Friday, January 23, 2015

Where high hopes of fiber telecom infrastructure collide with weak federal funding

Changes to RUS Broadband Loan Program Include Rural Gigabit Pilot - Telecompetitor: When President Obama spoke last week about reforms to the USDA Rural Utilities Service broadband loan program, he was referencing changes adopted in the 2014 Farm Bill, a USDA official advised in an email to Telecompetitor.
Joan Engebretson's


It seems the President’s objective is to encourage municipal construction of broadband networks, which would compete with existing providers.  The push to allow municipalities to construct broadband networks, which is prohibited by state law in 19 states but not in Iowa, will do little or nothing for the actual rural customers for which Obama claims to be concerned.

The fact is that most companies want nothing more than to roll out the next generation of broadband services, but simply do not have the cash flow to do so.  The biggest hurdle facing those consumers without high-speed internet services is provider’s lack of funding to get these services to the most remote customer in their areas.

Thursday, January 22, 2015

Common carrier utility regulation appears a near certainty in 2015

Legacy incumbent telephone and cable companies have threated to sue the U.S. Federal Communications Commission if as expected the FCC follows President Barack Obama’s call to classify Internet services as a common carrier utility under Title II of the Telecommunications Act. The incumbents hope the specter of prolonged litigation and uncertainty will give the FCC pause before it acts next month.

The problem for the incumbents however is even if they make good on the threat, it may not buy them the degree of uncertainty and delay they would like. Any litigation arising from the expected regulatory action by the FCC would likely be disposed of in relatively short order. The courts operate under a doctrine of judicial deference to how regulators interpret and apply statutory law such as the Telecommunications Act. They are loath to put themselves in the place of regulators and second guess administrative rulemaking, reasoning the regulators and not the courts hold the requisite expertise when it comes to figuring out how to apply the finer points of statutory law. 

Possibly realizing this, the incumbents’ lobbying corps is implementing a backup strategy in Congress to amend the Telecommunications Act to carve out Internet service on the grounds that it doesn’t function as a market monopoly – the underlying rationale for classifying it as a common carrier utility like telephone service. Demerits of that legislative rationale aside, that nascent effort also isn’t likely to be productive since even if passed it would face a likely presidential veto.

The outlook for 2015 is common carrier utility regulation of the Internet is coming and isn’t likely to be derailed.

Wednesday, January 21, 2015

21st century needs new regulation for a new generation of telecommunications services

A major contributing factor to the current crisis over how to regulate Internet-based telecommunications is the passage of time. Lots of it. It's been more than four generations -- 80 years -- since the United States enacted the Telecommunications Act of 1934 regulating telephone service as a common carrier utility.

A 1996 update of the statute incorporated Internet services. But they were so new then regulators -- the Federal Communications Commission -- didn't consider them as a common carrier telecommunications service. Internet was an optional additional service, accessed by special connections made over slow dial up modems to specialized information services such as CompuServe and America Online. Now two decades later, it serves as a all purpose telecommunications service providing data, voice and video over Internet protocol (IP).

In a little more than a month's time, the FCC will decide whether to regulate IP services as a common carrier utility under Title II of the Telecommunications Act. Indications are it will do so -- most likely for landline delivered, premise Internet service. Along with the designation come rules designed to ease and promote the construction of infrastructure to serve all premises and not just selected ones as is the case under the present regulatory policy.

Twentieth century legacy telephone and cable companies have built their business models based on the current policy, models that will be disrupted with the shift toward regulating the Internet as a common carrier utility that must be offered to all and not just some Americans.

But out of disruption comes business opportunity for a generation of new providers. The federal government should put in place meaningful technical assistance and funding -- and not just "funding leads" given the importance of Internet infrastructure -- to help the new Internet telecommunications providers of the 21st century become established and financially viable for the long term.


Saturday, January 17, 2015

U.S. needs complete telecom infrastructure construction strategy, not minimalist incrementalism

The United States needs a comprehensive, holistic approach to ensure the construction of fiber optic infrastructure to provide robust Internet enabled telecommunications services in the 21st century on a par with universal telephone service in the 20th. The nation won’t achieve that standard in a timely manner by relying on incremental, one off builds.

