Could the business case for U.S. fiber to the home in historically-challenged settings rather sharply improve for the better because of government action? Certainly. All that matters is the level of subsidies we are willing to make.
George Ford, economist at the Phoenix Center for Advanced Legal and Economic Public Policy Studies, argues that about 9.1 million U.S. locations are “unserved” by any fixed network provider.
“According to my calculations, if the average subsidy is $2,000 (which is the average of the RDOF auction), then the additional subsidy required to reach unserved households is $18.2 billio,” Ford argues. “If the average subsidy level is $3,000, then $22.8 billion is needed. And at a very high average subsidy of $5,000, getting broadband to every location requires approximately $45.5 billion.”
That amount possibly could be authorized by the U.S. Congress, and would dramatically change the business case for FTTH in rural areas.
Given a big-enough subsidy, service providers would have a far-easier time justifying FTTH even in quite-rural areas where the present subsidy system has been deemed insufficient to incentivize construction.
Such an extensive subsidy system would change the FTTH business model for all telcos operating in rural areas, might affect cable operators and also could reduce demand for all satellite and fixed-wireless operators.
All that is just a reminder that for every public policy there are corresponding private interests that are helped or harmed.
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