Tuesday, June 30, 2015

Pew continues to survey as if it's 1999 on "Internet adoption"

Pew: Internet Penetration Reaches Saturation Levels – For Some - Telecompetitor: Internet penetration in the U.S. has reached saturation levels, at least for some groups, according to an analysis of 15 years of data collected by a Pew Research Center unit that has been tracking and studying Internet adoption and use in the U.S. since 2000.

The Internet saturation point has been reached for Americans – young Americans especially – with high levels of education and those who live in more affluent households, Pew highlights in “Americans’ Internet Access: 2000-2015.”

More than 8 in 10 of all American adults – 84 percent – now use the Internet, up from about half in 2000. Seventy percent of young U.S. adults used the Internet in 2000. That has increased steadily since 2000: Today 96 percent of young U.S. adults use the Internet. In contrast, it wasn’t until 2012 that more than half of U.S. adults 65 and older said they do.

These surveys of "Internet adoption" are growing increasingly irrelevant as the Internet delivers various types of services including data, video, voice, telemedicine, distance learning and control of home systems. The Internet is not a distinct service but rather a means of delivering multiple services -- and is now classified as a common carrier telecommunications service by the U.S. Federal Communications Commission.

That Pew continues to do these retrospective, backward looking surveys is puzzling in 2015. It does fit nicely however with the strategy of the legacy incumbent telephone and cable companies and their outmoded metallic Internet infrastructures to keep the concept of "the Internet" as it was in 1999 when it was used solely for data such as email and the then relatively new World Wide Web.

Tuesday, June 23, 2015

Fundamental flaw: Linear thinking prevails in an exponentially changing world of Internet-based telecom

The Law of Accelerating Returns | POTs and PANs: The FCC recently set the new definition of broadband at 25 Mbps. When I look around at the demand in the world today at how households use broadband services, this feels about right. But at the same time, the FCC has agreed to pour billions of dollars through the Connect America Fund to assist the largest telcos in upgrading their rural DSL to 15 Mbps. Not only is that speed not even as fast as today’s definition of broadband, but the telcos have up to seven years to deploy the upgraded technology, during which time the broadband needs of the customers this is intended for will have increased to four times higher than today’s needs. And likely, once the subsidy stops the telcos will say that they are finished upgrading and this will probably be the last broadband upgrade in those areas for another twenty years, at which point the average household’s broadband needs will be 32 times higher than today.
I laud Google and a few others for pushing the idea of gigabit networks. This concept says that we should leap over the exponential curve and build a network today that is already future-proofed. I see networks all over the country that have the capacity to provide much faster speeds than are being sold to customers. I still see cable company networks with tons of customers still sitting at 3 Mbps to 6 Mbps as the basic download speed and fiber networks with customers being sold 10 Mbps to 20 Mbps products. And I have to ask: why?
Some excerpts from an excellent blog post from Doug Dawson of CCG Consulting that explains to a great extent why the United States suffers from inadequate telecom infrastructure: employing an ill suited linear planning and business model for today's Internet-based telecommunications space that is expanding exponentially. I too have asked why -- why providers and regulators view Internet-based telecom like a consumptive utility such as electric power, water or natural gas and base their business models on packaging and selling bandwidth rather than telecommunications services? For example, see this provider's "dedicated optical fiber" service that slices and dices bandwidth into seven (yes, seven) bandwidth tiers at exorbitant prices on a fiber circuit that can easily deliver 1 Gigabit of bandwidth.

The consequence of the linear, incremental thinking that dominates in telecom manifests in what I have termed Levin's Law of Internet Infrastructure Inertia.*

*Blair Levin, a former U.S Federal Communications Commission official and lead author of the FCC’s 2010 National Broadband Plan observed in 2012 that the major landline ISPs had no plans to improve and build out their infrastructures. “For most Americans, five years from now, the best network available to them will be the same network they have today," Levin stated.

