Internet access became widely available to residential users by the mid 1990s. For a few years, the primary mechanism to access the Internet was a dial-up connection, in which a standard telephone line is used to make an Internet connection. A dial-up connection offers data transmission speeds up to 56 kilobits per second (Kbps). Broadband, or high-speed, Internet access became available by the late 1990s. Broadband differs from a dial-up connection in certain important ways. First, broadband connections offer a higher-speed Internet connection than dial-up—for example, some broadband connections offer speeds exceeding 1 million bits per second (Mbps) both upstream (data transferred from the consumer to the Internet service provider) and downstream (data transferred from the Internet service provider to the consumer). These higher speeds enable consumers to receive information much faster and thus enable certain applications to be used and content to be accessed that might not be possible with a dial- up connection. Second, broadband provides an “always on” connection to the Internet, so users do not need to establish a connection to the Internet service provider each time they want to go online. Consumers can receive a broadband connection to the Internet through a variety of technologies. These technologies include, but are not limited to, the following: Cable modem. Cable television companies first began providing broadband service in the late 1990s over their hybrid-fiber coaxial networks. When provided by a cable company, broadband service is referred to as cable modem service. Cable providers were upgrading their infrastructure at that time to increase their capacity to provide video channels in response to competition from direct broadcast satellite (DBS) providers such as DirecTV® and Dish Network. By also redesigning their networks to provide for two-way data transmission, cable providers were able to use their systems to provide cable modem service. Cable modem service is primarily available in residential areas, and although the speed of service varies with many factors, download speeds of up to 6 Mbps are typical. Cable providers are developing even higher speed services. DSL. Local telephone companies provide digital subscriber line (DSL) service, another form of broadband service, over their telephone networks on capacity unused by traditional voice service. Local telephone companies began to deploy DSL service in the late 1990s— some believe, in part, as a response to the rollout of cable modem service. To provide DSL service, telephone companies must install equipment in their facilities and remove devices on phone lines that may cause interference. While most residential customers receive asymmetric DSL (ADSL) service with download speeds of 1.5 to 3 Mbps, ADSL technology can achieve speeds of up to 8 Mbps over short distances. Newer DSL technologies can support services with much higher download speeds. Satellite. Currently, three providers of satellite service can offer nearly ubiquitous broadband service in the United States. These providers use geosynchronous satellites that orbit in a fixed position above the equator and transmit and receive data directly to and from subscribers. Signals from satellites providing broadband service can be accessed as long as the user’s reception dish has a clear view of the southern sky. Therefore, while the footprint of the providers’ transmission covers most of the country, a person living in an apartment with windows only facing north, or a person living in house in a heavily wooded area might not be able to receive Internet access via satellite. Earlier Internet services via satellite could only receive Internet traffic downstream— that is, from the satellite to the subscriber—and upstream Internet traffic was transmitted through a standard telephone line connection. Currently, however, satellite companies provide both upstream and downstream connections via satellite, eliminating the need for a telephone line connection and speeding the overall rate of service. Transmission of data via satellite typically adds one-half to three-fourths of a second, causing a slight lag in transmission and rendering this service less well-suited for certain applications over the Internet. While satellite broadband service may be available throughout the country, the price for this service is generally higher than most other broadband modes; both the equipment necessary for service and recurring monthly fees are generally higher for satellite broadband service, compared with most other broadband transmission modes. Wireless. Land-based, or terrestrial, wireless networks can offer a broadband connection to the Internet from a wide variety of locations and in a variety of ways. Some services are provided over unlicensed spectrum and others over spectrum that has been licensed to particular companies. In licensed bands, some companies are offering fixed wireless broadband throughout cities. Also, mobile telephone carriers—such as the large companies that provide traditional cell phone service—have begun offering broadband mobile wireless Internet service over licensed spectrum—a service that allows subscribers to access the Internet with their mobile phones or laptops as they travel across cities where their provider supports the service. Such services are becoming widely deployed and are increasingly able to offer high-speed services. A variety of broadband