Wednesday, October 7, 2009

FCC Investigates Middle and Second Mile Access Market

The FCC is seeking comment on the market dynamics for middle and second mile access services. Specifically, the FCC is looking for information as to whether "backhaul costs . . . stand as impediments to further broadband deployments." The FCC says several entities have claimed that adequate, reasonably priced, and efficiently provided access to middle and second mile transport services and facilities play an important -- if not gating -- role in the economics of broadband deployment, particularly in rural, unserved, and underserved areas. Public comment, which is due by November 16, will held shape the FCC's National Broadband Plan.

The FCC defines "middle mile transport" refers generally as the transport and transmission of data communications from the central office, cable headend, or wireless switching station to an Internet point of presence. "Second mile transport" refers generally to the transport and transmission of data communications from the first point of aggregation (such as a remote terminal, wireless tower location, or HFC node) to the point of connection with the middle mile transport.

The public inquiry seeks input in the following areas:

1. Network Components of Broadband Connectivity. On a per-end user connection basis, how much middle mile capacity is needed to provide adequate broadband Internet access to that end user connection? How does this vary? What technology options are coming in the next 5-10 years for middle mile and second mile connections?

2. Availability and Pricing of Middle and Second Mile Connectivity. What is the price of purchasing middle mile and second mile connectivity, broken down by relevant geographic area and technology (e.g., DS3, microwave, OCn, Fast Ethernet, Gigabit Ethernet)? How much do these prices vary by length of the circuit? How large are discounts from tariffed rates for middle mile and second mile connectivity obtained from incumbent local exchange companies? Given current and projected demand and supply conditions, what portion of the overall cost of providing broadband Internet service to an end user is attributable to middle mile and second mile transport? How do these vary?

3. Pricing and Availability of Internet Connectivity. What is the current price per megabyte per month for a dedicated Internet access (DIA) port charged by a Tier 1 Internet backbone service provider? Likewise, what is the current price for other forms of Internet backbone connectivity available to Internet service providers, such as a transit agreement?

4. Economics of Deployment. Is the provision of a high-capacity fiber optic middle mile or second mile connection to a particular location a natural monopoly in some locations? To what extent do providers self-provide or integrate components of middle mile and/or second mile transport? Are certain types of providers--such as cable operators -- more likely to self-provide these services, perhaps because they can utilize that bandwidth not only for broadband Internet access but also for the delivery of video programming? If some government subsidy or action is necessary to facilitate construction of second mile and middle mile facilities, please identify the type of government action that would be adequate, such as the proposed regulatory action, explicit funding, or tax credits.

5. Nature of Competition and Availability of Alternatives. a. How do firms compete in providing middle mile transport services? What is the effect on price of the presence of a second or third facilities-based provider of middle mile or second mile transport service?

Additional questions in each of these areas is online.


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