Thursday, December 31, 2009

USF reform alone won't achieve universal U.S. broadband

Just as the U.S. Federal Communications Commission set a date for the end of analog broadcast television earlier this year as TV signals went digital, it should also establish a sunset date for the legacy Publicly Switched Telephone Network (PSTN), AT&T asserted in a December 21 filing with the FCC.

The business model for the PSTN -- a proprietary network comprised of central office switches, amplifiers and copper cable plant designed to deliver what's known as plain old telephone service -- POTS -- is in a death spiral as the number of people shutting off their landline voice service in favor of wireless and Voice Over Internet Protocol (VOIP) services has accelerated in recent years, AT&T notes. In the meantime, the telco stated, the FCC should modernize its regulations to ensure an orderly transition from the PSTN to an Internet Protocol (IP) based system, taking full regulatory control and ending state oversight authority originally established for regulating POTS.

However, legacy PSTN/POTS isn't alone in suffering from serious business model problems. So does the IP-based model that is the future of telecommunications. The reason: what AT&T describes as the "enormous" amount of capital necessary to complete the build out of required infrastructure to ensure all Americans have access to IP-based services just as basic telephone service is nearly universal. In its filing, AT&T concedes eight to ten percent of American households lack access to broadband, although another estimate released in October placed the figure higher at 12 percent, including even spotty access in major metropolitan areas.

In order to allow telcos to direct more capital investment to building out broadband infrastructure, AT&T proposes the FCC scrap rules requiring telcos to provide POTS so they can redirect funds to upgraded infrastructure capable of delivering IP-based services. "The legacy PSTN network – which is rapidly hemorrhaging customers and revenue – is now diverting much needed funds from investments in broadband networks," AT&T states in its filing.

AT&T also wants the Universal Service Fund (USF) -- created to subsidize the cost of providing POTS in high cost areas -- retasked to do the same for IP-based services. Doing so would help achieve the Obama administration's goal of broadband access for all Americans, according to AT&T.

But there's a difference between USF subsidies for voice telephone service and IP-based services. Deployment and adoption of basic phone service played out over decades. By contrast, there's a huge reservoir of pent up demand for broadband AT&T and other big telcos assured would be offered to all U.S. households when the Telecommunications Act of 1996 was enacted providing telcos tax breaks and other incentives intended to pave the way for them to universally deploy fiber-delivered telecommunications services by 2006. Didn't happen, obviously.

The FCC and other policymakers should keep this history and differences in demand between POTS and IP-based services in mind. Reforming the USF isn't likely to be the sole solution to remedy market failure for IP-based services. They must also encourage alternative business models such as open access fiber networks owned by local governments and telecom cooperatives through subsidies, low cost loans and tax incentives.

Wednesday, December 16, 2009

FCC draft broadband plan: Incorrect diagnosis, wrong prescription

The U.S. Federal Communications Commission today unveiled the underlying policy principles that will frame the plan it must present to Congress in February to expand advanced telecommunications infrastructure to ensure all Americans have broadband access. The FCC was charged with developing the plan under the American Recovery and Reinvestment Act of 2009 signed into law by President Barack Obama in February.

A basic principle is encouraging competition to "build on the attributes of the American broadband ecosystem." That's something of a head scratcher as Tim Nulty and other experts have accurately pointed out that telecommunications infrastructure is a natural and not market-created monopoly. It's a lack of adequate infrastructure -- and not vendors who want to offer services over it -- that has brought about the large gaps in broadband availability in the United States.

Given that, it's not apparent how encouraging competition will even begin to fulfill the Obama administration's goal of universal broadband access. The problem isn't lack of competitors. It's lack of any providers because their for profit business models simply don't allow them to profitably deploy infrastructure within broadband black holes. No amount of enhanced competition can alter that business reality.

If the FCC accepts that reality, then its final recommendation to Congress in February must by implication call for alternative ownership and business models for last mile -- and some middle mile -- telecom infrastructure.

Tuesday, December 15, 2009

Report recognizes lack of broadband access in "non urban" areas of U.S.

When it comes to discussing advanced telecommunications infrastructure, one of my major peeves is the frequent over generalization of the United States into just two categories -- urban and rural -- as if it were still the early 20th century when electric power or other utilities bypassed entire rural counties and regions before they were built out.

In the case of advanced telecom infrastructure, it's far more granular than that. It can be available on one street or road -- even in the burbs -- but not on the next. Indeed, many visitors find this blog after a search query on the vexing question of why they're stuck on dialup while a nearby neighbor can get wireline broadband.

So it's heartening to see that this recently issued forecast by The Insight Research Corporation despite its "urban vs. rural" dichotomy gives some degree of recognition that of an estimated 12 million households in the U.S. that lack access to broadband, not all are confined to rural areas. Some are situated in "non urban" areas, i.e. outlying suburbs, exurbs and less densely populated portions of metropolitan regions.

Here's the relevant excerpt:

While the exact number of households that do not have access to broadband service is unknown, even to the government, INSIGHT estimates that at least 12 million rural and non-urban market households do not have access to any broadband service due to the lack of supporting terrestrial infrastructure.
Insight estimates that with a minimum cost of $1,500 per household, it would cost in excess of $18 billion to build out advanced telecom infrastructure to serve them.

Thursday, December 10, 2009

Reducing demand for California state office space through telework

As deficit plagued California continues to grapple with red ink and sells off state owned office buildings to help bring in much needed cash, California Assembly consultant and Auburn, Calif. councilmember Kevin Hanley believes California can reduce the cost of office space to house state workers Monday through Friday.

Here's how, according to Hanley: state managers should shrink the cubicle jungle by allowing state workers to work remotely from home part of the work week. In his Sacramento Bee op-ed piece, Hanley notes the information technology is there. The problem is outdated supervisory technique that relies too much eyeballing workers rather than measuring job performance based on their work product.

I would add that for some California state workers -- particularly those living in outlying areas and who generate the most carbon emissions to get to work -- telecommunications infrastructure also needs updating from early 1990s era dial up to provide robust Internet connectivity options.

California PUC conditionally funds start up cooperative's middle mile project

The California Public Utilities Commission has demonstrated its support of start up telecom cooperatives -- entities this blogger believes play a crucial role in the rapid expansion of advanced telecommunications infrastructure in areas that are not sufficiently profitable for incumbent providers.

In a resolution adopted earlier this week, the CPUC agreed to fund 19 percent of the California Broadband Cooperative's planned open access wholesale middle fiber project along 448 miles of Highway 395 in the Golden State's Eastern Sierra area including the counties of Mono, Inyo, Eastern Kern and San Bernardino. Coop membership is open to local governments, institutions and Internet Service Providers.

The 19 percent funding level is beyond the 10 percent level the CPUC established in July in an effort to utilize its $100 million California Advanced Services Fund (CASF) to leverage $7.2 billion in federal subsidies for broadband telecommunications infrastructure allocated in the American Recovery and Reinvestment Act (ARRA). The CASF funding is contingent on the project being approved for ARRA funding.

In the initial round of ARRA broadband funding that closed in August, the National Telecommunications and Information Administration's (NTIA) Broadband Technology Opportunities Program (BTOP) generally required project grant applicants to put up a 20 percent funding match. In an effort to get more California projects funded, CASF kicked in half the match amount, bringing total project funding up to 90 percent. That left it to applicants to come up with the remaining a 10 percent match.

However, the California Broadband Cooperative noted as a start up nonprofit with no financial history it would find it all but impossible to come up with the 10 percent match for its proposed $101.4 million project under grant and loan subsidies for broadband infrastructure construction under the BTOP and the USDA's Rural Utilities Service (RUS) program.

Kudos to the California PUC for recognizing that alternative, nonprofit business models like cooperatives are needed in the quest to close the digital divide in California and that these entities face unique and substantial start up funding challenges. As the NTIA and USDA draw up new rules governing an upcoming and final round of funding for broadband infrastructure projects early next year, the agencies should keep the California PUC's action in mind.

Tuesday, December 08, 2009

Obama proposes additional funds for broadband infrastructure

President Barack Obama said in a speech today at the Brookings Institution that more federal subsidies are forthcoming for broadband infrastructure as part of a renewed effort to create badly needed jobs. Whatever the amount, it will supplement the $7.2 billion already allocated in the American Recovery and Reinvestment Act Obama signed into law in February.

Here's the relevant excerpt from a transcript of the president's remarks posted on the White House Web site:
Second, we're proposing a boost in investment in the nation's infrastructure beyond what was included in the Recovery Act, to continue modernizing our transportation and communications networks. These are needed public works that engage private sector companies, spurring hiring all across the country.

Already, more than 10,000 of these projects have been funded through the Recovery Act. And by design, Recovery Act work on roads, bridges, water systems, Superfund sites, broadband networks, and clean energy projects will all be ramping up in the months ahead.

