January 31, 1997



Telecommunications costs are often a major component of a telemedicine project's overall costs. These costs can be very high. Moreover, they can range widely depending on the telemedicine technology approach used. Different telemedicine technologies require different capacities or "bandwidth" of infrastructure, ranging from regular telephone line bandwidth required by low-tech store and forward equipment to expensive broadband infrastructure required by real time full motion television (IATV). As a result, assessing the costs for different combinations of technologies and infrastructures can be a difficult exercise.

Another factor affecting the telecommunications cost and ultimately the cost of the total telemedicine system is the uneven distribution of modern telecommunications infrastructure across the country. In those areas where the information infrastructure is underdeveloped, unreliable, or non-existent, the cost of upgrading the infrastructure can be prohibitive. Yet these same areas would most likely benefit the most from telemedicine services. Rural areas in particular have the least access to high quality and high capacity modern telecommunications infrastructure.

Finally, the fast changing nature of the infrastructure technology itself will dramatically affect the costs to telemedicine. For example, evolving technology such as data compression is likely to significantly change the transmission times and capacity required in the future for sending diagnostic images. In the long run, these advances may decrease overall costs but in the short term it is not as clear whether the costs will increase or decrease.

This chapter looks at the current high costs of the existing information infrastructure and some recent changes in law that may address the problems discussed above.


The trade-off between potential health benefits in terms of access, efficiency, speed of information transfer and the cost of infrastructure is illustrated in Table 30, which shows the transmission costs for different telecommunications network bandwidths. What does greater bandwidth buy you? Simple "store and forward" equipment transmits recorded images for later review by a health care specialist. This type of consultation might require only standard telephone

Table 30: Example Transmission Costs for Advanced Infrastructure






112 Kbps MT-Ronan N

600 200 200 $0.53 /min


KS-Atwood N

80 0 545 $0.04/min
T1(1.5 Mbps) MT-Glendive



















$0.25-0.70/ min



NC-Chapel Hill (each site) N NA NA 3300 2992 $0.38/ min

Source: ORHP, 1996

LATA* Local Access Transport Area is a local area telephone service area created by the breakup of AT&T .

lines at normal transmission rates. For example, in transmitting chest x-rays using digitized uncompressed images (2 new films, plus 2 old films for comparison) requires approximately 7 hours over a 14.4 kbps modem, 3.5 hours over a 28.8 kbps modem and only 40 minutes over a more costly ISDN line.

A more interactive store-and-forward system is available through video phones which allow simultaneous transmission of audio and high-resolution still images as the two practitioners examine the patient. Transmission rates of 112Kbps can take place over standard telephone lines. The "interactive" nature of the consultation comes from the simultaneous transmission of audio and visual components. Using ISDN bandwith of 128 Kbps or higher makes the store and forward transmission even faster, improves image quality and allows for limited quality video conferencing.

T1 (at 1.5 megabits-per-second) capability provides acceptable motion quality and the flexibility to send or receive real-time full motion video and voice among multiple sites, as well as provide data transfer capability in a timely manner consistent with the needs of higher volume, larger providers or health care services. What is gained in speed can be illustrated by the chest x-ray transmission example above which would require 40 minutes over an ISDN line, but only 4 minutes over a T1 line. For applications that need very accurate and detailed imaging, Asynchronous Transfer Mode (ATM) using 155 megabit-per-second transmission can provide very high resolution imaging together with rapid transfer of information. In addition, ATM offers very high resolution videoconferencing capabilities.

It should be noted, however, that advanced infrastructure is usually unavailable or very expensive in rural areas. According to the FCC Telecommunications and Health Care Advisory Committee, " most cases the telecommunications bandwith available to urban health care providers and businesses is not available in rural areas."

In several areas of the country, access to modern infrastructure is extremely limited--a number of rural communities lack rudimentary telecommunications services, relying, for example, on party lines. Where basic telecommunications services for modern healthcare are available, the cost is often four to five times the cost in urban areas, which makes these services unaffordable for rural health providers.

Thus, the telecommunications portion of health costs not only varies with bandwidth requirements but also with accessibility to already existing telecommunications infrastructure. As shown in Box 31, the cost of health care access can be very high in sparsely populated areas, especially where no advanced infrastructure exists.

In other cases where an advanced infrastructure does exists, high resolution, live two-way video can provide great benefits but the monthly infrastructure costs can be high. Box 32 illustrates the trade off between access, efficiency and the cost of using advanced infrastructure. NTIA's grant to the state of North Carolina has helped to develop a high speed, 155Mbps, telemedicine video network with ATM high resolution video services. The state has underwritten the $4,000-$6,000 per month total cost of the use of advanced infrastructure.