While it’s laudable that some local governments have built or are planning fiber infrastructure in response to private sector market failure on the supply side (as spotlighted this week in Cedar Falls, Iowa by President Obama), these builds without significant and sustainable funding support cannot cumulatively provide the telecommunications infrastructure the nation needs and should have been planning at least two decades ago. As Steven S. Ross notes in his article in the November-December, 2014 issue of Broadband Communities, Bandwidth: Good for Rural Residents, Good for the Country, these localities that have or are putting in place modern telecommunications infrastructure participate in the same economy as do others lacking it.

New York State’s initiative announced this week it would dedicate $500 million of a $4.5 billion windfall arising from the settlement last year of prosecutions of alleged misconduct by banks and insurance companies to subsidize fiber construction. That’s one time, opportunistic funding that will help construct fiber in areas where it doesn’t exist. But it addresses only a small fraction of the state’s significant need as shown by the accompanying map. The money will quickly be exhausted with no plan fiber up the rest of the Empire State, reinforcing existing disparities. Similar underfunded initiatives exist in other states. Incrementalism allows policymakers to claim small, short term victories but leaves incomplete networks in its wake over the longer term.

Other examples of incrementalism are the continuing circa 2002 debate over “broadband speeds” -- which grows increasingly irrelevant in an age of fiber optic-based telecommunications technology -- and “net neutrality.” Net neutrality – the principle that all Internet traffic be given equal priority – is meaningless without robust network service in the first place. A more important principle than net neutrality is Metcalfe’s Law. It holds that the value of a communications network increases as the number of connections to the network grows. With so many Americans not offered fiber Internet service, the U.S. has a long way to go to recognize the full value of Metcalfe’s Law. It won’t get there with piecemeal incrementalism.

Friday, January 16, 2015

Study finds relationship between recent U.S. settlement patterns and telecom services

The November-December 2014 issue of Broadband Communities includes primary research finding a correlation between population trends and the robustness of telecommunications services. The study covers the period of April 2010 to December 2013.

Editor-at-large Steve Ross, who conducted the research, notes his findings relate to a recent U.S. Commerce Department study showing the relative lack of robust Internet service in rural areas compared with urban areas. Examining census data, the Commerce Department study found for the first time in U.S. history, most rural counties lost population between 2010 and 2012.

Ross includes a couple of caveats on his research. He notes the broad urban/rural county classification used doesn't take into account that exurban counties often include some areas that are functionally urban and others that are functionally rural. He also cautions against drawing conclusions from the data as to whether the availability of strong telecommunications services attracts population and lack thereof drives out migration.

Given the relationship between robust telecommunications services and settlement patterns, Ross's research suggests that U.S. settlement patterns could strongly be influenced with the deployment of more robust telecommunications infrastructure in less populous areas of the nation. Especially given the fact that much of today's information and knowledge-based economic activity can take place most anywhere that infrastructure is available.

Thursday, January 15, 2015

USTelecom makes case for Title II common carrier regulation of Internet

Consumers Continue Shift Away From Landline – Regulations Are Behind | USTelecom

This telecom industry article helps make the case for regulating consumer Internet services as common carrier telecommunications services under Title II of the Telecommunications Act. As the article notes, the existing common carrier regulations are designed for a bygone era of analog voice telephone service delivered over copper that is becoming increasingly outdated as landline technology shifts to fiber optic that can deliver voice and other services using Internet transmission protocols.

Wednesday, January 14, 2015

Administration’s “broadband” push window dressing

The Obama administration’s PR initiative this week on U.S. telecommunications infrastructure deficiencies is largely window dressing and will likely mean the wired network that Americans have today for their home and small business Internet connection is likely the same one they’ll have for the foreseeable. This prediction was made in 2012 by former U.S Federal Communications Commission official Blair Levin and continues to hold true in 2015:

"For the first time since American ingenuity birthed the commercial Internet, we do not have a single national wireline provider with plans (real plans, not “fiber to the press release”) to deploy a better network. For most Americans, five years from now, the best network available to them will be the same network they have today."