Whatever the additional amount agreed to by the president and Congress, there's still a long way to go given the consensus view that the $7.2 billion in the economic stimulus package represents a mere down payment on what the U.S. needs to invest to modernize its outmoded and incomplete telecommunications infrastructure as Blair Levin, the Federal Communications Commission's broadband czar, generally described the amount as the Obama administration prepared to take office one year ago.

Monday, December 07, 2009

Kiplinger predicts U.S. tax to bolster telecom infrastructure

The Kiplinger Letter is predicting the U.S. Federal Communications Commission will propose a tax next year to subsidize private telcos and cable companies' cost to build out broadband to serve all Americans. The American Recovery and Reinvestment Act of 2009 tasked the FCC with providing Congress a plan for universal broadband access by Feb. 17, 2010. Kiplinger Senior Associate Editor Richard Sammon forecasts the tax will be part of the plan.

But at the same time, Sammon says enacting such a tax will prove politically difficult. The take away is the FCC should be considering alternative entities that can roll out advanced telecommunications infrastructure for less money than the big telcos and cable companies that must produce hefty profits and pay fat dividends to satisfy shareholders.

That means turning to the nonprofit sector and specifically local governments and consumer-owned telecom cooperatives. There, taxpayer dollars can go farther and these smaller, more nimble entities can move more rapidly to deploy broadband infrastructure to fill in the areas where the business models of the large telcos and cable companies don't pencil out. Instead of new taxes, policymakers should enact tax breaks to encourage homeowners and small businesses to buy their own last mile fiber connections through cooperative ventures and public/private partnerships.

The need for alternative business models is underscored in a report prepared for the FCC by the Columbia Institute for Tele-Information and released last month.

A key conclusion: a significant number of homes -- 5 to 10 million representing 4.5 to 9 percent of U.S. households -- will continue to have "significantly inferior choices in broadband" between now and 2015. "Most of these homes will have wireless or wired service broadband available only at speeds substantially lower than the speeds available to the rest of the country," the report notes, adding that some homes "will have no choice except satellite broadband, which has some performance attributes that make it less satisfactory for many applications than a terrestrial broadband service."

Thursday, December 03, 2009

FCC puts broadband in proper perspective

The term broadband -- generally used to refer to Internet connectivity beyond first generation dial up access -- is a component of the larger transformation of the telecommunications infrastructure. The legacy Public Switched Telephone Network (PSTN) system that relies on copper cables and central office switches owned by the phone companies is of the pre Internet period. In the post Internet age, the Internet itself is becoming the phone system. Routers take the place of telephone switches and fiber optics supersede copper cable.

The U.S. Federal Communications Commission (FCC) put broadband into its proper perspective in a public notice issued Dec. 1 calling for public comment on this conversion of telecommunications infrastructure from a "circuit switched network to an all-IP (Internet Protocol) network."

The notice describes broadband as "a leading indicator of the major transitions in communications technology and services" and "a growing platform over which the consumer accesses a multitude of services, including voice, data, and video in an integrated way across applications and providers."

The FCC notice shows the agency -- charged under the American Recovery and Reinvestment Act of 2009 with developing recommendations for Congress by next February on how to best achieve universal broadband access -- is thinking beyond broadband and of the larger regulatory scheme in "the spirit of understanding the scope and breadth of the policy issues associated with this transition" and the "appropriate policy framework to facilitate and respond to" this shift.

Wednesday, December 02, 2009

Incumbents v. Illinois over proposed broadband stimulus projects

The telco/cable duopoly has gone to battle stations in Illinois, where according to this report in Crain's Chicago Business it's opposing five dozen applications for federal subsidies for broadband telecommunications infrastructure build out including projects proposed by the state of Illinois, Chicago and Cook County. The subsidies are contained in $7.2 billion allocated in the American Recovery and Reinvestment Act signed into law in February.

According to the story, the incumbents contend the projects would overbuild their proprietary cable plants that already provide adequate broadband access. But the Illinois Department of Central Management Services counters that the proposed project areas must rely on leased circuits costing hundreds of dollars per month (such as 1970s era T-1 lines) that are "too costly to achieve statewide 21st-century information and communication capabilities."

Playing the T-1 card? If the state of Illinois has the facts right, this story sheds light on what might be the incumbent telcos' strategy for challenging proposed broadband stimulus projects: simply contending broadband is available most everywhere in developed areas of the United States since anyone can order up a T-1 or higher bandwidth leased line. That's hardly the case when price is taken into account. If this is the linchpin of the incumbent telcos' strategy to shoot down proposed broadband stimulus projects, it's not likely to go over well and will earn the incumbents even greater enmity.

Monday, November 23, 2009

Minnesota wants all state residents able to telecommute by 2015

Minnesota has established a functionality-based broadband goal: all residents of the state should be able telecommute -- work from home -- by 2015. That would require advanced telecommunications infrastructure able to allow them to video conference, according to Rick King, COO of Thomson Reuters, who chaired the Minnesota High Speed Broadband Task Force. That functional definition translates to download speeds of 10-20 Mbs and upload speeds of 5-10 Mbs, reports mnsun.com.

The federal government and other states, particularly those with major commuter congestion and especially those like California looking to reduce greenhouse gas emissions, should look to Minnesota. It has taken a major step forward in defining what advanced telecommunications infrastructure should enable without getting caught up in the feeds and speeds debate over how "broadband" should be defined.

Friday, November 20, 2009

Fighting the future: Telco/cable duopoly resorts to astroturfing to preserve status quo

Here's a key passage from a screed by Tim Karr of Free Press deploring the use of phony grassroots "astroturf" groups by the telco/cable duopoly to cloak its self interested protectionism in populist-sounding righteousness:

On Internet policy, astroturf groups have pocketed millions from industry to fulfill Job No. 1: Lock in incumbent phone and cable companies' control over high-speed Internet connections in America. At present, these companies provide 97 percent of fixed connections into American homes, a status quo they are willing to spend untold sums to maintain.

Thursday, November 19, 2009

Brigham City, Utah: Pioneering America's telecom future

America's brightest and most promising version of its advanced telecommunications future is playing out in Brigham City, Utah. Residents there aren't waiting for the incumbent telco and cable companies to build fiber infrastructure to reach their premises. In the pioneering spirit of the great American West where consumer cooperatives formed a century ago to provide telephone service, they're doing it themselves, reports App-Rising.

According to App-Rising, 1,600 residents have paid $3,000 to install fiber to their homes, which will give them access to various providers via one of the nation's first open access networks, UTOPIA.

The concept is right out of a working paper issued one year ago by the New America Foundation authored by Derek Slater and Tim Wu titled Homes with Tails What If You Could Own Your Internet Connection. Like those for solar power, the paper recommends state and federal tax credits to create incentives for homeowners to buy their own fiber.

This concept has great potential to fill in the great many broadband black holes found throughout the West. As the Federal Communications Commission prepares recommendations to Congress due in two months on government policy to expand broadband access, it should put this open access, consumer owned fiber to the premises model -- and tax credits to encourage its use -- on the top of its list.

It's the infrastructure, stupid

This Rollcall article by think tankers Robert Shapiro of the Georgetown Center for Business and Public Policy and Kevin Hassett of the American Enterprise Institute implies that broadband black holes are caused by a lack of Internet bandwidth. To fill in the holes, Shapiro and Hassett suggest, simply charge large bandwidth users more.

The problem with their analysis is that it assumes broadband black holes are a pricing problem. Wrong answer. It's an infrastructure problem. The holes are there because the business models of the incumbent telco and cable providers don't allow them to fill them. The investor-owned incumbents must earn a return on their capital expenditures within five years but they can only do so in selected parts of their service areas. Hence, limited availability of the advanced telecommunications infrastructure necessary to deliver Internet protocol-based advanced telecommunications services. The telco/cable duopoly has long charged business users higher prices to subsidize services to lower revenue residential customers. That pricing differential has done nothing to spur investment in investor-owned advanced telecommunications infrastructure.

What's needed to fill in the broadband black holes are alternative business models such as nonprofit consumer-owned telecom cooperatives formed a century ago when the investor owned telcos were unable to profitably provide telephone service to large parts of the nation. Local governments can play a similar role.

Saturday, November 14, 2009

Report: Flood of comments on broadband stimulus requests indicate "significant incumbent challenges"

Telecompetitor is reporting Mary Campanola, outreach coordinator for the Rural Utilities Service, told a panel at the Telco TV annual conference and expo Nov. 12 that the agency has received 11,000 comments for the 2,200 applications it received for funding through its Broadband Initiatives Program (BIP). BIP provides grants and low cost loans as part of $7.2 billion set aside for broadband infrastructure subsidies in the American Recovery and Reinvestment Act of 2009.

Telecompetitor quotes Campanola as saying 80 percent of all applications received at least one comment, which according to the interactive blog reveal "significant incumbent challenges" of proposed deployments aimed at providing broadband to areas designated as unserved or underserved.

