March 16, 2010, 12:00 AM

FCC proposes speeding up broadband and extending it to more consumers

The FCC today unveiled a 10-year plan to extend broadband Internet access to nearly 100 million more consumers and make the web at least 25 times faster for most consumers. Achieving those goals could make online shopping more appealing, experts say.

The Federal Communications Commission today unveiled a 10-year plan to extend broadband Internet access to nearly 100 million more consumers and make the web 25 times faster than it is today for most U.S. consumers. Achieving those goals could only make online shopping more appealing, some experts say.

The National Broadband Plan sent to Congress by the FCC proposes policies aimed at ensuring that at least 100 million households have Internet access by 2010 at speeds of no less than 100 megabits per second, or 25 to 30 times today`s typical broadband speed in the U.S.

The average broadband speed in the U.S. was 3.9 megabits per second in the fourth quarter, according to content delivery network Akamai Technologies; comScore Inc. reported a median speed of 3.0 mbps in its September survey. There are about 115 million U.S. households, so the FCC goal would bring higher-speed access to most U.S. consumers. The goal is for all households to have broadband access at a speed of at least 4 megabits per second, or roughly today`s rates, an FCC spokesman says.

The plan assumes continued increases in Internet transmission technology; today, South Korea leads the world in broadband access speed at only 11.3 million megabits per second. The FCC proposes a variety of policies aimed at promoting the deployment of high-speed fiber-optic cable and wireless Internet access points, including making it less expensive to attach transmission devices to utility poles and publicizing data about actual transmission speeds. "More transparency could create some pressure to deliver higher speeds," the FCC spokesman says.

Higher-speed Internet connections would make it more convenient for consumers to shop and research online, says Josh Crandall, president of research firm Netpop, which focuses on broadband Internet access. He says it will also enable retailers to add more video and other rich media features to their web sites that encourage consumers to buy online rather than going to stores to see products they`re considering. Higher-speed web connections will also enable e-retailers to display high-definition videos, which require more bandwidth, says David Belson, director of market intelligence at Akamai.

Extending broadband access to the homes of the nearly 100 million U.S. residents who lack it today may not have as big an impact on e-retailers, as those consumers tend to have lower incomes. Only 40% of adults whose household incomes are under $20,000 have broadband connections, versus 93% of those in households with incomes above $75,000, according to the FCC. Still, retailers want to reach as many consumers as possible, Belson says. "Every additional consumer has some, even small, amount of buying power, so having more of them online would be a good thing," he says.

Retailers that sell lower-priced items might benefit from these consumers having web access, but many of them do not have credit cards, which means retailers targeting lower-income consumers should consider offering other ways to pay, says Jeffrey Grau, senior analyst at market research firm eMarketer. "Overall, I don`t think the FCC plan will have a significant effect on retail e-commerce sales," Grau says.

Expressing a similar view is Dan Shust, director of emerging media at digital marketing agency Resource Interactive. He says what`s needed to accelerate e-commerce is not faster access speeds but custom experiences tailored to consumers` social profile, location and purchase history.

The FCC estimates its plan could cost $20-$25 billion, but would be offset by proposed sales of wireless spectrum. Of that cost, roughly $16 billion is for a high-speed wireless network for use by police, fire and other public safety agencies. The cost of extending broadband access to lower-income and rural houses is part of an existing program that today subsidizes telephone access in rural areas. That program is being transitioned to cover broadband access, which can deliver voice, video and web services, the FCC spokesman says.

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