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February 20, 2013
Cost of Providing Mobile Broadband to Targeted Areas in Alaska Found to be Approximately $596 Million, According to Report by Brattle Economists

A recent report authored by Brattle economists and presented before the Federal Communications Commission (FCC) finds that the cost of providing mobile broadband service to all targeted areas in Alaska is estimated to be roughly $596 million. Brattle was commissioned by Alaska telecommunications carrier GCI to develop a model estimating the incremental cost of providing mobile broadband service specifically to residents of Alaska. More generalized cost models used nationwide may not be fully applicable for estimating mobile broadband service costs in Alaska because of the unique geographic and demographic characteristics of the region. The Brattle models took specific account of the geography and population, as well as the physical infrastructure of the state, which by themselves and together are very unique in comparison to most areas of the United States. The Alaska Mobile Broadband Cost Model estimates the incremental costs of providing mobile broadband service at average speeds of 768 kbps downlink/256 kbps uplink to 97% of the population of Alaska. The model encompasses the capital expenditure, and operating and maintenance (O&M) costs of building new cell towers in select areas un-served by wireless, and upgrading existing towers in areas that currently receive wireless service at lesser speeds. The model also incorporates costs for common network facilities, and backhaul. While most of the continental U.S. has fiber-based backhaul facilities either in place or nearby, the geography and infrastructure in Alaska requires that other (and frequently more expensive) backhaul options by considered – notably the combination of satellite, microwave and T-1 lines, together with limited fiber backhaul facilities. The report finds that of the estimated $596 million in mobile broadband service costs, roughly $330 million (58%) of the total costs is associated with cell site and network costs, while the remaining $266 million (42%) is associated with backhaul. From another perspective, 59% of the total estimated costs are associated with upgrading areas that currently receive wireless services, with the remaining costs primarily associated with bringing mobile broadband services to currently un-served areas. The Brattle report was authored by principal William Zarakas and associate Giulia McHenry, and can be accessed here. The report was recently cited in a February 20, 2013 article of Communications Daily.