Since RUS must check out each incumbent challenge, the BIP stimulus dollars will flow slowly. Campanola reportedly said just 18 applications that were due three months ago made it past the initial review phase. Those projects selected for funding will be announced starting in December with award notifications made on a rolling basis well into 2010, Campanola was quoted as saying.

Monday, November 09, 2009

Broadband demand vs. supply siders: Real debate or a diversion?

As in macroeconomics, an ideological split appears to be developing among supply siders and demand siders over government policy designed to make broadband available to all Americans.

The demand siders tend to hail from the telco/cable duopoly such as Kyle McSlarrow, the president and CEO of the National Cable and Telecommunications Association (NCTA). Policy should focus on the demand side, McSlarrow told a conference hosted by the Family Online Safety Institute. "[T]he way we need to think about this is to think about this in terms of broadband adoption. We have it a little backwards right now."

Demand siders got a boost last week with the release of a study by the Information Technology and Innovation Foundation concluding the U.S. should create several programs to address demand for broadband in addition to subsidizing deployment of advanced telecommunications infrastructure.

Supply siders however question the need for government programs to stimulate broadband demand. IDG News Service reported at a recent California forum, some speakers suggested broadband adoption would continue to rise in the U.S. without significant help from the government. Connecting to broadband will eventually be like electricity, easy and inexpensive, Google cofounder Sergey Brin was quoted as saying.

I question whether the supply/demand side debate is real or contrived. The fact that the demand siders tend to be in the telco/cable camp raises my suspicion that their pushing the issue of adoption is more of a tactical move than substantial policy difference, aimed at diverting attention away from the problem of numerous broadband black holes. Last month, the Yankee Group issued a report noting about 12 percent of U.S. households, including those in some major metropolitan areas, have no access to broadband service, landing the U.S. at a dismal 15th in broadband penetration worldwide.

Even if we were to give the telco/cable duopoly the benefit of the doubt and accept a true policy split exists, I'd have to lean toward the supply siders. Unlike the far slower rate of adoption for basic telephone service, demand for and adoption of broadband has been explosive by comparison.

We also have to be careful not to frame the issue too narrowly. It's not just about high speed Internet connectivity but rather the larger migration to next generation, Internet Protocol-based telecommunications infrastructure than can provide not just fast Internet connections but also voice communication and TV/video -- both services that have very high rates of adoption in the United States.

Saturday, November 07, 2009

Shifting telecom paradigm poses challenge as FCC crafts broadband plan

The U.S. Federal Communications Commission is drafting recommendations due to Congress in a little more than three month's time on a national policy to ensure universal broadband access.

It's no easy task. The reason? We're in the midst of a paradigm shift away from yesterday's proprietary, closed single purpose telephone and cable systems to an open Internet-based system that can deliver everything these systems provided and so much more.

In fact, yesterday's closed telco/cable paradigm is itself the major impediment to universal broadband because its business model cannot easily accommodate that goal. Subsidizing it to expand broadband access using old models designed to expand access to the basic telephone service of yesteryear isn't likely to accomplish the goal of universal broadband access. The subsidies will prove to be too little, too late (such as this legislative proposal to expand the Universal Service Fund to include broadband defined as the soon to be obsolete speed of 1.5 Mbs), unable to keep up with the rapid advance of IP-based applications and their accompanying demand for ever greater speeds and bandwidth. It's like like subsidizing mainframe computing and keypunch machines in a new distributed computing age of powerful servers and microcomputers.

It is therefore essential that the FCC think outside of the box of the legacy telco/cable duopoly and look to innovative approaches and alternative business models as it prepares its recommendations. At the top of the list should be locally owned and operated open access fiber to the premises infrastructure. Whether these systems are operated by local governments, cooperatives or public/private partnerships, they can be more rapidly deployed and are thus more likely to expediently meet the goal of expanding broadband access to all Americans while simultaneously providing protection against technological obsolescence.

Wednesday, October 28, 2009

White paper highlights role of muni fiber as U.S. develops national broadband plan

Here's an excellent white paper on the status of U.S. municipal fiber to the premises systems issued this month by the Fiber to the Home Council.

The report lists 57 muni fiber networks that serve both homes and businesses operating as of October 2009 (it adds at least 15 more serve businesses only), noting that "a growing number of municipal governments are taking it upon themselves to build FTTH networks – much in the way that they have previously built roads, sewers and/or electrical systems – as a means of ensuring that local residents have access to necessary services, in this case, Internet connectivity for the 21st Century."

These muni fiber systems typically spring up after private service providers have declined to upgrade their networks or build such systems, the report notes. As such, the white paper concludes, these networks are an important component of the U.S. telecommunications infrastructure and should be encouraged.

That conclusion should be given due consideration by the Federal Communications Communications Commission as it develops a recommendation due to Congress in February 2010 on a national broadband deployment plan.

Wednesday, October 21, 2009

Broadband stimulus funds insufficient -- but agreement ends there

It seems everyone agrees that the $7.2 billion in subsidies set aside in the American Recovery and Reinvestment Act of 2009 for broadband infrastructure construction aren't anywhere close to what's needed to overhaul the U.S. telecommunications infrastructure to allow it to support ubiquitous next generation, Internet-Protocol-based telecommunications.

Blair Levin, the Federal Communications Commission's broadband czar, described the stimulus subsidies just days before President Barack Obama took office in January as a down payment, representing only a portion of the new administration's planned efforts.

This week, the Boston-based Yankee Group concurred, issuing a summary of a study concluding the $7.2 billion figure is woefully inadequate, representing less than a third of the needed investment.
The Yankee Group study also reinforces the FCC's own findings. In a Sept. 29 news release, the FCC declared $7.2 billion in grants and loan subsidies contained in the economic stimulus package "are insufficient to achieve national purposes." The FCC said $20 billion would be the price of a minimum "basic" broadband that would be quickly outmoded.

The Yankee Group put the minimum figure close to the FCC's: $24 billion. Either of these figures would represent a wasteful investment in technology that would soon be obsolete. The FCC's $20 billion would achieve connectivity ranging between 768 Kbs -- already outmoded -- and 3 Mbs, which is on the verge of obsolescence given the growing amount of high bandwidth video content. To bring the U.S. where it needs to be for the future -- fiber to the premises providing throughput of 100 Mbs or better -- the FCC puts the number at $350 billion.

Behind the consensus that more money is needed beyond the $7.2 in the stimulus package is disagreement over where it will come from and under what terms. Splits exist even within the Obama administration. Earlier this month Levin was quoted in Multichannel News telling an FCC meeting that private investment -- and not by implication federal subsidies -- would foot the bill. But just four months earlier, Jim Kohlenberger, chief of staff for the White House’s Office of Science and Technology, said private market failure has hamstrung telecom infrastructure investment.

The private sector -- largely represented by the legacy telco/cable duopoly and their astroturf groups -- is firing warning shots across the bow of the FCC as it readies a major regulatory policy recommendation due to Congress in February. They are sending the message that unless they can invest in infrastructure on their own terms and retain control over it, further investment will be jeopardized. That will lead to a reverse stimulus, eliminating rather than creating jobs, the Internet Innovation Alliance warned Oct. 20.

Thursday, October 15, 2009

FCC likely to favor open access networks in forthcoming policy recommendation

The Federal Communications Commission is approaching a critical juncture in its congressionally mandated task of devising national policy to further advanced (broadband) telecommunications infrastructure build out. The issue facing the FCC is to what extent the nation emulate the open access network regulatory model used by other countries that have leaped past and made the U.S. and its proprietary, closed networks an also ran rather than a leader in deploying advanced, Internet protocol-based telecommunications.

The FCC commissioned a report suggesting that regulatory policy in the form of the 1996 Telecommunications Reform Act requiring telcos to unbundle their networks and allow providers of voice and Internet services to lease space on them had it right and that model needs to be embraced again. Here's a good summary of the study by Internetnews.com.

Look for the FCC will lean strongly toward open access in developing its plan due to Congress next February. The Obama administration stipulated that subsidies set aside for broadband infrastructure construction in the American Recovery and Reinvestment Act of 2009 be for open access networks. That sends a strong signal to the FCC where it stands on open access.

The incumbent duopoly telco and cable companies will protest open access will discourage them from investing in building out their proprietary networks. It's a non sequitur. They're already discouraged from doing so by the economics of their business models. Those models simply don't allow them to make the big investments in their network infrastructure necessary to allow the United States to catch up and bring its outdated telecommunications networks -- particularly over the last mile -- to where they need to be.

This isn't economic rocket science. The average consumer who has asked his or her local telco or cable company for years why the folks a couple miles away -- and often closer -- have broadband and they don't already knows this. They've been repeatedly told by customer service and field personnel -- when these personnel are being frank and direct -- that their neighborhoods simply cost too much to serve and they're SOL for the foreseeable.