The reason is the same as in 2012: insufficient available capital. Building Internet infrastructure to serve homes and businesses is a high cost endeavor. Those high costs have produced market failure on the supply side as the administration acknowledges, noting in this fact sheet that three of four Americans lack networks providing a level of service increasingly required for many online services. “Rarely is the problem a lack of demand — too often, it is the capital costs of building out broadband infrastructure…”

The administration is correct that local governments will have to play a major role in meeting the Internet infrastructure needs of their residents, infrastructure many argue is as critical in the 21st century as roads and highways were in the 20th. But it has no meaningful plan to help these localities finance infrastructure construction beyond highly limited and restricted funding available through existing grant and loan programs directed to rural areas of the nation that are only a drop in the bucket relative to the many billions of dollars needed.

In fairness to the administration, even it if did have a plan, it would face difficult odds getting Congress to appropriate the necessary funding. That has left the administration with little to offer in the way of tangible economic assistance. The administration is relaunching its BroadbandUSA website, where among other things it will offer “funding leads” for financing infrastructure construction. Given the lack of needed dollars, the administration has also been reduced to talking points that unfortunately won’t do anything to build last mile fiber to the premise infrastructure including:
  • Increasing “competition.” (Sounds great, but ignores the fact that telecommunications infrastructure is a natural monopoly, not a competitive consumer market like groceries, vehicles and air travel. It also undermines Obama's position that Internet should be regulated under Title II telecommunications common carrier rules that are predicated on a monopoly market.)
  • Enforcing “net neutrality” rules on Internet service providers. (A wonky term that doesn’t mean anything to consumers with subpar or no wired Internet service options).

Tuesday, January 13, 2015

Obama administration seeks public option for Internet infrastructure - The Washington Post

Obama wants to help make your Internet faster and cheaper. This is his plan. - The Washington Post: Frustrated over the number of Internet providers that are available to you? If so, you're like many who are limited to just a handful of broadband companies. But now President Obama wants to change that, arguing that choice and competition are lacking in the U.S. broadband market. On Wednesday, Obama will unveil a series of measures aimed at making high-speed Web connections cheaper and more widely available to millions of Americans. The announcement will focus chiefly on efforts by cities to build their own alternatives to major Internet providers such as Comcast, Verizon or AT&T — a public option for Internet access, you could say.

The public option is certainly needed given Internet telecommunications infrastructure is to the 21st century what roads and highways were to the 20th. Relying totally on commercial, investor-owned providers won't build that needed infrastructure. There simply isn't enough investment capital to get it done. And to get the choice and competition for Internet services the administration seeks, that infrastructure must be open access fiber to the premise, selling access on a wholesale basis to service providers who compete to offer services to businesses and consumers.

Like building the highways of the 20th century, that infrastructure won't come cheap. For the public option to become a reality rather than aspirational rhetoric, it will have to be backed with billions of dollars in funding to help regions of the United States build fiber to the premise Internet infrastructure on a par with telephone lines in the last century that served all Americans no matter where they made their homes or operated a business.

Saturday, January 10, 2015

Net neutrality takes new twist as Congress appears ready to step in - CNET

Net neutrality takes new twist as Congress appears ready to step in - CNET: Large broadband providers, such as AT&T and Verizon, say that reclassifying broadband as a utility will stifle innovation by imposing antiquated telecommunications regulations. 

The innovation argument is a canard. Fiber optic technology had been around for decades. The challenge isn't technological but rather one based in economics and policy so that fiber is as ubiquitous as copper telephone cable was in the pre-Internet era.

Some consumer advocates and content companies, such as Netflix, say reclassifying broadband services as utilities is the only way to ensure that the Internet will give equal treatment to content and sites.

Net neutrality alone won't ensure equal access to the Internet's core content. Title II classification of Internet services must also ensure all U.S. homes and businesses at the network edge have access to those services -- something they don't currently have given the nation's checkerboard of the limited "footprints" of incumbent telephone and cable providers that serve some areas but leave many others unserved.

