Will Regulators Allow ISPs to Build Where There is Demand?

Should AT&T get municipal authority to build its proposed 1-Gbps access network in Austin, Texas, new issues will be raised. Some providers, such as Sonic.net, have been extending 1-Gbps service first to the places Sonic.net believes there will be the highest demand. 

Sonic.net is "prioritizing our fiber build-out efforts on communities where we see very high uptake of our Fusion Broadband Phone service." Google has done the same in Kansas City, Mo. and Kansas City, Kan. 

And now AT&T says it wants the same terms and conditions as Google Fiber got, before starting its own 1-Gbps upgrade in Austin. 

That raises an issue. Traditionally, municipal franchise authorities have required universal coverage of all homes in a franchise area as a condition of getting a franchise. That can raise overall deployment costs high enough that many would-be providers are discouraged from trying to do so. 

So the broader issue is whether regulators will relent, allowing suppliers to build where there is demand, rather than stipulating that facilities be built where there is little demand, or requiring suppliers to build low-demand areas roughly as fast as they build high-demand areas.

Other proponents of gigablit service, including Gig.U and Ignite, as well as the Federal Communications Commission, recognize that gigabit service has to occur first in selected parts of communities. 

The issue is whether it is not realistic to recognize that similar priorities might be necessary if the fastest extension of gigabit service is desirable. The point is that gigabit networks are expensive. And it might be that the best way to encourage such upgrades is to foster "spot deployments" as widely as possible, without immediately worrying about "universal service."

That isn't the way regulated communications has been governed in the past. But new policies that do not require universal access might speed up investment. There are public policy issues, to be sure. But gigabit networks are a gamble. 

Perhaps we should encourage providers to make the gamble by loosening requirements for universal service, in preference for "build everywhere you can make money, as fast as possible." Oddly enough, if prices do not fall until there is competition and scale, which will lead to applications innovation and then more scale, one has to "prime the pump."