Friday, October 09, 2009

Prince Charles warns of UK "broadband deserts"

The UK's broadband "not spots" are getting royal attention from the Prince of Wales. The BBC today reported Prince Charles wrote the Daily Telegraph to point out that "Too many rural households are currently unable to access the internet at satisfactory speeds."

As the Brits would say, Charles used rather extraordinary language to condemn the situation, calling the lack of investment in modern telecommunications infrastructure "vandalism on a grand scale" of rural economies.

From my perspective from across the Big Pond and on the other side of the North American continent, it seems a big contributor is inside the box thinking among our British friends. They appear stuck in the publicly switched voice telephone over copper network paradigm that can only deliver DSL -- and only so far. Instead, they and the rest of us need to be thinking in terms of advanced, second generation telecommunications over fiber to the premises delivering multiple digital services that copper was never designed to accommodate.

Monday, October 05, 2009

FCC's Levin: Private sector must foot bill for broadband build out

A Multichannel News item today quotes Blair Levin, the Federal Communications Commission's broadband czar, as telling an FCC meeting last week on the broadband deployment plan mandated by Congress that it will largely fall to the private sector to fund the build out America's broadband infrastructure.

Whatever the cost, FCC broadband consultant Blair Levin conceded that private industry will foot most of the bill.

“We have to recognize that most of this [broadband] ecosystem is funded by the private sector, and we expect that to continue,” said Levin. "But government has a role to move whichever levers are necessary to improve the health of that ecosystem, he said.

I respectfully submit Levin's analysis is too limited in scope. The ecosystem will also require substantial public sector involvement and that of non governmental organizations (NGOs) like nonprofit telecom consumer cooperatives that bridged the gap at the beginning of the 20th century when investor owned telephone companies shunned their communities because they couldn't afford to both serve them and earn a return for their investors.

Reconstructing America's outdated single purpose, copper-based analog telecom infrastucture and replacing it with the open access, next generation fiber to the premises Internet Protocol-based system it needs now and in the future is an enormously costly endeavor that cannot be borne solely by investor-owned telcos and cable companies.

In developing its forthcoming national broadband plan, the FCC has estimated it would cost $350 billion to build this kind of infrastructure. So costly in fact that just days after the FCC issued that estimate, the
James L. Knight Foundation issued a report equating the task of building adequate infrastructure ensuring all Americans have access to the modern digital telecommunications necessary for a 21st century democracy to the Eisenhower administration's 1950s project to build the interstate highway system.

Had the private sector been relied upon to foot the cost of the massive highway project, Route 66 might have been in use as the nation's main cross county highway until only recently instead of serving as a reminiscent film setting of post WWII America.

Levin's suggestion the private sector primarily bear the cost of updating the nation's telecom infrastructure is also at odds with remarks by another Obama administration official at the
Broadband Stimulus National Town Hall held in Washington in early June. Market failure has constrained the ability of America's privately owned telecom infrastructure to deliver universally accessible broadband-based services, requiring government to fill the gap, Jim Kohlenberger, chief of staff for the White House’s Office of Science and Technology told gathering, according to a BroadbandCensus.com report.

Wednesday, September 30, 2009

FCC: More subsidies needed for U.S. telecom infrastructure

Just days before President Barack Obama took office this year, his then-technology advisor and now Federal Communications Commission broadband czar Blair Levin told the State of the Net Conference that the $6 billion allocated for broadband infrastructure in the forthcoming American Recovery and Reinvestment Act represented only a portion of the new administration's planned efforts to boost broadband deployment in the U.S. (Congress increased that amount to $7.2 billion in the final version of the bill.)

The FCC clearly signaled more robust federal subsidies will be needed in an update released Tuesday on its progress and plans toward developing an overall broadband build out strategy to achieve universal access as required by the economic stimulus legislation.

Current subsidies including the the $7.2 billion in grants and loan subsidies contained in the economic stimulus package "are insufficient to achieve national purposes," the FCC said in a Sept. 29 news release. The reason as explained in the news release: $20 billion in subsidies would be needed to fully deploy slow speed "basic" broadband that would be quickly outmoded. To bring the U.S. where it needs to be for the future -- fiber to the premises providing throughput of 100 Mbs or better -- the number rises to $350 billion.

Monday, September 28, 2009

Internet access -- not the coffee -- is likely primary attraction of U.S. coffee shops

MuniWireless has a summary and link to a social commentary piece that posits Americans go to coffee shops like Starbucks not so much for the coffee and baked goods or even the social ambiance savored -- slowly -- in European coffeehouses.

Instead, the draw is wireless high speed Internet access that has made U.S. coffee cafes more like public computing centers with patrons' making more eye contact with their laptop displays than other customers. (Query: I wonder if any U.S. coffee chains or shops applied for public computing center subsidies in broadband component of the economic stimulus package, especially during the current downturn that has customers buying fewer premium four dollar espresso drinks?)

Rather than socializing and conversing like their European coffeehouse counterparts, Americans are primarily there to get Internet access and to get work done -- or dash out the door with coffee to go in a paper cup instead of one made of china.

I suspect the difference between U.S. and European coffeehouses can't be fully ascribed to sociological factors. For many Americans, Starbucks and other retail coffee venues are about getting affordable broadband that can't be obtained at home due to the fractured and subpar state of premises-based advanced telecommunications infrastructure.

Thursday, September 24, 2009

IP-based service convergence rendering broadband debate irrelevant

Comcast's move into digital voice in 2006, AT&T's disclosure to Investor's Business Daily two years ago that it ultimately plans to shut down its existing voice network and replace it with a VOIP (Voice Over Internet Protocol) system in the limited areas where its U-Verse offering is being deployed and Verizon CEO Ivan Seidenberg's assertion at a Goldman Sachs investor conference last week that his company is migrating from the publicly switched telephone network (PSTN) and central offices designed to handle plain old telephone service (POTS) delivered over twisted pair copper wire to fiber to the premises (FTTP) all signal that wireline telecommunications is undergoing a paradigm shift.

The transition is away from the single purpose voice telephone and cable TV systems of the past to Internet-protocol based telecommunications infrastructure capable of delivering various media including high speed Internet connectivity, voice and video.

This paradigm shift is rendering the debate at the U.S. Federal Communications Commission and elsewhere over what constitutes broadband Internet increasingly irrelevant. What's gaining importance isn't the download and upload speeds that have dominated the debate over defining broadband but rather how to ensure these various IP-based services can be reliably and economically delivered to end users.

That takes a new and improved telecommunications infrastructure. This emerging IP-based infrastructure and the business models that can most rapidly deploy and support it is what truly deserve attention going forward. The pointless back and forth over how to define broadband keeps the conversation oriented retrospectively to the 1990s instead of where it needs to be: forward into the 21st century.

Tuesday, September 22, 2009

Verizon abandons PSTN, commits to next generation IP-based services

Verizon has become the first big telco to fully commit to next generation Internet Protocol-based service delivered over fiber in which the Internet replaces the publicly switched telephone network (PSTN) designed for plain old telephone service (POTS) delivered over twisted pair copper wire.

“We don’t look any different than Google,” Verizon CEO Ivan Seidenberg told a Goldman Sachs investor conference last week. “We can begin to look at eliminating central offices, call centers and garages.” Seidenberg's remarks were reported in Saul Hansell's Bits column in The New York Times.

That means a much smaller, shrinking wireline footprint for Verizon as the company sells off its old copper plant and deploys its FiOS fiber to the premises plant. In effect, Verizon is starting almost from scratch to build a new wireline plant. And just as with the early copper cable plant, urban areas will see it many years before those living outside them will. That sets the stage for history to repeat the cycle of the early copper POTS deployments of a century ago in which less densely populated areas established telecom cooperatives in the meantime. Only this time the coops will be putting up fiber instead of metal.

In contrast to Verizon, the dominant American telco, AT&T, is trying to keep one foot in its PSTN past by attempting to pound the square peg of ever increasing IP-based bandwidth demand -- particularly for video -- into the round hole of copper POTS with its Project Lightspeed/U-Verse FTTN architecture. This gambit leaves AT&T far less strategic headroom and could ultimately lead to the company getting out of residential wireline altogether in the first part of 2010.

Monday, September 21, 2009

FCC Proposes New Open Internet Rules

The concept, referred to as net neutrality, pits open Internet companies like Google Inc against broadband service providers such as AT&T Inc, Verizon Communications Inc and Comcast Corp, which oppose new rules governing network management.

"Today, we can't imagine what our lives would be like without the Internet -- any more than we can imagine life without running water or the light bulb," Genachowski said in his first major policy speech at the Brookings Institution, a public-policy think tank.

But service providers say the increasing volume of bandwidth-hogging services -- such as video sharing -- requires active management of their networks and some argue that net neutrality could stifle innovation.


This is baloney. Big telcos like AT&T continue to introduce technical advances in long haul infrastructure that can handle ever increasing bandwidth. What they really fear is this proposal will have the effect of requiring them to increase bandwidth over the middle and last miles -- and do so faster and at higher cost than their business models permit.