Thursday, January 08, 2015

The number of Americans lacking broadband could soon go up. That’s a good thing. - The Washington Post

The number of Americans lacking broadband could soon go up. That’s a good thing. - The Washington Post: Virtually overnight, nearly 1 in 5 Americans would no longer be served by what the government considers adequate Internet, according to the FCC. That's 55 million Americans, up from an estimated 13.8 million that lack access under the current definition of broadband, according to a forthcoming FCC report.

But that may be a good thing — a recognition of the way technology has improved over time and a sign the government is finally catching up.

Sorry Mr. Fung of The Washington Post. It's not a good thing. It's an embarrassment. The United States should have had plans and processes in place in the early 1990s to build fiber optic telecommunications infrastructure to serve all Americans regardless of where they make their homes, work or receive education and healthcare services. It was clear by then that telecommunications were going digital and that fiber would be the necessary delivery infrastructure.

Now in 2015 the U.S. and regulators are still using 1990s terms like "broadband" and engaged in a losing game of catch up, chasing after Internet bandwidth demand that's increasing so quickly that by the time regulators issue their latest definition of "broadband," it's already fast headed toward obsolescence.

Wednesday, January 07, 2015

FCC pronouncements on Internet adequacy won't address U.S. telecom infrastructure deficit

Only 25Mbps and up will qualify as broadband under new FCC definition | Ars Technica: FCC Chairman Tom Wheeler today is proposing to raise the definition of broadband from 4Mbps downstream and 1Mbps upstream to 25Mbps down and 3Mbps up.

As part of the Annual Broadband Progress Report mandated by Congress, the Federal Communications Commission has to determine whether broadband “is being deployed to all Americans in a reasonable and timely fashion.” The FCC’s latest report, circulated by Wheeler in draft form to fellow commissioners, “finds that broadband is not being deployed to all Americans in a reasonable and timely fashion, especially in rural areas, on Tribal lands, and in US Territories,” according to a fact sheet the FCC provided to Ars.

Unless the U.S. Federal Communications Commission under Wheeler's chairmanship decides this year to reclassify Internet service as a common carrier utility that like telephone service must be offered to all premises that request it, the FCC will find itself issuing similar findings next year and every year thereafter.

Blair Levin, who served as chief of staff to one of Wheeler's FCC predecessors, Reed Hundt, predicted in 2012 that for the foreseeable, the best wireline network available to most Americans will be the same one they had then. Nearly three years later, that will remain the case regardless of any FCC pronouncements of what constitutes adequate Internet service and whether Internet infrastructure is being deployed in a timely manner -- lacking meaningful action.

Friday, January 02, 2015

Federal telecom infrastructure funding initiative needed

The American Recovery and Reinvestment Act of 2009 appropriated $4.7 billion in grant and loan funding to support the construction of Internet telecommunications infrastructure. Most of it has gone toward middle mile infrastructure projects to bring fiber backhaul closer to homes and businesses. But it was only a drop in the bucket relative to the need. What’s needed now is last mile infrastructure to link the middle mile to these premises.

According to the Institute for Local Self Reliance, nearly 400 communities in the United States have local telecommunications networks, many providing fiber connections to premises. That’s critical to the nation’s future given that legacy incumbent telephone and cable companies aren’t upgrading their metal wire networks to fiber notwithstanding the burgeoning growth in bandwidth demand and the availability of federal and state government subsidies.

Those 400 community networks represent a good start. But other communities won’t be able to follow them unless state laws restricting them are repealed (shown in red on the ILSR map) and there is substantial, relatively unrestricted funding to help them. A likely consequence is these 400 community networks will end up as one off builds, leaving the rest of America to the tender mercies of the incumbents who lack incentive to build out and upgrade given that costly telecom infrastructure is a natural monopoly.