Friday, June 19, 2015

Homeowners near Palmer Divide stuck with slow Internet or no Int - KOAA.com | Continuous News | Colorado Springs and Pueblo

Homeowners near Palmer Divide stuck with slow Internet or no Int - KOAA.com | Continuous News | Colorado Springs and Pueblo: Imagine moving into your dream home, only to find out no company will provide you with Internet access.

We're not talking about living 60 miles away in the country, but near the Palmer Divide in northern El Paso County.

Five homeowners associations have joined together to create the Palmer Divide Broadband Coalition, a team hoping to grab the attention of state leaders and local officials to help bring broadband into their neighborhoods.

“Homeowners have been trying for about 8 or 9 years to get broadband service,” Palmer Divide Broadband Coalition Chris Davis said. "We've had home sales that were lost and properties that were under contract where they buyers backed out when they found out that broadband service was not going to be available to that home."

Keep an eye on this growing pain point with America's inadequate telecommunications infrastructure. The problem is creating direct adverse economic impact on communities redlined by legacy telephone and cable companies and otherwise left off the Internet grid.

Seattle's search for a viable FTTP business model

Gigabit Internet access for $45 a month: How Seattle could make it happen - GeekWire: Seattle’s top technology and budget officials say the city can’t bear the cost on its own, if funding for the project comes purely from subscriber fees. But they acknowledge that the city would have a better chance of bankrolling the build-out by adding a property tax to the mix.

A property tax would have several advantages. First, under the financial models used by consultant Columbia Telecommunications Corp., the monthly fee for subscribing to Seattle’s municipal Internet service would drop to $45/month if a property tax were used to subsidize the cost, rather than the $75/month envisioned otherwise.

This, in turn, would make it tougher for Comcast, CenturyLink or any other commercial provider to engage in a price war with the city.

This article is an excellent, comprehensive overview of the financial challenges Seattle faces in pursuing its decade-long goal of building fiber to the premise (FTTP) telecommunications infrastructure for Emerald City residents. Adding public funding in the form of property assessment reduces the so-called "take rate" risk of a purely subscriber paid business model for fiber to the premise (FTTP) such as employed by investor-owned incumbent telephone and cable companies.

As I've blogged previously, from a policy perspective a property assessment makes economic sense because studies have shown a fiber connection to a property boosts its market value just as does a paved road running nearby. It also has the knock on effect for local governments of bolstering economic activity and the tax revenue that such activity generates. Bringing public funding into the mix is also part of the business models of regional FTTP projects including the Utah Telecommunication Open Infrastructure Agency's (UTOPIA) public-private partnership (property fees) and WiredWest in western Massachusetts (municipal bonds supplemented by state grant funding).

But as long as incumbent telephone and cable companies are in the picture to the extent they are in large urban areas like Seattle, even mitigating the take rate risk with public funding doesn't solve all the financial challenges as noted in the article:
In an interview last week about the consultant’s report, Matmiller also cautioned that there would be no guarantee of success with the scenario of a $45/month rate subsidized by property taxes. “We still want a model that puts less risk to the system,” he said.“Even though it’s a cheaper monthly amount, if Comcast or a competitor comes in and uses their pricing power to match it and takes away the consumer argument to switch over, then we are stuck in same boat where now you’re paying a property tax and we have to shut down the system.”

Seattle like other municipalities reserves the nuclear option of inverse condemnation if it wants to push the incumbents out of the way in the name of progress to get FTTP to all city residents in a timely manner given the incumbents have no incentive to move quickly given their monopoly status. But that too comes with major downsides. The city would have to pay fair market value to the incumbents to acquire legacy metallic cable plant, adding more costs and likely years of delay as the condemnation process wound through the legal system.

Tuesday, June 16, 2015

Regional FTTP initiatives may have better odds of success than municipal projects

Broadband for all: 8 next steps for Seattle | Crosscut: According to the city’s study, Seattle would have to invest $460 million to $660 million in building this network. Seattle would need to get 43 percent of potential customers choosing the service at $75 a month in order to break even. Such a “take rate” is virtually impossible due to the serious competition already in place from Comcast, Wave, CenturyLink, Verizon, AT&T and other services. 

