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By PETER SVENSSON, AP Technology Writer Thu May 22, 3:14 PM ET

NEW YORK – The lack of high-speed Internet access in some areas of the U.S. has been hotly debated, even as that digital divide has narrowed. But a new, wider gap is being created by technology that will make today’s broadband feel as slow as a dial-up connection.

Much like broadband enabled downloads of music, video and work files that weren’t practical over dial-up, the next generation of Internet connections will allow for vivid, lifelike video conferencing and new kinds of interactive games.

But while access to cable and phone-line broadband has spread to cover perhaps 90 percent of the U.S. in the space of a decade, next-generation Internet access looks set to create a much smaller group of “haves” and a larger group of “have nots.”

The most promising route to superfast home broadband is to extend the fiber-optic lines that already form the Internet’s backbone all the way to homes. Existing fiber-to-the-home, or FTTH, connections are already 10 times faster than vanilla broadband provided over phone or cable lines. With relatively easy upgrades, the speeds could be a hundred times faster.

In the U.S., the buildout of FTTH is under way, but it’s highly concentrated in the 17-state service area of Verizon Communications Inc., which is the only major U.S. phone company that is replacing its copper lines with fiber. Its FiOS service accounts for more than 1.8 million of the 2.9 million U.S. homes that are connected to fiber according to RVA LLC, a research firm that specializes in the field.

FTTH is also offered by some small phone companies, cooperatives and municipalities, like Chattanooga, Tenn. The other major phone companies, like AT&T Inc. and Qwest Communications International Inc., are laying FTTH in “greenfield” developments, but aren’t pulling fiber to existing homes. Some cable companies are doing the same.

Graham Finnie, chief analyst for the telecom research firm Heavy Reading, believes 13 percent of U.S. households will be connected to fiber by 2012. Since Verizon is the major builder, the vast majority of those will be in Verizon territory on the East Coast, Texas and California.

“That does beg the question: What happens to everyone else? There’s going to be a huge community of people who are not getting FTTH in the next five years,” Finnie said.

“A quarter of the U.S. is going to get one of the best networks in the world,” said Dave Burstein, editor of the DSL Prime newsletter.

The rest of the country, he said, is going to be stuck with slow DSL or cable, though the latter is due for upgrades in the next few years that will boost top speeds fivefold.

Still, it’s not entirely clear that people on fiber connections are going to have a big advantage over slowpokes on regular broadband. Today, there is not much that can be done on a fast connection that can’t be done on a standard one. Fiber is already available to a third of South Korean homes, but that hasn’t revolutionized society there, at least not yet.

Increased used of video, particularly high-definition video, is seen as the future of the Internet, but most cable modems and high-end DSL are already capable of streaming HD video downloads. However, fiber connections support higher upload speeds, potentially making for better video conferencing from the home, which in turn creates opportunities for distance learning. Games also could get a jump in realism and online interactivity, Burstein said.

Not only are U.S. regions going to differ tremendously in how fast they get fiber, the differences between countries will also be huge. Apart from South Korea, Finnie cited Japan, Taiwan, Hong Kong and Sweden as other front-runners. He estimates that almost half of all Swedish households would have fiber by 2012, for instance.

“This is not a market where there’s a smooth progression across countries and regions — it’s going to be extremely variable,” said Finnie.

Considered as a whole, the U.S. will be “middling” in the international comparison, trailing the pioneers but well ahead of other developed nations like Finnie’s home country, Britain, which he estimates will have 3 to 4 percent fiber-connected homes in 2012.

The fiber buildout is going to take more time and be more patchy than the introduction of broadband because it’s so much more expensive, Finnie said. Cable modem and DSL connections are retrofits to links originally laid down to provide video and phone service, respectively. Fiber-optic lines will be the first links that are built for data to reach U.S. homes.

The costs will remain high, because getting permits for the buildout and drawing the physical lines is “a hugely physical, human-type activity,” said Joe Savage, president of the FTTH Council North America. While the cost of the equipment keeps dropping rapidly, two-thirds of the cost of connecting a home are labor, he said

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By Paul Davidson, USA TODAY

A federal airwaves auction starting Thursday is expected to bring consumers improved wireless broadband services and will likely provide the last opportunity to create a nationwide challenger to the big cellphone companies.

The Federal Communications Commission is auctioning off the last big swath of airwaves for the foreseeable future. While the bidding features such cellphone powerhouses as AT&T (T) and Verizon (VZ), Google (GOOG) has emerged as a wild card that could win a chunk of spectrum and use it to provide a new national wireless service.

CHART: Leading players in wireless airwaves auctionSome analysts are skeptical. Yet the online search giant has prodded the FCC to at least carve out conditions for certain airwaves that could help give consumers new choices in handsets and applications.

A total of 214 bidders have qualified to bid on 1,099 local, regional and national licenses that are expected to fetch at least $10 billion for the government. Besides Google, potential bidders from outside the telecom industry include private investor Paul Allen, Microsoft‘s (MSFT) co-founder. The auction is expected to last four to eight weeks and, since bidding is anonymous, no winners will be known until it ends. Resulting new services could start to emerge in late 2009, says Stifel Nicolaus (SF) analyst Rebecca Arbogast.

The spectrum will be returned to the government by TV stations when they switch to digital-only broadcasting in February 2009. The airwaves, in the low-frequency 700 megahertz band, are desirable because they let signals carry lots of data, travel far and easily penetrate buildings. Winners will be able to cut costs by installing fewer antennas.

These airwaves “can be the building blocks for the next generation of wireless broadband,” FCC Chairman Kevin Martin says.

The impact: new wireless broadband services in underserved rural areas and more robust video and Web offerings in cities. “Most of what we take for granted on the desktop we’ll be able to do on a mobile basis,” Arbogast says.

Under FCC conditions, the winners of large regional licenses in the “C” block must open services that use those airwaves to any handset or software a subscriber wants to use. That requirement was pushed by Google, which is seeking to extend its desktop presence to the wireless world. The wireless giants generally have restricted consumers to handsets they sell and steered users to their partners’ applications and websites.

The FCC mandate has prodded Verizon and AT&T to say they will open their entire networks to any phone or application that meets their quality standards. Google has formed a coalition that’s developing an “open” operating system that can handle all kinds of applications. Sprint and T-Mobile have joined the group.

As a result, Google has several ways to push its services on mobile devices, reducing the need to build its own network, says Stifel Nicolaus analyst Blair Levin.

Separately, the winner of the “D” block of nationwide spectrum must share its network with police and fire agencies in an emergency. It gets a deep discount on the airwaves – a minimum bid of $1.3 billion – but must cede much control to public safety representatives who have final say over, for example, the equipment used to build the network. Many public-safety agencies can’t talk to each other in a crisis because their radios operate on different frequencies.

Frontline, a start-up backed by Silicon Valley heavyweights that was considered the most likely bidder for those airwaves, recently shut down. It had planned to lease the airwaves to other providers, paving the way for new entrants.

Now, Levin says, AT&T or Verizon are the likely winners of that spectrum. The auction still holds the promise of new competition, but the outcome will likely solidify the giants’ dominance, he says.

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