access technologies and services are also provided on unlicensed spectrum— that is, spectrum that is not specifically under license for a particular provider’s network. For example, wireless Internet service providers generally offer broadband access in particular areas by placing a network of antennae that relay signals throughout the network. Subscribers place necessary reception equipment outside their homes that will transmit and receive signals from the nearest antenna. Also, wireless fidelity (Wi-Fi) networks—which provide broadband service in so-called “hot spots,” or areas up to 300 feet—can be found in cafes, hotels, airports, and offices. Some technologies, such as Worldwide Interoperability for Microwave Access (WiMAX), can operate on either licensed or unlicensed bands, and can provide broadband service up to approximately 30 miles in a line-of-sight environment. Under section 706 of the Telecommunications Act of 1996, Congress directs FCC to encourage deployment of advanced telecommunications capability, which includes broadband, to all Americans. In implementing the act, FCC has treated the two most widely available broadband services—cable modem and DSL service—as information services having a telecommunications component. FCC’s approach of not treating such services as telecommunications services has important legal implications because a service defined as a telecommunications service could be subject to regulation under Title II of the Communications Act, which imposes substantial common carrier regulations unless the commission choose to forebear from their enforcement. As part of its responsibilities, FCC periodically issues a report to Congress on the status of advanced telecommunication capability in the United States. To prepare this report, FCC developed a periodic reporting requirement using Form 477. In November 2004, FCC modified its rules regarding the filing of the 477 form, which went into effect for the companies’ second filing in 2005. Specifically, FCC removed existing reporting thresholds, and companies are now required to report their total state subscribership by technology. We found that in 2005, about 30 million American households—or 28 percent—subscribed to broadband, although households in rural areas were less likely to subscribe to broadband service than were households in urban and suburban areas. Households appear to subscribe to cable modem and DSL services—the two primary broadband services—in approximately equal numbers. FCC requires providers of broadband service to report on the geographic areas in which they serve subscribers, but these data are sometimes used to infer the status of deployment of companies’ Internet infrastructure. Some stakeholders find FCC data collection efforts useful for comparison of adoption of broadband across states, but we found that the data may not be as useful for understanding the status of broadband deployment across the country. Based on survey data from 2005, we found that 28 percent of American households subscribe to broadband service. Figure 1 illustrates how American households access the Internet, by various technologies, and also shows the percentage of households that do not own a computer. As shown, 30 percent of American households subscribe to dial-up access, and about 41 percent of American households do not have an Internet connection from home. Of those households that do not access the Internet, more than 75 percent do not have a computer in the home, while the remaining households own a computer but do not have online access. Among online households, we found 50 percent subscribe to dial-up service, and 48 percent subscribe to a broadband service. Additionally, we found that of those households subscribing to a broadband service, roughly half purchase DSL service and half purchase cable modem service. (See fig. 2 for the types of connections purchased by online households.) Finally, we found that households residing in rural areas were less likely to subscribe to broadband service than were households residing in suburban and urban areas. Seventeen percent of rural households subscribe to broadband service, while 28 percent of suburban and 29 percent of urban households subscribe to broadband service. (See fig. 3 for the percentage of urban, suburban, and rural households purchasing broadband service.) We also found that rural households were slightly less likely to connect to the Internet, compared with their counterparts in suburban areas. In order to fulfill its responsibility under section 706 of the Telecommunications Act, FCC collects data on companies’ broadband operations. In early 2004, FCC initiated a proceeding to examine whether it should collect more detailed information for its broadband data gathering program than had previously been collected. Specifically, FCC asked whether it should do several things to enhance the broadband data including (1) requiring providers to report the speeds of their broadband services, (2) eliminating the reporting threshold such that all providers of broadband—no matter how small—must report to FCC on its services, and (3) requiring that providers report the number of connections by zip code. In late 2004, FCC released an order in which it decided to require all providers—no matter how small—of broadband to report in the 477 data collection effort on broadband and also required providers to report information about their services within speed tier categories.