That in turn will lead to pressure for alternative models in which states, local governments and telecom cooperatives will do the job with open access networks, rendering the incumbents increasingly irrelevant over the middle and last miles.

Incumbents protest Missouri broadband stimulus project

There has been much speculation that incumbent telecom providers would challenge projects seeking broadband infrastructure construction subsidies of the American Recovery and Reinvestment Act of 2009.

One such challenge is shaping up in the Show Me State. Missouri has endorsed a proposal by Marshfield-based Sho-Me Power to lay 2,500 miles of new fiber-optic cable and build 200 new wireless towers to improve broadband access. The project seeks $142.3 million in federal stimulus funds that would be matched by $25.2 million in state funds.

The incumbents contend they already have plenty of middle mile in place and worry the state wants to avoid paying for access to their infrastructure and build its own.

Wednesday, September 16, 2009

As with proposed health care coops, U.S. should seed telecom coops

One of the most debated aspects of the current health care reform effort pending in Congress is how and to what extent any overhaul should foster market competition among managed care plans and insurers. Due to the high costs of paying for medical care for large numbers of people and the substantial capital barriers to entry, the market is oligopolistic with a relatively small number of players operating in each state.

Senate Finance Committee Chairman Max Baucus's (D-Mont.) solution unveiled today in his markup of America’s Health Future Act: purchasing pools for small businesses and consumer cooperatives. The Baucus bill appropriates $6 billion in seed money to help the coops cover start-up costs and to meet solvency requirements.

What does this have to do with advanced telecommunications infrastructure? Like health insurance, the market over the so-called "last mile" also tends to be uncompetitive due to the high capital costs of entry. In fact, it's even less competitive than health insurance from consumers' perspective as telecom infrastructure is a natural monopoly or at best, a duopoly. Here too, coops can provide a degree of competition and choice that's lacking.

Not only that, they can help the Obama administration fulfill its stated policy goal of extending broadband access to all Americans by building out advanced telecommunications infrastructure. As Sen. Baucus proposes, Congress and the administration should similarly seed fund telecom cooperatives that also face high start up costs and capital requirements.

Monday, September 14, 2009

"Broadband in a box" is prime example of going backward on telecom infrastructure

Stories like this one in Telephony Online depict the U.S. headed backward in a race to the bottom rather than forward when it comes to deploying advanced telecommunications infrastructure. This so-called "Broadband in a Box" might make sense for some isolated part of the Third World. But what's sad is it's being deployed in the United States of America. West Virginia, to be exact.

"Broadband in a Box" combines two of the absolute worst forms of Internet Protocol-based connectivity: sucking a satellite on the downlink and dialugging for the uplink.

It's so pathetic that it rightfully doesn't even meet the U.S. government's definition of broadband -- already arguably obsolete at 768 Kbs down and 200 Kbs up -- for the purposes of broadband infrastructure subsidies in the American Recovery and Reinvestment Act of 2009.

Wednesday, September 09, 2009

U.S. posts database of first round broadband economic stimulus projects

Summaries of projects proposed in the first round of U.S. broadband stimulus funding that closed in mid-August ($4 billion of the total $7.2 billion allocated for broadband infrastructure subsidies in the American Recovery and Reinvestment Act of 2009) are available via a searchable database at the broadbandusa.gov Web site.

Maps of the proposed projects -- which are also required to be posted at the site -- haven't yet been posted.

Friday, September 04, 2009

Why the incumbents prefer a sub 1 MBs broadband standard

Some are scratching their heads at recent comments submitted by large telcos and cable companies to the Federal Communications Commission recommending that broadband be defined at speeds of under 1 Mbs in the national broadband plan the FCC is due to present to Congress by February.

Why would they set the bar so low, observers rightfully wonder, particularly since such a low standard is already becoming obsolete given the explosive growth in bandwidth demand and video content.

It's clearly incongruous that Comcast, for example, would urge the FCC define broadband at circa 1998 levels of 256 Kbs at the same time it rolls out its DOCSIS 3.0 software upgrade providing downloads of 50 Mbs and potentially higher. Or for Verizon to suggest broadband be deemed 768 Kbs down and 200 Kbs up (the current FCC definition of "basic" broadband service) when its own fiber to the premises offering, FiOS, offers throughput on a par with that of Comcast.

Here's the explanation: These sub 1 Mbs standards are based not on what the providers are technologically capable of delivering today but instead on their business models. They have built out their proprietary infrastructures to the extent these models allow while providing a reasonable return and dividends for their shareholders.

By advising the FCC to define broadband on such obsolete and arguably bogus terms, the providers are essentially telling the feds they aren't serious about the issue. It's a frivolous, throwaway position that summed up says "forget about any national broadband plan and leave us the hell alone." It's reminiscent of the scene in the 1980s film Tin Men where a car salesman asks a tin man played by Danny DeVito what he's willing to pay for a Cadillac and DeVito answers "Five dollars."

That stance is likely to lead to more complaints from top FCC brass that the FCC's call for input on a national broadband plan is producing self serving and unconstructive comment that doesn't provide any illumination or guidance.

Tuesday, September 01, 2009

What do fuel efficiency standards and broadband have in common?

Like the decades-long policy debate over fuel efficiency standards for automobiles, a new one is springing up. This time it's over minimum broadband speeds with incumbent telecommunications providers arguing for lower standards and consumers demanding higher numbers.

Free Press advocates for a "future proof" telecommunications infrastructure. Based on current, proven technology, that means fiber optics to the premises. Free Press also correctly observes that unlike automotive technology that can be incrementally improved to deliver more fuel efficient vehicles, telecommunications is basic infrastructure and thus requires the right choices to be made up front to protect it from obsolescence and provide sufficient flexibility to accommodate both current and future needs.

Fortunately, there's a way around this debate, which the Federal Communications Commission will soon discover is unlikely lead to a useful outcome or do anything to improve America's fragmented and inadequate telecommunications infrastructure. It's empowering local governments and nonprofit telecommunications cooperatives to build and own their own fiber telecommunications infrastructure -- and ultimately define broadband on their own terms.

Canada's version of broadband stimulus

Two weeks after the U.S. government closed out the first round broadband stimulus funding applications seeking seven times more funds than available, the Canadian government is ramping up its own broadband infrastructure subsidy program.

Like the U.S. broadband stimulus targeting unserved and underserved areas, it too appears aimed at creating jobs and economic activity as rapidly as possible. Applicants have until Oct. 23 to apply for subsidies of up to 50 percent of project costs (compared to 80 percent subsidies under the U.S. Broadband Technology Opportunity Program.)

Unlike the clearly inadequate minimum 768 Kbs download standard for the U.S. program, the Broadband Canada: Connecting Rural Canadians initiative calls for a minimum standard of 1.5 Mbs. While twice that of the U.S. minimum, that standard is already on the verge of obsolescence, barely capable of supporting the growing amount of IP-based video content.

Thursday, August 27, 2009

First round of U.S. broadband stimulus funding draws deluge of applications

It's a good thing the Obama administration sees the $7.2 billion in grants and loans for broadband infrastructure allocated in the American Recovery and Reinvestment Act of 2009 (ARRA) as a mere down payment on building out the nation's incomplete telecommunications infrastructure.

The two federal agencies overseeing the disbursement of the funding -- the Commerce Department's National Telecommunications and Information Administration (NTIA) and the Department of Agriculture's Rural Utilities Service (RUS) -- announced today they received proposals requesting seven times the $4 billion set aside for the first funding round. Two more rounds later this year and early in 2010 will dispense the balance of the allocated ARRA funding.

Link to the agencies' press release here.

Wednesday, August 26, 2009

Universal broadband could "change face of Britian as we know it"

Universally available high speed Internet connectivity would redistribute Britian's population and alter its economy, according to a study reported today by Sky News.

The report also revealed that UK businesses could save up to £31.7bn, if more people were able to work from home.Robert Ainger, Orange's director of corporate business said: "The long-entrenched domination of the South East in Britain's economic structure could at last be coming to a close, with many workers wanting to trade their city lives to work from more rural and idyllic parts of the country."Our report reveals that a digitally connected country could change the face of Britain as we know it."

The findings could have even larger implications for the United States as advanced telecommunications infrastructure is more widely built out.

Socio-economist Jack Lessinger predicted in his 1991 book Penturbia: Where Real Estate Will Boom After the Crash of Suburbia that Americans would emigrate from large metro area suburbs for smaller towns outside of metro areas. Around the same time, early proponents of telecommuting or telework -- your blogger among them -- began to see how telecommunications could fuel the trend that same way freeways fed the surburban boom immediately following World War II.

Thursday, August 20, 2009

FCC wants comment on defining broadband

The Federal Communications Commission has issued a public notice requesting comment on how it should define broadband, a question that arose not long before the Obama administration assumed office at the start of the year. The notice contains a caveat on focusing on throughput speed:

Much of the discussion of any proposal to define “broadband” tends to center on download and upload throughput. Download and upload throughput are important, but neither is precise or diverse enough to describe broadband satisfactorily.

