FCC changes Universal Service Fund, but how much will it help?

This means nothing to most of you, so here's the bottom line: the $$ extra charges on your telephone bill that until now subsidized rural telephone service will soon go toward expanding internet service to more than 600,000 Americans. It will be called the "Connect America Fund" and will be capped at $4.5 billion.

One major problem I see in the FCC's plan, which estimates that $24 billion will be needed to extend broadband to 7 million Americans, is the FCC's  over-reliance on 4G cellular network deployments. Most of us have 3G now on our cell phones, and that service is painfully slow in many populated areas like San Francisco and New York City -- so much so that AT&T employees have advised me to force my iPhone to use the older, slower Edge network for browsing and E-mail. The problem isn't with 3G per se; it's with how carriers build their networks. High speed mobile internet service is expensive to operate, and carriers consider average traffic per user and aggregate busy hour traffic (the busiest hour of the day) when they equip their base stations with capacity.

The problem comes when the average traffic per user exceeds the forecast, as is what happened when the iPhone hit the market. The iPhone let people eat up much more capacity than the network was designed for. The base station radio had to either refuse additional customers or throttle down capacity for its existing users. Imagine what happens when those users are connecting their home computers to the same cellular network.

Then, there is the backhaul problem. Even if the radio base station can handle the additional traffic load, the lines connecting the base station to the nearest network hub quickly run out of capacity. Most base stations today have extremely limited backhaul capacity (most are copper T1s) rather than high capacity fiber optic lines. When you go to rural areas, the situation is even more extreme. Fiber optics are practically non-existent. And since cellular networks are sized for mobile devices, which demand less bandwidth than home computers, once you connect a bunch of rural home computers to a cellular network, chances are it will run out of capacity rather quickly.

Without MAJOR investment in backhaul improvements and significant capacity added to 4G base stations - most of which would undoubtedly fail to generate positive net present value - 4G network deployment will unlikely fill the need of rural residents who don't currently have access to internet service.

Urban Winemaking Part 2: James Blake Wines now online

In Part 2, we visit James Blake Wines in suburban Sacramento and learn why it's important to pick grapes early and how weather plays such an important role during harvest season. Watch winemaker James Scheller talk about what goes into their award-winning Cabernets, Merlots, Nebbiolos and Zinfandels.