In the wake of the severe recession at the end of the last decade, local governments are still struggling financially and can’t easily fund these projects on their own. A recent survey by the National Association of Counties found only one in 50 U.S. counties has fully recovered economically since the start of the recession in 2007. The federal government should step up with an expanded telecommunications funding program to build on the ARRA stimulus funding. It should include technical assistance grant funding to help communities plan fiber to the premise network infrastructure as well as grants and loans to help finance their construction. In the end, it would likely prove to be a good investment, generating taxable economic activity to defray the expenditures.

Electric power transmission towers and poles provide existing fiber to the premise infrastructure



Nearly two decades ago, investor-owned electric power provider Pacific Gas and Electric Co. considered installing fiber optic telecommunications cable on its poles and towers and leasing it to cooperatives, telephone and Internet service providers. In 2006, PG&E was in discussions with a startup, Current Communications, hoping to roll out new technology to deliver Internet over electrical lines known as Broadband over Power Lines (BPL).

The talks shorted out over money and BPL ultimately proved technologically unfeasible. Interestingly, one of the investors in Current Communications along with General Electric and EarthLink was Google.

Nearly a decade later, Google is building its own fiber to the premise network in two metro areas of the United States and is considering several others although recently put its expansion plans on hold, most likely until the U.S. Federal Communications Commission decides this year whether to regulate Internet service as a common carrier telecommunications utility. (Should the FCC do so under Title II of the Telecommunications Act, Google in a December 30, 2014 letter urged the FCC to enforce compliance with Section 224 of the statute requiring utilities such as PG&E to provide access to its poles, conduits and rights of way on reasonable terms and conditions)

controls poles, ducts, conduits, or rights-of-way used, - See more at: http://codes.lp.findlaw.com/uscode/47/5/II/I/224#sthash.YCBB6J1R.dpuf
In the meantime, Google Fiber and PG&E might consider exploring a joint venture that would give Google access to PG&E’s transmission towers and poles that provide existing infrastructure serving millions of premises to speed the deployment of its fiber network. PG&E itself should look not only at Google Fiber but also consider forming a subsidiary that would build an open access wholesale fiber to the premise network. It could then lease access to Google Fiber and other ISPs. (I'll even host the discussions -- off the record, of course --- and some fine Cabernet at an undisclosed winery location if the companies are interested).

Wednesday, December 31, 2014

Lawrence Kansas mulls common carrier fiber infrastructure mandate

Lawrence City Hall struggles with what role to play in broadband competition / LJWorld.com: City commissioners are being asked to make a decision on a technical question commonly referred to as “common carriage" or "open access” of future fiber optic networks. Common carriage would allow for multiple Internet service providers to operate on a single network of fiber optic cables rather than each company burying its own set of cables.

It's difficult to understand why city staff is grappling with this question. So-called facilities-based competition is wasteful. There's no point in having redundant fiber optic infrastructure when a single strand of fiber can handle all the Internet traffic the city could possibly generate over the foreseeable. Open access common carrier infrastructure would also enable competing providers to offer Internet-based services, benefiting consumers.

Allowing a provider to build its own infrastructure rather than treating it as common carriage might well prove more financially expedient in the short term since private providers would be motivated to quickly build out fiber to serve neighborhoods deemed most immediately profitable. But once that's done, the rest of the city would likely be left unconnected. ("Hello, this is Lawrence via dialup. Is anybody there?")

The policy question under consideration in Lawrence is being mirrored at the federal level as the U.S. Federal Communications Commission is considering placing Internet telecommunications under common carrier regulation under Title II of the federal Telecommunications Act.

Wednesday, December 24, 2014

Kentucky middle mile telecom infrastructure project needs solid last mile solution

 


Kentucky.gov: - Governor Beshear, Congressman Hal Rogers Launch Statewide Broadband Initiative, Beginning in Eastern Kentucky: The first stage of the project is to build the main broadband fiber lines across the state. These major fiber lines are called the “middle mile.” The “open access” network will allow the private sector to use the fiber to deliver services into communities. Once complete, other Internet service provider companies, cities, partnerships, or other groups may then tap into those “middle mile” lines to complete the “last mile” – the lines that run to individual homes or businesses.

