Many USF advocates have made the assertion that universal broadband should be given the same priority and consideration that was given to the universal provision of electric service to all parts of the country. However, this argument fails when advances in broadband technology are brought into consideration. Electrical power delivery is dependent on the construction of a massive wired infrastructure to every user location and an expensive support system for that infrastructure. Traditional landline broadband is similar, as dsl, fiber and cable have substantial plant and plant maintenance requirements. In a wireline network, facilities must be built out to every potential customer location, even if those customers are not using the service. This drives up the cost of deployment and maintenance. A high penetration rate is required for a wireline network to be profitable and costs are fixed at a high rate.
Fixed wireless broadband does not have these same requirements.
When a fixed wireless broadband system is brought online, a landline network is only needed when the aggregate demand of the base station exceeds the capacity of a wireless backbone system. Once a base station is brought online, everyone within range is able to obtain service and there are no additional plant maintenance costs beyond the installation of the customer premise radio. With fixed wireless, a base station can be profitable even with a very small number of customers and the total cost of operation goes down with every additional customer added to the base station. This simple difference in the economics of deployment enables WISPs to survive and prosper without government subsidies while landline operators are dependent on USF to maintain their wireline plants.
In a wireline broadband deployment, fixed expenses are constant throughout the lifetime of the system and these expenses are used as part of the equation for determining USF support. In many cases, USF funding does not go to the providers that are delivering the best product – it goes to the companies that deliver the most expensive product and do the best job of filling out paperwork. Until this issue is resolved, USF has the potential to do more harm than good to rural broadband deployment in America.