Indeed. The issue isn't broadband itself, but the poor state of the U.S. telecommunications infrastructure that has tended to keep the focus on speed and latency, largely because it's so lousy in much of the nation that its ability to deliver what could even be charitably described as broadband is sketchy and often nonexistent.

Broadband should be instead be defined as fiber infrastructure to the premises. As the FCC notice suggests, any definition based what the pipes can carry rather than the pipes themselves will devolve the discussion into a "how many angels can dance on the head of a pin?" debate and result in the the lowest possible standard chosen in order to dispose of the question in the most politically expedient manner.

Fiber is proven technology and remains the most obsolescence proof advanced telecommunications infrastructure going to best accommodate the growing volume of bandwidth hungry applications and multiple services.

Tuesday, August 18, 2009

Second NOFA for broadband stimulus funds should include seed funding for telecom coops

Cooperatives are in the news a lot this week. Specifically, health care cooperatives as a more politically palatable alternative to a Medicare- like government insurance "public option" plan that is generating a lot of controversy as Congress crafts an overhaul of private U.S. health care finance.

Sen. Kent Conrad (D-N.D.) is currently fleshing out the concept, which would reportedly include about $6 billion in seed funding to help the health care cooperatives get up and running.

As the National Telecommunications and Information Administraiton (NTIA) and the Department of Agriculture's Rural Utilities Service (RUS) prepare the Notice of Funds Availability (NOFA) for the second round of federal economic stimulus subsidies for broadband infrastructure this fall, they should include a similar provision for telecom consumer coops. Getting adequate funding and/or loan guarantees to cover the not insignificant cost of experts and consultants to put together a preliminary network design and business case analysis/long range business plan in time to meet the NOFA application deadline can be an insurmountable hurdle for coops that might otherwise propose solid plans to better connect areas that are unserved or underserved when it comes to broadband.

The guidelines for the first NOFA (applications are due this week) allowed for up to five percent of project planning costs to be refunded -- but only if the project is approved. However, that creates a Catch-22 for coops since they can't even develop a proposal that meets the NOFA requirements without these costs covered at the outset, which means a lot of potentially meritorious projects could fall by the wayside.

The second NOFA should include a preliminary step to allow telecom coops that have or have applied for 501(c)(12) tax exempt status to apply for grant funding or loan guarantees to cover project planning costs on the condition that they engage qualified consultants on an arms-length basis and put forth a good faith effort to complete the work within a relatively short period of time (60 days, for example).

They would then have to propose their projects immediately thereafter if the planning work shows the proposed project would meet the NOFA guidelines and be economically sustainable. If the project turns out not to be so based on preliminary design and business planning, that would give coops the opportunity to tweak their proposals to comply with the guidelines or drop them, saving both them and the federal agencies the time and effort of reviewing unfeasible proposals.

Full disclosure: Your blogger is founder and president of a startup telecom cooperative in El Dorado County, California.

Friday, August 14, 2009

Big telcos, cablecos say no thanks to broadand stimulus funds

This week saw the nation's three big telcos (AT&T, Verizon, Qwest) and the dominant cable company issue a firm "no thanks" to the $7.2 billion in broadband infrastructure grants and loans in the American Recovery and Reinvestment Act.

The San Francisco Chronicle reports AT&T, Verizon and Comcast say they are flush with cash to upgrade and expand their networks on their own and don't need the money. They also don't like the conditions attached to the funding, fearing it would create regulatory precedents that would threaten their closed, proprietary networks. "We are concerned that some new mandates seem to go well beyond current laws and FCC rules," said Walter McCormick, president of USTelecom, a trade group that represents telecom companies including AT&T and Verizon, is quoted as saying.

This is all well and good. Subsidies should be directed to smaller providers, local governments and cooperatives who have a greater commitment to their local areas and can likely do a far better job than the big guys.

Thursday, August 13, 2009

Migration of boomers to Penturbia will boost small town broadband

The Daily Yonder has an interesting item in today's issue that lends credence to Jack Lessinger's prediction two decades ago that America is poised to enter its fifth major settlement pattern. This fifth era -- dubbed Penturbia by Lessinger in the title of his 1990 book on the topic -- will be marked by a shift away from metro areas and suburbs to less populated smaller towns outside of metro areas.

The Daily Yonder story cites a U.S. Department of Agriculture Economic Research Service forecast that the baby boomers -- a hugely populous demographic group -- will shun the burbs in favor of Lessinger's Penturbs. A big draw will be natural amenities, which a map accompanying the article shows are primarily in the western U.S.

This is also where the nation's telecommunications infrastructure is least likely to offer broadband and other advanced telecommunications services, services the boomers are likely to expect and demand but telcos and cable companies have found difficult to profitably provide there. An influx of boomers could change those economics. And where the providers won't upgrade or expand their infrastructures, look for the boomers to form telecom cooperatives and do the job themselves.

Friday, August 07, 2009

Promises, promises: FCC building record to rebut telco broadband deployment claims

Federal Communications Commission Chairman Julius Genachowski is ramping up his agency's work on a national broadband deployment plan due six months from now as required by the American Recovery and Reinvestment Act of 2009.

As the plan is developed, the FCC will be heavily lobbied by telcos and given assurances the companies will be building out advanced telecommunications infrastructure and turning up service pronto, as one failed AT&T deployment scheme that turned out not to be such was dubbed. Therefore, the pitch will go, the best national plan is no plan. Just leave it to us and we'll get 'er done.

But such platitudes aren't satisfactory to FCC officials, who have publicly complained they have received too much empty rhetoric and not enough substantive input in response to the agency's call for industry and public comment on what a broadband plan for the United States should include.

Being a careful, methodical lawyer, Genachowski is already building the record to rebut industry puffery with facts. Multichannel News reports the FCC has retained the Columbia Institute for Tele-Information (CITI) at Columbia's Business School in New York, to fact check previous broadband deployment capital expenditure claims of telecom companies.

"CITI will provide an analysis of the public statements of companies as to their future plans to deploy and upgrade broadband networks," Multichannel News quoted the FCC as saying, "as well as an historical evaluation of the relationship between previous such announcements and actual deployment."

Wednesday, August 05, 2009

Little upside, major downside risk for incumbents challenging proposed broadband stimulus projects

There's an increasing amount of speculation in cyberspace that incumbent telcos and cable companies could opt to exercise a broadband black hole preservation provision in the rules governing the first round of federal broadband stimulus funding applications due Aug. 14. The provision allows incumbent providers to challenge proposed projects in their territories as not meeting the criteria of "unserved" or "underserved" areas under the rules.

Already law firms are warning incumbents that these projects could infringe on their footprints in thinly veiled inducements to challenge or litigate against them. As with lawsuits by incumbents against local governments that have proposed their own fiber to the premises deployments, the goal isn't to prevail on the merits but rather to delay and buy time. Moreover, while the rules place the burden of proof on incumbents to demonstrate a proposed project encompasses census blocks that aren't unserved or underserved, it's likely to be very difficult for project proponents to rebut the incumbents since the rules don't require incumbents to make their own deployment data publicly available.

The problem for the incumbents is that buying more time won't help them since their infrastructures are already built out to the extent their business models permit. Challenging proposed broadband stimulus projects has little upside and significant downside risk: fueling negative public perception and increased scrutiny from regulators likely to view such conduct as monopolistic and contrary to current federal policy to expand broadband access.

New FCC chair must consider alternative business models for telecom infrastructure

Newly minted Federal Communications Commission Chairman Julius Genachowski has kicked off a major initiative to get the United States' telecommunications infrastructure upgraded so that it can deliver broadband to all Americans.

In meetings with newspaper editorial boards, Genachowski noted 40 percent of U.S. households don't subscribe to broadband. "That's not where you want to be on something that we think is a core infrastructure for the United States," he told reporters and editors of the San Jose Mercury News this week. "And I think it is. Broadband will be our platform for commerce, for democratic engagement, and for addressing a whole series of vital national priorities."

To accomplish his goal of full build out of advanced telecommunications infrastructure, Genachowski, who is to present a plan to Congress in February to make it happen, will clearly have to consider alternative business models. The current model in which most telecom infrastructure is held by large publicly traded corporations cannot because it lacks sufficient patient capital to make the necessary investment. These companies can play an important role in providing long haul Internet backbone and much of the middle mile infrastructure. But to ensure last mile access, nonprofit telecommunications cooperatives, small local providers and local governments will have to play the same role they did in the early part of the 20th century where they provided electrical, water and telecommunications infrastructure where shareholder-held companies could not profitably do so.

Genachowski should also recommend Congress put in place incentives to help bridge the last mile gap such as tax breaks allowing property owners to deduct initial costs they would pay to join telecom cooperatives offering fiber connections to their properties.

