that are counting on migration to fiber based systems as their “bridge to future economic development”.

(Dr Barratino is the Chief Executive Officer of Global Broadband Solutions, an advanced technology communications services company providing consumers of domestic and international broadband telecommunications services with tailored global network solutions.)

Let me conclude by saying that the funding of Alaska infrastructure projects absolutely promotes Congress’ goals for ARRA and for any of the Alaska projects for which grants and/or loans are awarded, economies in many of the Lower 48 states will benefit with contracts for materials and services. The Alaska oil pipeline benefited Alaskans and the nation. Broadband access in Alaska would do likewise.

(Jim Rowe is Executive Director of the Alaska Telephone Association. Its goal is advocating “for uniformity and efficiency in accounting, operating, maintenance and construction for supporting the continuance of telecommunications service to the public.” )

Thanks for your post. I appreciate the debate, and I agree with two key points you make:

1) Alaska is the most disadvantaged state in terms of broadband economics (see my post: http://blog.endeavourpartners.net/2009/08/26/population-density-and-broadband-economics/)
2) the purpose of the broadband stimulus act is to bring broadband services to unserved and underserved areas exactly such as these.

But I am struggling with how hundreds of millions of dollars for undersea fiber could possibly be the most cost effective solution to serve only thousands of customers. I am also struggling with how this investment will ever pay itself back or reap any meaningful benefit in terms of job growth, new business formation, or economic recovery.

The question at hand is not: “How do we reach every man, woman, and child in the US with super fast broadband regardless of cost?”

The question is more like: “What is the best way to spend $7.2 billion to provide the greatest improvement in broadband service affordability and availability to unserved and underserved areas while also creating jobs and spurring economic growth?”

We look forward to seeing more details about these proposals, so that we can look at the facts and provide a more fully informed opinion. My first impression is that the Alaska undersea fiber projects do not meet the hurdle implied by the second question above.

Best regards,

Moe.

The key criteria here are the benefits and costs involved, both for the people served, and for the broader population; we’re searching for the greatest good for the common weal.

Given finite funds, the key considerations here *must* be how much the service is improved, for how many people, at what cost. There is a huge opportunity cost to very expensive projects that serve small numbers of people; the much larger number of people who could have benefited had that spending been allocated to its highest and best use.

From that perspective, $344 million dollars to connect a few people in Western Alaska will deny the benefits of the broadband stimulus to much larger numbers of people elsewhere. Here’s a quick calculation: a quick search suggests that the population of Western Alaska is about 30,000 people (http://www.dced.state.ak.us/bsc/CDQ/cdq_handbook/9_cdq_chapt2.pdf), so with an average household size of 2.59 (http://factfinder.census.gov/servlet/SAFFFacts) there are about 11,000 households. Average US broadband penetration is about 60% (although the Broadband Stimulus will increase this), so we could anticipate that there would be about 7,000 or so households subscribing to broadband service.

On that basis, $344 million dollars is about $50,000 per household subscribing to broadband service. That’s a very expensive underwater bridge to nowhere.

Michael

Scott Slater
Co-Founder & Exec Dir
Personal Broadband Industry Assoc