Seattle's situation shows that local government efforts to build universal fiber to the premise (FTTP) telecommunications infrastructure face high financial hurdles in urban areas where there are multiple incumbent providers.

Unlike municipal projects like these, regional FTTP initiatives in less urbanized parts of the United States where incumbent telephone and cable companies have less infrastructure and there are sizable areas lacking any landline Internet connectivity options may face better odds of financial viability. One such example is WiredWest, a cooperative of 44 Western Massachusetts towns that is in the formative stages and picking up speed quickly.

Thursday, June 11, 2015

AT&T’s planned “wireless local loop” plant could help it meet its Title II universal service obligation

When AT&T began the regulatory review process of its planned acquisition of DirecTV one year ago, it proposed to offer fixed wireless Internet service to about 13 million residential premises in its service territory not offered Internet service in order to improve the deal’s odds of gaining approval. These premises were never offered AT&T’s legacy ADSL service after it was introduced more than a decade ago. And even if they were today, ADSL would fall far short the Federal Communications Commission’s speed-based minimum standard for Internet service of 25 Mbps for downloads and 3 Mbps up.

Image result for at7tNow that the FCC’s rules deeming Internet a common carrier telecommunications service under Title II of the Communications Act are going into effect requiring Internet service providers to “furnish such communication service upon reasonable request” under Title II’s universal service and nondiscrimination provisions, AT&T may be seeking another, more important role for its planned “wireless local loop” fixed wireless plant. 

Specifically, helping it meet its universal service obligations. With so many premises in its service territory refused Internet service for a decade or longer, AT&T could face a potential barrage of complaints and penalties if these premises remain without premises Internet service and it continues to say no to service requests.

However, as arstechnica reports today, AT&T’s fixed wireless service is expected to provide connectivity of up to 20 Mbps – below the FCC’s minimum standard for Internet service. The only way to get more wireless bandwidth is more fiber backhaul bandwidth and/or more wireless transmitters. That means AT&T would likely have to spend more than it would like on its planned “wireless local loop” plant to bring service up to the FCC’s standard in order to keep itself out of hot water with regulators.

Monday, June 08, 2015

‘Quad Play:’ Remedy for the failed "triple play" business model as Title II universal service obligation kicks in?

Are Americans Ready to Pay for ‘Quad Play’? - WSJ: A combination of T-Mobile US Inc. and Dish Network Corp. would merge two companies rooted in different industries.

For consumers, it would merge some of the fastest-growing bills in their budgets.

American households spent more than $191 a month on average for television, Internet and phone services in 2013, according to Labor Department data. That was up 24% from 2007 and about what they spent on health insurance.

The question is whether Americans are going to take to paying all that to one company. The prospect isn’t so far-out anymore. With satellite broadcaster Dish Network pursuing a merger with wireless carrier T-Mobile US, AT&T Inc. about to close a $49 billion acquisition of Dish rival DirecTV and cable companies experimenting with cellphone plans, many of the services that keep people entertained and in touch are moving under the same roof.

Such providers are betting on so-called convergence—the idea that they will be better off if they can bulk up, as services that used to flow via different wires and satellite dishes all start traveling on the Internet.

It makes technical sense to deliver all these telecommunications services via Internet Protocol (IP). But there's a disconnect between Internet technology and economics. Many homes and small businesses are not offered landline premise Internet service since the economics of the current "triple play" business model (phone, Internet and TV) don't pencil when the costs of infrastructure CAPex and OPex are factored in.

Will bundling in mobile wireless to create a "quad play" offering improve the business case? One might think so when there's ARPU approaching $200 a month. And it might well better once new rules issued by the U.S. Federal Communications Commission go into effect this month classifying Internet as a telecommunications service under Title II of the Communications Act.

Title II subjects Internet service providers to universal service and nondiscrimination requirements and bars ISPs from redlining higher cost neighborhoods not offered triple play services. That in turn increases the pressure on ISPs to consolidate to ensure they can offer these all inclusive service bundles under their preferred vertically integrated business models where they own both the Internet "pipe" to the home and the services delivered over it.
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