Thursday, July 30, 2009

California local governments, nonprofits eligible for 90% broadband stimulus subsidization

California local governments and nonprofit entities that can successfully navigate the complex, 121-page set of rules governing the first round of grants providing up to 80 percent subsidization of broadband infrastructure build outs under the National Telecommunications and Information Administration's Broadband Technology Opportunities Program -- and do so in the just two weeks remaining before the Aug. 14 application deadline -- could get as much as 90 percent of their project costs subsidized.

To leverage the federal broadband stimulus funds, the California Public Utilities Commission had previously approved an order expanding its subsidy program for broadband infrastructure, the California Advanced Services Fund, to provide up to half of the 20 percent match required of regulated telecom providers proposing BTOP projects.

Expanding the CASF funding to include local governments, telecom cooperatives and other non commercial providers required legislative authorization. Gov. Arnold Schwarzenegger signed the legislation, AB 1555, into law July 29. An urgency measure, the bill takes effect immediately.

It remains to be seen if any such projects will be proposed given BTOP rules that make it difficult to qualify projects and give incumbent providers effective veto power, particularly in areas deemed "underserved" under the guidelines.

Jump in online video calls for higher FCC minimum broadband definition

PC Magazine reports this week on a survey by the Pew Internet & American Life Project that found the percentage of adults who watch video online has nearly doubled since 2006, up to 62 percent versus 33 percent in December 2006.

The item underscores the inadequacy of the current minimum definition of broadband of at leasat 768 Kbs download standard adopted by the U.S. Federal Communications Commission, which has also been written into the rules governing the disbursement of $7.2 billion in federal economic stimulus funds for broadband infrastructure. That speed isn't going to hack it for video, which most observers agree is the fastest growing form of online content.

The 768 Kbs standard also represents a huge step down from the speeds Congress contemplated in a January draft version of the American Recovery and Reinvestment Act as minimally defining wireline broadband of at least 5 Mbs download and 1 Mbs uploads and 45 Mbs on the downside and 20 Mbs up for "advanced" wireline broadband.

Under the stimulus legislation, the FCC is required to develop a national broadband plan and present it to Congress next February. The agency should dispose of its outdated definition of broadband and instead adopt the minimum standards outlined in the draft stimulus legislation as they are better matched to meet the growing bandwidth requirements of online video.

Wednesday, July 29, 2009

U.S. broadband stimulus rules favor telco/cable duopoly, turn back clock to 1998

Take a look at Christopher Mitchell's critique of the Notice of Funds Availability (NOFA) issued at the beginning of the month by the National Telecommunications and Information Administration (NTIA) for the first round of grants and loans to subsidize broadband infrastructure allocated in the American Recovery and Reinvestment Act (ARRA).

Mitchell's complaint is rather than getting the United States on a path toward upgrading its obsolete copper-based telecommunications infrastructure to modern fiber optic-based networks owned by local governments and community-based organizations, the rules instead instead favor incumbent private sector providers and effectively revert to the status quo of a decade ago. That's directly at odds with the intent and language of the ARRA, Mitchell asserts, suggesting the rules will require additional future government subsidies since they encourage construction of on the cheap, technologically obsolete telecom infrastructure in a race to the bottom rather than the top.

Here's an excerpt from Mitchell's How the NTIA Dismantled the Public Interest Provisions of the Broadband Stimulus Package:
NTIA has charted a path to bring the slowest networks to people who live in areas that are the most uneconomical to reach. Rather than doing it right the first time (i.e. a strategy that starts with modern speeds and identifies an upgrade path moving forward), NTIA’s path will likely expand 1998-era networks, certainly requiring future appropriations to bring residents to networks with contemporary speeds.

Tuesday, July 28, 2009

Mixed messages inside a broadband black hole


Life can be odd inside a broadband black hole where the normal laws of logic and common sense get twisted and break down.

Consider, for example, today's mail delivery. It contained the contradictory mix of 1) A letter soliciting Comcast Business Class service, a $79/month bundle of "business class Internet up to 4 times faster than DSL." (Query: how can it be compared to a nonexistent service -- no DSL here) and 2) A big postcard from HughesNet addressed to "DIAL UP INTERNET HOUSEHOLD" inviting me to suck a satellite to get speeds "50X FASTER than dialup." (Thanks but I'll pass).

Two direct mail solicitations: One from a provider that can't deliver what it pitches (Comcast) and another selling a costly, latency larded service (HughesNet) that could be more aptly dubbed MolassesNet.

Somehow these companies don't have their marketing campaigns straight. It's no wonder the government wants to map broadband availability because apparently the providers themselves are confused.

After 13 months, persistent Firefox/My Yahoo! bug finally squashed

After nearly 13 months -- longer than the lifespan of most biological insects -- a persistent bug in the interaction of the Firefox browser and the My Yahoo! home page has finally been squashed. This blog first wrote about the issue last September, which surfaced when Yahoo did a forced upgrade to a new home page.

The problem: when Firefox users clicked on an article on the home back and then attempted to navigate back to their My Yahoo! home page, they would lose their place on the home page which would reset to the top of the page. They then had to scroll down the page to find where they left off, making for a very kludgy browsing experience.

With the recent release of the latest version of the browser, Firefox 3.5, the problem appears to have been finally resolved.

Monday, July 27, 2009

U.S. residential DSL access shows no gain since 2006


U.S. residential DSL availability in the first half of 2008 continued to show no increase since it virtually hit the wall in 2006, with about a fifth of the nation still unable to access it.

That's pretty much the same story reported on this blog back in January based on Federal Communications Commission data covering the previous six-month period of July to December 2007. Readers can see for themselves by looking at the first column of Table 14 in the latest FCC report on Internet access released last week.

The same states continue to rank low on residential DSL access, including Vermont, Virginia, New Hampshire, Maine Michigan, Mississippi, Maryland and New York. The FCC withheld DSL availability for some states including Delaware, Massachusetts, Rhode Island, and Hawaii citing "firm confidentiality."

This redaction and other mechanisms to obfuscate where broadband infrastructure deployment exists and where it doesn't are increasingly cropping up at a time when government initiatives to increase broadband access demand greater transparency. It will be interesting to see how federal and state governments resolve this fundamental conflict.

Tuesday, July 21, 2009

Memo to RUS and NTIA: Proposed revisions for broadband stimulus funding rules

The two agencies administering rules governing the disbursement of $7.2 billion of grants and loans for allocated for broadband infrastructure construction in the American Recovery and Reinvestment Act -- the Rural Utilities Service and the National Telecommunications and Information Administration -- should revise the guidelines as follows:

1. Liberalize the rules to encourage consumer telecom cooperatives, recession ravaged local governments and small local fiber providers to propose projects. While the guidelines for the first round of applications issued July 1 allow up to five percent of application preparation costs (e.g. infrastructure engineering, development of minimum 5-year business plan) to be awarded in grants and/or loans, only projects accepted for funding can get these substantial costs credited back. This creates sizable up front risk and funding hurdles that discourage infrastructure builds by non-incumbent entities and providers. Revise the guidelines to include loan guarantees for engineering and business planning for projects that demonstrate good faith, diligent planning work. Doing so will encourage more projects and also help weed out those that seem like a good idea but won't pencil out.

2. Don't require non incumbent providers to be census takers and go door or door to document the level of broadband availability and adoption in census blocks comprising their proposed projects. That's a job for the Census Bureau and introduces cost and delay that are contrary to the stimulus funding goal of rapid deployment of broadband infrastructure.

3. Lose the broadband black hole preservation provision in the current rules that allows incumbent providers to challenge proposed projects. Also trash a provision in the definition of "underserved" areas deeming these areas as such if no wireless provider merely advertises service with at least 3MBs download connectivity. Both of these provisions will only introduce delay and may lead to litigation that's at cross purposes with the speedy build out of broadband infrastructure.

Minnesota municipalities don't like broadband stimulus rules

The Minneapolis StarTribune.com reports Minnesota municipalities are having second thoughts about applying for some of the $7.2 billion in taxpayer subsidized grants and loans allocated in the federal economic stimulus package for broadband infrastructure construction.

The reason is the 121 pages of guidelines issued July 1 by the two federal agencies that will review and determine which projects get funded require applicants to conduct door to door censuses of their proposed project areas to determine if the census blocks contained in their contemplated project areas qualify for funding under the rules' definitions of what constitutes an unserved or underserved census block. Skipping this step could jeopardize a project since it could be rejected outright by the agencies for lack of required documentation of need or challenged by incumbent providers as permitted under the guidelines.

An excerpt from the article:

The problem, as city and county broadband planners see it, has less to do with technology than with the sheer legwork required to create an acceptable proposal.

Applicants must prove that all the areas they propose to serve would meet a narrow federal definition of being underserved -- that 50 percent or more households in the area lack broadband access, or that fewer than 40 percent of the households already subscribe to broadband. That puts the burden on cities and counties to undertake expensive and time-consuming door-to-door surveys, because telephone and cable companies don't reveal which areas they serve.

