$11 billion needed for rural broadband upgrade

NECA site

The National Exchange Carrier Association on Wednesday released a survey

showing that it would cost nearly $11 billion to upgrade U.S. rural telephone

lines to broadband Digital Subscriber Line (DSL) capability.

The results of the survey of NECA member companies were released at

a news conference at which officials also said a search had begun for funding

to help companies that serve rural areas pay for the upgrade.

The 244 companies that participated in the survey serve sparsely populated

regions of the United States from the bayous of Louisiana to the mountains

of Alaska, said Victor Glass, director of demand forecasting and rate development

at NECA. Typically, there are about five households per square mile in those

coverage areas — compared with the typical 50 households per square mile

in urban coverage areas.

The U.S. Federal Communications Commission defines broadband as the

ability to support a data rate of at least 200 kilobits/sec, both upstream

and downstream. NECA officials said alternative technologies exist for delivering

broadband to remote areas; however, the study only produced estimates related

to DSL.

The $11 billion upgrade price tag would cover 3.3 million lines, which

is equivalent to an average cost of about $3,300 per line. However, Glass

said that estimate is deceptive because the more remotely situated a customer

is, the higher the price to upgrade the line. For example, in a town, the

upgrade cost per line is about $500, but upgrading a telephone line that

runs to a farm, mine or other rural enterprise can run well into the thousands

of dollars, he explained.

He also said that the estimate covers only upgrades to equipment from

a customer's home to the local exchange carrier's switch. It will actually

cost an additional undetermined amount for DSL equipment, switches between

a carrier and an Internet service provider, and backbone services — none

of which were factored into the survey.

The survey also concluded that a portion of the required upgrades are

already being planned by the respondents. About 65 percent of the lines

owned by those polled will be capable of providing broadband service by

2002.

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