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I believe it's practical because all IP networks now make it cheaper to give everyone broadband data and voice for less than the cost of traditional voice-only service. The technology has changed, and connecting everyone with broadband is cheaper than keeping up the old system.

I learned that first from Matt Bross at BT. When Bill Smith of BellSouth and Mark Wegleitner of Verizon told me similar a few years ago, I was convinced. Then Xavier Niel took me inside what he had built at Free.fr, an all ip network for 4M homes. He was running it with fewer than two dozen engineers, including designing his own DSLAMs and the FreeBox. Two Cisco CRS-1's ran the whole thing and he had dark fiber everywhere, allowing him to increase bandwidth. His network manager was under instructions to upgrade routers before congestion or anything else was a problem. The results were remarkable: I sat at the console and he showed me the logs and there was essentially no congestion across his network. Then he told me his bandwidth cost, including transit, peering, and any necessary equipment upgrades within his network as well. It was about half what a Bell was paying, because the Bell still had the costs involved in legacy networks.

While some folks get it, others don't. So I tried to come up with a way to make the issue clear, even to a lawyer or a corporate type who doesn't think like a problem-solving engineer. There's a lot under consideration that simply isn't on target of a better Internet for all.

One test of whether things are going right is whether all homes will be connected. This turns out to be practical from the engineering and cost point of view (with 1-2% only reached by satellite.) Nearly everyone in policy and politics thinks it's a great idea.

Starting by serving all displaces some ideas that were dubious already. The cost of backhaul is a crucial problem in some rural areas. There's plenty of inexpensive to operate capacity on existing fibers, but the price is too high. Many carriers are paying $100 and even $200/megabit that costs $5-$15 where there's competition.

The folks who want to collect federal money are pushing for a massive overbuild, $30B to twice that, which also requires the operating expense of a second network where even the first needs a subsidy. That idea fails because the money isn't there, and if you run the figures on OPEX the don't work. A second proposal from folks at small telcos is subsidized backhaul, but the current USF is at 12.6% and unsustainable.

The right way to lower backhaul costs is with narrowly tailored “special access” pricing, only in rural territories where weak competition yields ridiculous prices. The fiber is already in place, mostly paid for years ago for telephone service. Carrying more bits add little cost and a windfall profit to existing carriers – especially AT&T & Verizon. Mark Cooper and I both presented this as a crucial problem at the FCC hearings that already has a public record and can be implemented in months by FCC vote.

A second bad idea pushed aside by serving everyone is “demand stimulation” by preaching about the value of broadband. This has no evidence it works. People in 2009 know what the Internet is, and having middle class people go around telling poor people what to do is generally ineffective. There are many well-meaning folks in this, but also far too many political hacks (see California.)

Serving everyone will require some subsidies for the poor. That's already on the agenda, with nearly everyone agreed on including broadband in the Lifeline program. Funding that will require taking a close look at the current $20B in USF and ICC, looking for opportunities to reduce waste. The FCC inspector general discovered $1B in “improper payments” and that's just the tip of the iceberg. I've sat through too many wall street presentations by the larger “rural” carriers where they claim they have twice the margins of the bells. That's the first place to look for subsidies that are too high, even if the margins aren't twice as high as their CFOs like to claim.

With that in mind, I drafted this. These are my suggestions; I've no standing at the FCC, of course.

“The time has come to connect all our homes to the high speed Internet. The value is clear ... broadband + voice over broadband rather than the traditional PSTN phone line. The lower operating costs of Verizon FiOS, AT&T U-Verse, and tens of millions of lines in Europe and Asia have demonstrated a better way to serve homes. Verizon and AT&T will be offering nearly half the U.S. a next generation IP network by 2011, and following their lead in other territories will produce major operational savings as well as broadband for all. This is the cost-effective way to bring broadband to the quarter of American homes which might go without. We applaud the leadership of those, like John Rose and the OPASTCO association of smaller carriers, that want to move forward.

“90% of U.S. homes will soon have options in the range of 50 megabits, but 10% will be limited to megabit speeds without targeted government support. These homes, mostly rural, need to be a priority. So do those too poor to afford even the reduced prices possible with next generation networks. Having a connection available is meaningless if it is not affordable. Every lifeline connection should include broadband. Strong competition is the best way to bring down prices for everyone, but we also need a policy that works where competition is weak.

“Many countries and parts of the United States are moving rapidly to fiber at speeds of 100 and 1,000 megabits. This is ideal, and any policy should encourage networks at those speeds. ...

“Funds are limited, especially after the economic crisis. We will need to make hard choices about where to spend government money and how to regulate. Universal service and other carrier compensation must bring broadband as well as voice to every home.

“There are good terrestrial means to reach nearly all homes with service. A very small percentage, less than 2% and perhaps less than 1%, may cost between $5,000 and $50,000 per home to connect terrestrially. Beginning in 2011 improved satellites will offer speeds of over 5 megabits to these homes. Latency will remain high but can be considerably reduced in the new generation satellites. We must focus special attention on this last 2%.”