Wednesday, April 30, 2008
Earlier this year, Nulty dismissed the industry's oft-stated notion that there can be robust competition in America's privately owned and operated telecommunications infrastructure. Rather, Nulty correctly observed in my opinion, it's a natural monopoly that by its very nature cannot foster robust market competition to benefit subscribers. The costs to build telecom infrastructure are so high that only large telcos and cable companies have the capital to play. And once one has put infrastructure in place, it discourages other players from coming in and doing a "over build" with its own proprietary infrastructure since it becomes less certain the new entrant will be able to lure a sufficient number of customers away from the incumbent provider to earn a profit on the investment.
It is precisely in this vein that Nulty argues fiber to the premises can pencil out in broadband black holes. First, Nulty, told the Broadband Properties Summit this week, there is by definition a lack of competition in such locales, making a strong business case for a potential fiber-based provider since it would have the market to itself. Second, having the fiber market to itself in what was once a digital dead spot would translate into a higher take rate that would generate more revenues to cover the cost of installing fiber to the premises, also reducing uncertainty and building a stronger business case.
The folks out West in Utah who run that state's multi-muni fiber system UTOPIA and are currently reassessing their numbers after disappointing results would be well served to consult with Nulty.
Monday, April 28, 2008
Last October, Ralph de la Vega, AT&T's group president, regional telecommunications and entertainment, told Investor's Business Daily the telco plans to phase out its its existing voice network and replace it with a VOIP (Voice Over Internet Protocol) system where U-Verse is being deployed. In other words, swapping out existing legacy voice-based telephone central office (CO) switching equipment with what are essentially souped up Internet servers capable of delivering multiple Internet Protocol-based advanced services including Voice Over Internet Protocol (VOIP), video, and of course high speed Internet access. That's U-Verse.
Since AT&T like other telcos is rapidly losing residential wireline subscribers who are migrating to wireless voice, it could opt to speed up U-Verse deployments since it would allow the company to sell more than just Plain Old Telephone Service (POTs). That would provide revenues to replace lost residential customers as well as gain additional revenues justifying a ramped up rollout. U-Verse not only gives AT&T the opportunity to replace lost residential voice lines, but also to finance upgrades to its copper cable plant so it can reliably provide U-Verse services, which are delivered by VDSL-based remote VRAD terminals fed with fiber optic connections.
An added incentive for AT&T in some of these areas would be the absence of existing competition from cable companies, which would invariably increase the take rate for U-Verse since these broadband-deprived prospective customers are likely to jump at the chance to get off dialup and satellite.
Thursday, April 24, 2008
Cable providers face increased local government demands to renegotiate franchises for universal access
A case in point is detailed in this dispatch from the Shelburne Falls (Massachusetts) Independent.
Wednesday, April 23, 2008
Notably, the white paper cites the lack of broadband Internet access as a key obstacle to allow information workers to work from their homes at least some of the time rather than commuting to an office.
For widespread adoption of telework,the United States needs ubiquitous broadband Internet access. Much of the potential for enlarging the workforce through telework is by attracting people from rural or isolated areas -- or those who would like to relocate to such places. Yet these are the areas least likely to have broadband access. Additionally, the speed of broadband in many parts of the country is woefully insufficient to support the collaborative applications needed for efficient telework.
According to the Peteskoy (Mich.) News-Review, organizers including the Northern Lakes Economic Alliance and Northeast Michigan Council of Governments are looking into rural development loans from the U.S. Department of Agriculture to fund broadband infrastructure.
History is repeating itself. A century ago, telephone co-ops were created to provide service to areas without it. Provided they can raise sufficient funding, these modern day telecommunications co-ops like the Northern Michigan Broadband Cooperative may prove successful because they cover large geographical areas and thus can leverage economies of scale to their advantage.
More typical and problematic are the numerous scattered broadband black holes that characterize America's incomplete telecommunications infrastructure. They encompass much smaller geographical areas and make it difficult for residents and businesses to take collective action like in northern Michigan. The Communications Workers of America has aptly termed this swiss cheese, crazy quilt telecom infrastructure a "hodge podge" that can result in some folks having state of the art advanced telecommunications services while others just down the road or on the next street are stuck in 1992 and limited to dialup access.