Important strides in Federal policy toward health care and the information infrastructure were made in the past year. Before 1996, the Telecommunications Act of 1934 articulated in very general terms a national goal of "universal service;" widespread availability of basic communications services at affordable prices, and did not specifically address health care or telemedicine. The link between health care and universal service policy was made explicit in the Telecommunications Act of 1996 which calls for a revision of the universal service system.

The 1996 Telecommunications Act requires that the Federal Communications Commission (FCC) and the states revise the universal service system based on seven principles, including the principle that schools, libraries, and health care providers should have access to advanced telecommunications services. In addition to these broad principles, additional provisions were made that require the FCC to assure that health care providers serving rural areas have access to telecommunications services "necessary for the delivery of health care" at rates that are comparable to those for similar services in urban areas. In accordance with the new law, the FCC convened a Joint Board, made up of Federal and state communications commissioners, who will make recommendations to the FCC in its revision of the overall universal service policy.

The JWGT has closely tracked the implementation of this legislation through the FCC and has made its expertise available to the Commission on an individual basis. Several members of the Joint Working Group participated in the Advisory Committee on Telecommunications and Health Care which was convened by the FCC's Chairman to assist both the FCC and the Joint Board in implementing the health care provisions of the Telecommunications Act. Those such as Associate Administrator Kathryn Brown of the National Telecommunications and Information Administration, Department of Commerce, testified before the FCC on general universal service revisions. More specifically, the chair of the JWGT group, Dena Puskin, Sc.D. testified before the Commission on how the Joint Board should interpret the provisions of the 1996 Communications Act with respect to health care providers and several members of the working group provided Dr. Puskin with important input to her testimony.

In her testimony, Dr. Puskin outlined her recommendations on issues that are "critical for establishing modern telecommunications services to enhance access to badly needed health care services in rural communities." These issues included: the definition of rural areas, the definition of eligible health care providers, the definition of core services, the definition of advanced services and pricing issues.

The FCC Advisory Committee adopted Dr. Puskin's definition of "rural" areas in its recommendations to the Joint Board as well as some of her other recommendations. The Advisory Committee recommended that "adequate telecommunications infrastructure be made available to rural health care providers. The telecommunication infrastructure must be sufficient to allow eligible healthcare practitioners requesting these services to access a basic set of telemedicine applications necessary for healthcare in rural places." Its recommendation for the basic services to be covered by pricing comparable to that available in urban areas includes:

Internet access (available without long distance charges)

bandwidth up to 1.544 Mbps or equivalent

4.8 kbps for ambulances.

Moreover, the Advisory Committee recommends that universal support ought to be available both to construct the necessary infrastructure to meet these standards and also make rates in rural areas comparable to rates in urban areas. The level of services that are eligible for this support ought to be reevaluated as technology changes.

On November 7, 1996, the Joint Board presented its recommendations to the FCC regarding universal service. While it made specific recommendations for schools and libraries, the Board decided to postpone its recommendations for health care. In brief, the Board requested more detailed information pertaining to health care transmission costs before making a recommendation. These decisions were publicly released for comment and by May 8, 1997, the FCC must act on the recommendations of the Joint Board.

Given that the JWGT's individual members have been deeply involved in the development of the Joint Board's recommendations, the JWGT will continue to closely follow and contribute to the Joint Board's deliberation over the next year.

Technology changes

In addition to legal changes, rapid technology advances in telecommunications have and will continue to decrease the costs of transmission over the long term. Technological advances such as data compression allow services such as imaging to be sent over smaller bandwidth at lower costs. While the FDA allows marketing medical imaging systems that use compression, image compression has not been approved by the American College of Radiology or other standards setting bodies. Therefore, until such time as there is greater consensus on the use of compressed images, the JWGT will continue to base calculations for transmissions rates on uncompressed images.


The current high costs of using the advanced infrastructure can be prohibitive for most rural and some urban healthcare practitioners. Part of the problem lies in the widening gap between those who have access to a modern, reliable information infrastructure and those who do not. The Telecommunications Act of 1996 seeks to increase access to telehealth providers in rural areas by equalizing the costs of telecommunications services in rural and urban areas. With the help of the JWGT committee and the efforts of its individual members, over the next year:

The JWGT will work with the FCC Joint Board and its Telecommunications Advisory Committee to provide further information about telemedicine infrastructure costs and issues.

The Joint Working Group will also work closely with Federal telemedicine grantees who will provide the FCC with detailed information about their infrastructure costs, what they use the infrastructure for, and the comparative value of different bandwidth for telemedicine purposes.