This last sentence is key and delineates between what's actually planned to be built and what's theoretically hoped to be. Without those last mile ISPs, Kentucky will end up with an incomplete network, condemning many of its residents to continued subpar Internet service. It would be like building an expressway and having gravel or dirt roads at the exits and on ramps. As the news release from Gov. Beshear's office notes, Kentucky rates poorly compared to other states on Internet access. That sad statistic is unlikely to improve without a solid plan to build fiber to the premise infrastructure to serve the last mile.

Historically, middle mile projects like this one do a good job getting anchor institutions like schools, libraries and government offices connected. But that doesn't automatically mean nearby homes and small businesses will get connections and can even hinder their getting service as network expert Andrew Cohill has noted since the network operators tend to concentrate their efforts on serving anchor institutions and figure someone else can solve the last mile problem. That someone else has typically proven to be nonexistent. It's essentially a funding problem since there tends to be insufficient and/or uncertain future revenues to attract those interested in investing in the needed infrastructure to bridge the last mile to homes and small businesses.

In Utah, the private funding partner of the Kentucky initiative, Macquarie Capital Group, is working with the Utah Open Telecommunications Infrastructure Agency (UTOPIA) on an open access fiber to the premise project serving 11 cities. That project solves the last mile funding problem by treating the fiber to the premise infrastructure as public works, funded in part by fees assessed on property owners. Which makes sense since these properties collectively benefit by being able to access the various economic, educational, health care and other services made possible with fiber connections. Kentucky would be wise to draw upon the Macquarie/UTOPIA partnership to plan and construct a complete fiber telecommunications network that will serve all its residents in the 21st century.

Monday, December 22, 2014

Incumbent telcos, cablecos should reconsider shunning wholesale open access fiber networks

Incumbent telephone and cable companies that enjoy a natural monopoly over last mile Internet infrastructure connecting customer premises have been loath to offer services over open access, wholesale fiber to the premise (FTTP) networks like the Utah Telecommunications Open Infrastructure Agency (UTOPIA) system. In some states, they’ve even successfully supported legislation outlawing or making the creation of publicly operated open access networks difficult. As monopolies, they want control over both the “pipe” serving customer premises and the services provided over it. Having control over the premise connection is essential to this business model since it puts the incumbents in the dominant position with regard to selling their proprietary services.

But with a growing chorus of calls for competition for Internet service from the White House, members of Congress, the U.S. Federal Communications Commission and consumer advocates, the threat of federal antitrust litigation to break up the incumbents’ last mile monopolies has increased

Given that possibility, incumbents might want to reconsider their flat refusal to do business with wholesale open access fiber networks. If they chose to purchase access to wholesale networks to sell retail services to customer premises, they’d likely appear to be far less insular and monopolistic in the eyes of the government. Doing business with wholesale, open access fiber networks would also spare the incumbents –largely reliant on metal wire and cable last mile infrastructure – from the expense of having to upgrade their last mile plants to fiber in areas where these networks exist and allow them to reach customer premises outside their limited footprints.

Financial distress of PPP toll road projects holds lesson for telecom infrastructure

Are US toll roads in crisis? | Jacques Cook | LinkedIn: In a recent article “On the Road: Navigating the twists and turns of US highway P3s” (Dec. 8, 2014), Michael Dunning describes some of the serious financial difficulties facing some of the most important US P3 toll roads. He notes that the Indiana Toll Road, once described as a trend setter in the US P3 market, has declared bankruptcy; while several major projects in California (SR-125), Texas (SH-130), Virginia (I-495 Hot Lanes, Pocahantas Highway) and Illinois (Chicago Skyway) are also in financial distress and in various stages of bankruptcy and restructuring. These are not encouraging signs for the US P3 market. Dunning notes however that there are important lessons to be learned from these transactions.

While each of these projects was funded at different times and under different legal and institutional frameworks, they share one common characteristic—they were being funded entirely with tolls paid by automobiles and trucks.
The experience here can be applied to other costly infrastructure projects like modernizing and building out fiber optic telecommunications networks. Relying completely on user fees for its financing heightens the risk of insolvency.

 
Web Analytics