Monday, April 21, 2008
However, Qwest Chief Technology Officer Pieter Poll doesn't believe wireless can deliver sufficient capacity in the future as bandwidth demand grows. Instead, he suggests its role is that of an interim technology. Here's what he had to say on the topic in an interview with Telephony Online:
If you look at the calculation of what wireless networks can provide in terms of bandwidth, it’s a bit-per-second-per-hertz argument, first of all--the efficiency of how you use spectrum. But ultimately [it’s] finite spectrum. With a number of users. As you build networks, there’s a natural density of cells or reuse that you can get to. I don’t see wireless networks replacing wired broadband networks the way people are thinking about future wired broadband networks. Don’t get me wrong; I’m very excited about what wireless broadband offers today and will offer in the future. But I think it has its appropriate place for the reuse and speed offered. When we start thinking about things we can do in the home with extreme speeds, those are things you will not be able to realistically do over wireless networks, at least at any cost point that an operator would consider feasible.
One commenter wonders what happpened to billions in tax incentives provided under the federal Telecommunicaitons Act of 1996 that were to ensure all Americans had broadband Internet access by 2006. (Millions still don't in 2008 and continue to use the same dial up access they had when the bill was enacted more than a decade ago.) "They just took the dough and put it against their bottom line, screwing the US taxpayer yet again. NOW THEY WANT MORE?????," he wrote.
Another points out only a small fraction of the capacity of the of fiber optic cable installed during the late 1990s dot com boom is being used. "To start running out of bandwidth, this soon, is hard to believe. More likely these companies are creating FUD as an excuse to raise rates and/or cut back on service," the writer says.
Both the Utah Telecommunication Open Infrastructure Agency (UTOPIA), a fiber venture begun in 2003 underwritten by 18 Utah municipalities and iProvo, Provo's muni fiber project, are experiencing cash flow problems due to take rates falling short of projections and a low cost federal loan coming in later and with far less money than requested. The finances of both projects are under review as are a number of options to improve the numbers.
The lessons that can be drawn here for such ventures are 1) Making sure there is a committed base of business and institutional subscribers who are hungry for "big pipe" data-intensive services and making connections affordable for small businesses and 2) Getting good estimates of projected demand in residential areas to help prioritize build out to those where demand is highest.
"The initial model was build it and they will come," Paul Recanzone, UTOPIA's project manager, told the newspaper. "The new model is to let the market tell you where the demand is before building out."
Thursday, April 17, 2008
The North Bay Business Journal reports Verizon has expanded its wireless broadband service area up the Highway 101 corridor from Santa Rosa to Cloverdale, and out to coastal Sea Ranch. That's in addition to Clearlake, Lakeport and Middletown in Lake County, and Ukiah, Willits, Laytonville, Fort Bragg and Hopland in Mendocino County, encompassing large areas long lacking high speed Internet access.
While Verizon Wireless is primarily targeting mobile customers, it's finding a market in fixed AT&T residential and small business customers who have suffered years of digital deprivation in AT&T's sprawling broadband black holes.
Verizon offers speeds of 600 Kbs to 1.4 Mbs for downloads 500 to 800 Kbs on the uplink. That's arguably not broadband class throughput even at the high end of the range (most connections are likely to come in at half the advertised maximums), but a considerably better option than AT&T's ancient dialup or sluggish, costly satellite Internet.
From a competitive standpoint, this is bad news for AT&T. By offering a quasi-broadband service for residential subscribers situated in the many broadband black holes in AT&T's wire line service area, Verizon is likely to also build brand name loyalty and steal away wireless voice subscribers who might otherwise sign up with AT&T.
Tuesday, April 15, 2008
Brodsky now reports Kentucky Gov. Steve Beshear declined to approve $2.4 million in additional grant funding for the telco-backed nonprofit, citing the state's tight finances.
Beshear's veto message clearly indicates the governor's skepticism that the additional money will provide any real benefit for Kentucky residents. Perhaps Beshear like me isn't interested in more stalling, paper chase exercises such as mapping broadband availability and creating inflated, self serving statistics and would rather see real, tangible broadband infrastructure being built in order to provide broadband to those without it.
cellular-news reports WiMAX developer Telsima conducted tests there earlier this year and claims to have successfully demonstrated a 50km (30mile) connection with 6 Mbps throughput using a 3 MHz channel under near line of sight conditions in the 450 MHz frequency band.
"Compared to higher frequency systems, the Sub-GHz solutions are technically and economically suited for covering large areas where the foliage is dense and the terrain does not allow for line of sight communications between the subscriber station and base station. We are very optimistic in our sub-GHz solution's capability to address the needs of high coverage, low density markets with high modulation rate capacity," the publication quoted Wolfgang Mack, chief marketing officer of Telsima, as saying.
