DEPARTMENT OF COMMERCE
NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
Deployment of Broadband Networks and Advanced Telecommunications
Docket No. 011109273-1273-01
Josephine Scarlett, Office of the Chief Counsel,
National Telecommunications and Information Administration,
Room 4713 HCHB,
1401 Constitution Ave., NW,
Washington, DC 20230.
Comments of Charter Communications, Inc.
Charter Communications, Inc. (“Charter”), by its attorneys, hereby submits its comments in response to the NTIA’s Request for Comments in the above-captioned proceeding.
Charter Communications, a Wired World™ company, is among the nation’s largest broadband communications companies, currently serving some 7 million customers in 40 states. Charter provides a full range of advanced broadband services to the home, including cable television on an advanced digital video programming platform marketed under the Charter Digital Cable™ brand and high-speed Internet access via Charter Pipeline™. Commercial high-speed data, video and Internet solutions are provided under the Charter Business NetworksTM brand. Advertising sales and production services are sold under the Charter MediaTM brand.
NTIA’s request for comment covers much territory on which Charter has well defined views. For the present, however, Charter wishes to offer only one illustration that may inform NTIA’s view about how well broadband is being deployed. In 2000, Charter entered into an experiment in partnership with the City of LaGrange, Georgia, in which free broadband Internet access was made available to every home. It offers its experience as an illustration of a test of pure demand for broadband Internet in the presence of perfect supply (NTIA’s question “C”) and as a test of NTIA’s “access for all” model (Question “D”).
LaGrange is located 60 miles south of Atlanta. It is home to 27,000 people and is regional home to several Fortune 500 corporations. All 11,000 television households in the city are passed by cable, and approximately 9,000 of them subscribe to cable. The city is at approximately the national average for income levels, residence in single-family units versus multiple dwelling units, home ownership versus renting, married versus single, and number of people in household.
The convergence of the City of LaGrange’s plans for aggressive development of telecommunications facilities and Charter’s plans for system rebuild led us to an innovative partnership with the City of LaGrange in 1998. A series of transactions allowed for the sale of an upgraded hybrid fiber-coax (HFC) cable system to the City, and our leaseback of capacity for cable services. This accelerated the City’s prior efforts to deploy broadband capacity from 10 years to 1 year. It also provided the vehicle for an unprecedented effort to offer free broadband Internet access to every home beginning in 2000.
The free Internet offering was structured to remove potential barriers. Installation was free. If wiring inside the home could not pass broadband, it was rewired. Customers were required to subscribe to at least the lowest level of basic cable service ($8.95), but the City arranged to pay or subsidize that fee if a household could not afford it.
Broadband Internet Service was offered free to every home. In order to remove the need for or comfort with a PC as a potential barrier, we used WorldGate to deliver service directly to the television receiver.
Apart from initial commercial payments related to the sale and leaseback of plant, the municipal subsidy in the first year amounted to approximately $300,000. During the current renewal term, the City pays Charter $3.30/subscriber/month under the program. In short, LaGrange offers an environment with no “digital divide.”
The community also created an environment to reinforce wide spread use of the Internet. All schools were connected and classroom use of the Internet was promoted. The technology was demystified. Internet was available with the press of one button, with no boot up or exiting process. Speeds averaged 150 kbps downstream. Customers were provided with a wireless keyboard that operated like a TV remote control. Parental control filtering was installed and explained to remove qualms over family use. For those who preferred PCs, we also provided broadband Internet through cable modems to the PC at market rates (under $40). Approximately 47% of Internet subscribers in LaGrange use both a PC and WorldGate.
Applications included e-mail; a virtual mall for local merchants; an electronic front porch for community chats; education and training of the workforce; and support for “smart house” technology. The City began to market itself for telecommuters.
Satisfaction was very high. According to an April, 2001 survey commissioned by WorldGate, the majority of LaGrange subscribers rated the service as excellent in ease of using the keyboard (69%), ease of operating the WorldGate functions (65%), quality of pictures (66%), reliability (52%), ease of navigation (51%), channel hyperlinking (63%) and similar measures. Subscribers ranged from novice to expert. On average, respondents spent 3.3 years using the Internet prior to subscribing to WorldGate.
It may therefore seem counterintuitive that penetration of Internet is, one year after the start of this experiment, at 29%. The available data suggests that, as with other consumer products, demand is not unlimited, even at near zero cost.
NTIA’s questions suggest that “low subscribership rates” indicate a problem in Internet deployment on the supply side, such as “price,” “cost-structure,” “current economic conditions,” or “existing rates and rate structures for regulated telecommunications services.” Our experience in LaGrange provided a test bed environment in which the supply of broadband Internet was effectively perfect and without cost, but demand remains limited. This suggests to us that physical deployment of broadband facilities, even at subsidized rates, would not lead to immediate ubiquity of subscription. As with other consumer products, there is a gradual process of consumer education, experience, marketing, innovative applications, changes in attitude, and changes in social practices that affect demand and penetration. It is the genius of the market that competing, private providers will continue to cultivate and build demand, and satisfy that gradually growing demand through the facilities that they build.
CHARTER COMMUNICATIONS, INC.
COLE, RAYWID & BRAVERMAN, L.L.P.
1919 Pennsylvania Avenue, N.W.
Washington, DC 20006
DATED: December 19, 2001
 Notice, Request for Comments on Deployment of Broadband Networks and Advanced Telecommunications, __ Fed. Reg. __ (November 14, 2001), http://www.ntia.doc.gov/ntiahome/broadband/frnotice_111401.htm