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"How do other places do better?" the official of a state with 1.4M people "unserved" asked me. She's leading a well funded effort to bring broadband to everyone, and even with stimulus money the results are discouraging. Supporting competition usually works great, but it takes 4-7 players to make it strong (France, Japan;) paying for it is working for Singapore and Australia plans similar but U.S. "incentives" are failing so far; government guidance works where companies think fighting the government is unpatriotic. Cable economics - where cable is in place - are much more attractive than telco or fiber. The vast bulk of cable customers can be served at 10 megabits and soon at 50. Cable data gear is so cheap Time Warner and Comcast reach 99% of their franchised territory.

There are three problems to solve: Satellite only homes (second rate, but not really "unserved",) far fewer than the the hype suggests, 4-7% in the U.S. Half of those are cheap upgrades ($100-500) by upgrading the cable in place or adding a $200 DSL repeater, etc. The remaining run from pretty expensive to ridiculous.

Slow connections are more subjective to define. Some would consider less than 5 slow; I think in the long run less than 40 will prove lousy. Upstream needs to be considered. The costs depend mostly on how much construction is needed, because equipment cost is < $150 unless you go to fiber ($150-350 in quantity, dropping.) A fiber home build is a whole new network, hence expensive. Verizon's figure is $700/home passed, dropping, and hundreds more for each connection. Many other are budgeted at up to $1500-1800. Low densities and volumes are of course more expensive, as well as underground cables. I looked at a rural New England area that would cost $3,000 or so, and some like that go higher. Because upgrading cable to 50 meg and more almost always costs less than $500, it's difficult to justify $3,000 or more where cable is in place.

The thrid problem, price, is the hardest for a politician to face but the only way proven to significantly improve takeup. A useful guideline is that $15-30 per month is the natural price where there is a good market, up to the speed the line in place can handle. That's 100 megabits in French and Belgium cable, much less with DSL. Marginal operating cost for DSL or cable ranges from $5-$12, no matter what the speed, once the line is in place. Some kind of margin for overhead and profit is needed, but a $40 price, like U.S. cable averages, is a 70% or so margin. Verizon, for example, is happy to sell at $18, for a service with an operating cost about the same as the $40 cable offering.

I've left out the politically popular talk about "demand stimulus" because 98% of what said about that is a crock with a source that wants public money. Nothing except bringing down prices (including indirectly by subsidizing computers) has any proof it makes a substantial difference. I've read the original studies, most of them paid for by folks wanting public money, and most have no substance whatsoever. The Connect Kentucky work has been publicized with $10's of millions but totally falls apart when you look at the data. Some untrained, elderly, and learning disabled need some help to get started, but there is approximately zero proof that makes it more than a small difference.

Good results come from:

• Having a cable network in place. The economics of cable data are so attractive that 29 out of 30 cable homes in the U.S. are servable. Nearly all can get 10 megabits, and most will soon be upgraded to 50.
• Making sure competition is strong. Japan and France jumped ahead because they had 4-7 strong competitors. Even two competitors sometimes makes a difference. Verizon is building FiOS because Cablevision was taking too many customers. AT&T isn't bringing fiber home because the duopoly provided some but not enough competition. The Korean miracle happened after the government created Hanaro to compete with KT and it jumped ahead in broadband.
• Government guidance where companies will obey. In Korea and Japan, the government "suggested" that the telcos reach nearly everyone because they'd be considered "unpatriotic" not to do so when government set the priority.  Competition gave them a business incentive as well.
  
• Scaring the incumbent by threatening to help a competitor. BT is at 99.6% partly because Minister Timms threatened to fund someone else anywhere BT didn't build. Suddenly, they found building broadband was affordable almost everywhere. North Carolina jumped way ahead of other states when Erskine Bowles threatened similar in 2001.
  

Step 1 is to understand the problem.  There is almost no place in the developed world you In the U.S., almost everyone can get broadband from satellite (second rate) or T-1 lines and fiber (expensive.)

The large cablecos generally do a good job within their territory, with both Time Warner and Comcast offering data to 99% of homes in their franchise. The economics of adding data to a cable network are so attractive that 96% of U.S. cable homes can

but the telcos are expanding very slowly.

The one solution that works, in my experience, is fear of a competitor taking over. The "demand-side" incentives are far less effective.

In Britain around 2003, Rt. Hon Stephen Timms explained to me his strategy. "When BT told us it is economically impractical to serve some territories, we went out and looked for someone who will. We offer government funds if needed, because we believe in universal coverage. BT soon came back to us saying they could deploy after all." BT soon after reached 99.6% availability - some slow - including the hills of Wales and the islands of Scotland.

In North Carolina a little earlier, Erskine Bowles led a state commission which had a similar impact. "We want to work with you," he told BellSouth. "But if you're not going to serve an area, we have no choice but to look for someone else." I believe the story, because it was a BellSouth person who told it to me, explaining why every just about every exchange in the state was soon covered.

Wyoming in 2004 mapped the unserved areas to find attractive regions for new entrants. Jim Stegman of Costquest did the map, and told a Columbia seminar the results were surprising. They would identify a likely area, but before the process played out Qwest decided to cover it after all.