These results if verified could entice U.S. wireless broadband players using WiMAX like Clearwire to move outside its existing metro markets and cater to customers living in less densely populated areas where telcos and cable companies don't offer wireline-based broadband.
Tuesday, April 08, 2008
While big telcos AT&T and Verizon don’t compete on wireline-based broadband services and stay out of each other’s service areas, that anti-competitive strategy does not apply to wireless broadband.
In Northern California, for example, Verizon has expanded its wireless broadband footprint and AT&T announced this week it would counter with a $290 million expansion of its wireless system in Northern California and Reno, Nevada. Both are based on Third Generation (3G) wireless technology and are primarily targeted to mobile wireless customers rather than fixed residential users.
But some residential customers mired in AT&T’s large broadband black holes created by its incomplete wireline infrastructure are turning to Verizon’s wireless broadband plans offering advertised speeds of 600 Kbps to 1.4 Mbps for downloads and 500 Kbps to 800 Kbps for uploads. For them, it’s an easy choice over impractical early 1990s era dial up or substandard and costly satellite service.
AT&T isn’t likely to offer a superior alternative in terms of speed and usage caps (Verizon offers a 50Mb per month plan for $40 and a 5Gb plan for $50 with overage charges for exceeding the limit). Plus Verizon Wireless requires two-year contracts, which would dissuade subscribers from switching to AT&T.
If AT&T wants to protect its residential customers who don’t have wireline-based broadband from signing up with Verizon Wireless or convince them paying an early termination fee is worthwhile, it will have to do what it should have done years ago and expedite an upgrade and expansion of its wireline infrastructure to offer what the California Public Utilities Commission deems as true broadband providing minimum speeds of 3Mbs for downloads and 1Mbs uploads.
If on the other hand AT&T merely matches with a service at or slightly less comparable to Verizon Wireless Broadband without leveraging its wireline infrastructure to more widely offer true broadband service, it will once again be a day late and dollar short and leave unearned revenues on the table.
Monday, April 07, 2008
AT&T, cablecos poised to close Tennessee franchise deal that will leave gaping broadband black holes
They are set to announce a deal today in which the cable industry will drop its opposition to legislation that would preempt local government regulatory authority over Internet-protocol based TV (IPTV) service AT&T wants to offer in selected areas of the state. The same thing happened in California in 2006, leaving about 2,000 communities still without broadband access according to a report by Gov. Arnold Schwarzenegger's Broadband Task Force issued in late January.
Tennessee's cable companies, which earlier this year criticized AT&T's initiative because it provided for only limited infrastructure build out requirements that would leave large areas mired in broadband black holes, have reportedly dropped their opposition.
The Tennessean reports today that under draft legislation that was still being negotiated over the weekend, AT&T would have to cover just 30 percent of its territory within 3½ years after it begins offering IPTV, citing sources involved in negotiations.
According to the report, the draft legislation would apply credit toward AT&T's minimal build out requirement if it offers DSL service of at least 1.5mbs to homes that don't now have access to broadband. It's a meaningless provision. Even if enacted, AT&T is likely to ignore it since it has effectively halted new DSL deployments and is concentrating exclusively on its IPTV-based U-Verse offering. Those without broadband will simply be left twisting in the wind. Why would AT&T need the credit anyway with with legislation's already minimal buildout benchmark?
Bottom line is neither AT&T nor the cable companies have lost any skin in the deal and have sacrificed Tennesseans instead by relegating them to dial up and satellite Internet access. That leaves it to Tennessee Gov. Phil Bredesen to look out for the interests of his constituents as he indicated he would do in early February. Rather than endorse this lousy deal for consumers like Schwarzenegger did in California two years ago, he should reject it.
Tuesday, April 01, 2008
Wu's solution for the next administration that takes office in January 2009? Appoint a broadband czar reporting to the president. "Right now, broadband is no one's responsibility, and the buck keeps getting passed between industry, Congress, the White House, and the FCC," Wu writes. "The point of a czar would be to make it someone's job to figure out what it will take to fix broadband."
Wu also advocates revamping the Federal Communications Commission to remake it from its current political and lobbying based culture that tends to support the nation's mediocre broadband status quo to a technology-driven "dream team" agency run by the "wisest tech experts and visionaries."
Read this and Wu's other recommendations for the incoming administration by clicking here.