The Minnesota munis' concerns are understandable. They don't see themselves as being in the census business. Conducting a door to door survey is a costly and time consuming task that means many prospective applicants have concluded there's no way they can submit project applications to the agencies by the Aug. 14 deadline for the first round of funding.

FCC broadband czar underwhelmed by public comments on U.S. broadband policy

MultiChannel News reports the Federal Communications Commission's broadband czar Blair Levin is underwhelmed by the quality of comments the agency has received in response to its call for public input for a national broadband policy. Congress set a February 2010 deadline for the policy as part of the American Recovery and Reinvestment Act enacted earlier this year.

The gist of Levin's complaint is the comments are overly self serving and don't help the FCC shape a broadband policy that will further the Obama administration's goal of making broadband accessible to all American homes and businesses.

That's hardly surprising given the inherent tension between the public's growing and nearly insatiable demand for more and faster broadband and the private telco/cable industry's duopolistic control over who gets service and at what speed and price -- and only provides it when it's in their and not necessarily in their customers' interest.

Implicit in this tension is the evolution of the U.S. telecommunications infrastructure and services away from the closed, proprietary single purpose systems of the past that provided basic phone service and cable. The future is locally owned and operated open access-based fiber infrastructure to the premises that can deliver various advanced Internet-protocol-based services to business, government and residential consumers with bandwidth to spare. In that regard, Levin's FCC is likely getting variations on the theme "fight the future" from a telco/cable duopoly that fears it.

Wednesday, July 15, 2009

App Rising: Ten ways broadband stimulus rules fail America

From App-Rising's perspective, the Notice of Funds Availability (NOFA) announced July 1 for the first round of $7.2 billion of grants and loan subsidies for U.S. broadband telecommunications infrastructure falls short of the goal of Obama administration and Congress in authorizing the funds as part of the American Recovery and Reinvestment Act. Some key excerpts:

In large part this stimulus is business as usual for America's broadband policy, or lack thereof. We're continuing to muck around, shuffling our feet when the rest of the world is racing forward. It's not just that this NOFA isn't aspirational enough, it's that it does seem to be aspiring to anything at all. There's no ultimate goal for what it's setting out to achieve other than getting some people some broadband. And there's seemingly little being done to even use this as a learning experience that we can build from and help guide future investments. It feels like NTIA and RUS just took the safest route, followed the same steps that have failed us in the past, and at best only marginally improved the approach. Because of this I can't help but feel pessimistic about what the ultimate impact of the broadband stimulus will be.

There are a host of truly shovel-ready, truly innovative, true testbed showcase projects for us to be supporting through this broadband stimulus. But based on how things are looking so far, I can't help but feel like this NOFA is already a massive failure and the money hasn't even gone out the door yet.

I agree the rules governing this first NOFA issued two weeks ago create too much opportunity for incumbent providers to delay proposed projects in order to maintain their territorial hegemony that is a hallmark of America's privately built and operated telecommunications infrastructure.

On the other hand, App-Rising sees this first NOFA as all encompassing broadband policy. It is not. The broadband provisions of the economic stimulus legislation call for the creation of an omnibus U.S. broadband policy by Febuary 2010. Plus the funding allocation was described by Obama administration officials as a "down payment" on a badly needed upgrade of the nation's telecommunications infrastructure. Finally, there's a good chance the rules of the first NOFA will be revised based on complaints such as these in the second and third rounds of funding later this year and early 2010.

Tuesday, July 14, 2009

California PUC approves subsidy for fixed WISP build offering 14Mbs symmetric service

The California Public Utilities Commission announced July 9 that it approved a 40 percent subsidy totaling $2.8 million from its California Advanced Services Fund for fixed terrestrial wireless infrastructure to provide broadband connectivity to more than 14,000 unserved premises in Alpine, Amador, Calaveras, Tuolumne, and Mariposa counties.

According to the CPUC resolution approving the project, it will be built over a 20-month period by Mother Lode Broadband and will leverage a regional network of existing mobile cellular towers reinforced with "expanded backhaul" -- most likely fiber.

The proposed throughput will blow existing WISPs -- both mobile 3G cellular as well as fixed premises providers -- clean out of the water. It's on a business class scale providing symmetric connectivity of "up to" 14 Mbs. There's no word on latency and Mother Lode Broadband is mum on what protocol -- WiMAX is a likely possibility -- that it plans to use. In addition, the CPUC resolution is silent on the technology that will make service this scale possible, only revealing it will employ "high capacity licensed spectrum."

Only time will tell if this is for real or simply more wireless vaporware. With the deployment planned over 20 months, there is a relatively large amount of that -- and probably too much for those 14,000 premises that needed broadband 10 years ago and are still stuck on dialup or sucking a satellite. "I'll believe the speeds when I see them," one skeptical Northern California industry insider tells me.

Fed up with "depressing" service, Virginia county forms broadband authority

BEDFORD — After several months of consideration, the Bedford County Board of Supervisors narrowly voted Monday to form a broadband authority.

The authority, which was enacted by a 4-3 vote after a public hearing, is a legal entity that can contract directly with private providers to deliver broadband access to residents and businesses. The seven-member board would serve as the authority and could appoint an advisory committee for technical assistance.

“We do envision this as a public-private partnership,” Assistant County Administrator Frank Rogers said of the authority’s purpose. He said the county “is not looking into the business of being a broadband provider” but rather a vehicle to help facilitate service to parts of the county that are not served or underserved.

Monday, July 13, 2009

California issues updated "unclassified" state broadband availability maps

The California Public Utilities Commission has published updated versions of maps of broadband availability in the Golden State that were issued in early 2008 by Gov. Arnold Schwarzenegger's California Broadband Task Force.

There are two versions of the maps: "classified" versions accessible only to approved providers and "unclassified" maps that are publicly available and published online as .pdf files. The secret maps -- classified at the insistence of incumbent providers who don't want the public or potential competitors knowing exactly what they are providing (and more importantly, not providing) and where -- purportedly reveal street address level broadband availability organized by census block. The unclassified public maps by comparison show only the view from 60,000 feet and are sanitized via rasterization and the omission of key highway and road identifiers and town markers. This renders them nearly inscrutable to outsiders and consumers -- some of whom complain the maps exaggerate the boundaries of where broadband availabilty truly exists.

Notably, the two federal agencies administering the distribution of $7.2 billion of grant and loan subsidies to faciltiate the build out of broadband telecommunications infrastrucutre -- the Dept. of Agriculture's Rural Utilities Service (RUS) and the Commerce Department's National Telecommunications and Information Administration (NTIA) -- issued rules last week for the first round of funding requiring proposed projects include service area maps delineated by census block and posted on the federal government's Broadband Stimulus Portal.

When compared with the California maps, these newly created maps of proposed project areas may show where the broadband black holes really exist in a way the California maps do not.

Sunday, July 12, 2009

Ironically, some broadband stimulus projects may need stimulation of their own

Grants and loan subsidies totalling $7.2 billion in the Obama administration's economic stimulus package are aimed at "shovel ready" broadband telecommunications infrastructure projects that can generate employment and do so quickly while expanding access to broadband .

Project plans that have already been drawn up and have been sitting on the shelf and not proceeding but for sufficient capitalization will likely be the only ones that will be able to meet the fast approaching Aug. 14 deadline for the first round of funding under rules developed by the two federal bodies administering the funds, the Dept. of Agriculture's Rural Utilities Service (RUS) and the Commerce Department's National Telecommunications and Information Administration (NTIA).

However to qualify for subsequent rounds of funding, start up projects -- particularly those proposed by nonprofits and telecommunications cooperatives -- ironically face significant financial hurdles just to get their stimulus funded project proposals ready. That's because the funding application guidelines jointly issued by the RUS and the NTIA and published last week in the Federal Register require extensive preparation including the foundational step of identifying contiguous census blocks that fall within the guidelines' definition of "unserved" and "underserved" when it comes to broadband access. And that doesn't include the actual project network plan that in the case of a project that will cost more than $1 million or more to build requires retaining professional engineering consultants to review and sign off on the build.

Both of these pre-build steps can run anywhere from $30,000 to $100,000 and potentially far more depending upon the size and scope of the proposed project. While the rules allow these application preparation costs to be reimbursed should a proposed project be approved for funding, raising these sums on the front end with no guarantee of reimbursement given both the complexity of the rules as well as likely challenges of proposed projects by incumbent providers as specifically provided under the guidelines could prove to be an insurmountable hurdle for projects by telecom coops and cash-strapped local governments. That will lead to far fewer potentially meritorious projects being proposed than might otherwise be the case. For the next two rounds of broadband stimulus funding this fall and next year, the RUS and the NTIA should liberalize the rules to include at least some of these costs for broadband build out projects proposed by nonprofits and local governments.
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