Showing posts with label Broadband infrastructure. Show all posts
Showing posts with label Broadband infrastructure. Show all posts

Monday, March 09, 2009

Broadband black hole preservation act introduced in Pennsylvania

In Pennsylvania, the state government controls alcoholic beverage sales via a state run monopoly. Apparently the telco/cable duopoly wants similar protection in the form of proposed legislation that would bar local governments from being involved with or helping finance the construction of local broadband telecommunications infrastructure, MuniWireless reports.

Talk about a state with mixed up crackpot regulatory policies. It treats one industry that's a naturally competitive private market (alcoholic beverage distribution) while proposing telecommunications infrastructure -- a natural monopoly -- be treated as a competitive private market and protected from government "competition."

Tuesday, December 30, 2008

Guiding principles for U.S. broadband infrastructure economic stimulus

As Congressional leaders and the incoming administration of U.S. President-elect Barack Obama mull economic stimulus legislation including a portion of which is expected to be devoted to telecommunications infrastructure to boost broadband Internet access, I offer these guiding principles:

1. The focus should be on the so-called "last mile" or local access network portion of the system. There's a broad consensus that the lack of adequate broadband access in the United States is due to technological shortcomings on this segment of the telecommunications infrastructure, its weakest link. The overall goal should be full build out of this currently incomplete but vital infrastructure to serve all residents and businesses.

2. The "copper wall" that comprises the last mile telecommunications infrastructure is the primary barrier to wider broadband Internet access. It has been obsolete for about a decade and will become increasingly so as demand for broadband access and more bandwidth intensive content like video grows. The copper wall should be torn down and replaced with fiber optic cable, either aerial or buried depending on local construction cost factors and neighborhood preferences. Calls by large telcos for funding for DSL over copper should be rejected. Funding for such projects would keep the U.S. lagging behind other developed nations on broadband telecommunications technology and constitute an economic bailout to build increasingly obsolete technology rather than a true stimulus.

3. The last mile is the most local element of the nation's telecommunications infrastructure. Accordingly, stimulus should favor local entities to replace copper with fiber such as locally owned private companies, local governments and fiber cooperatives, the latter aided by incentives to encourage homeowner-owned fiber over the last mile.

The 12 year period following the enactment of the 1996 Telecommunications Reform Act has shown providing tax breaks and other incentives to large publicly traded telcos has not resulted in adequate capital expenditure on infrastructure to serve the nation's future telecommunications needs or the selection of broadband technology best suited to do so.

As for private providers, Congress and the Obama administration should note that even generous subsidies to incumbent telcos to build out broadband infrastructure may prove indequate as seen from their less than enthusiastic response to a California Public Utilities Commission program that subsidizes broadband deployments in unserved and underserved areas with a surcharge on intrastate voice long distance calls.

The investment cycle of these companies is apparently too short to earn a return on broadband infrastructure investment even at the 40 percent funding level provided by the program -- and even for arguably obsolete DSL equipment proposed in the handful of projects approved by the CPUC in 2008. Accordingly, broadband infrastructure stimulus funding directed to community-based cooperatives, nonprofits and local governments would likely produce the most rapid deployments.

Thursday, March 20, 2008

Burlington Telecom head: Broadband infrastructure a natural monopoly that should be publicly owned

Here's a guy who really understands the economic big picture when it comes to broadband infrastructure: Tim Nulty, director of Burlington Telecom, which built a publicly owned broadband system serving the city of Burlington, Vermont.

Nulty sets out crystal clear guidance for public policymakers on broadband infrastructure: it's a natural monopoly that by its very nature can't foster robust market competition to ensure the needs of the public are met. Hence, Nulty says, it should be in the public rather than private sector like roads and highways. Nulty's observation has enormous implications for the current misguided notion being embraced by some states at the behest of AT&T that state regulation preempting local governments will lead to a competitive market for advanced services. AT&T's approach creates a duopoly of telcos and cable companies and a duopoly does not a competitive market make.

Here's an excerpt from a recent profile of Nulty appearing in Vermont's Business People magazine:

He likens his fiber-optic superhighway to a more commonly understood network. "Nobody thinks twice about the roads being in the hands of the public," Nulty says. "The thought that a private company could own the roads and charge whatever they pleased to anybody who goes on them is ludicrous anywhere in the world. That's what this is: the public roads."

Monday, February 04, 2008

AT&T hikes DSL prices, newspaper reports

The Chicago Tribune is reporting AT&T is raising prices across the board for its DSL service by $5 a month. The exception, a company spokeswoman told the newspaper, is residential customers who pay $35 for the Elite plan and customers with long term contracts.

AT&T said the increase is needed to upgrade infrastructure to support more bandwidth intensive applications such as video and music files.

I'm doubtful of the company's stated rationale for the increase because it has effectively pulled the plug on upgrading its legacy first generation DSL plant and is instead directing funding to its hybrid fiber/copper Project Lightspeed deployment in selected metro areas. This deployment is in support of the telco's U-Verse all digital triple play bundle of voice, high speed Internet and Internet Protocol TV (IPTV).

The DSL price boost is an effort to merely extract greater incremental income out of existing services. That's in line with AT&T's highly risk adverse cash flow and depreciation based management strategy that shuns significant physical plant upgrades that would eliminate large swaths of its 22-state service area where AT&T offers no wireline-based broadband services.

Tuesday, December 11, 2007

Back to the future: Could AT&T be facing major federal regulatory action two decades after divestiture order?


Could AT&T once again find itself facing sweeping federal government regulatory action on the scale of the 1984 federal court ruling ordering the big publicly traded telecommunications company be divested on anti-trust grounds?

It’s possible because in the more than two decades following the break up order, AT&T through a combination of mergers and acquisitions including its purchase of BellSouth one year ago has regained much of its territorial hegemony and is now the dominant telecommunications provider in 22 states.

If it happens in the next several years, this time around federal policymakers will be motivated by a different set of circumstances: Not just the company’s dominant market position, but growing alarm over the insufficiency of AT&T's aging copper wire-based local distribution infrastructure to meet the burgeoning demand for advanced telecommunications services based on broadband Internet access.

The realization that broadband Internet access is vital to the health of the nation’s economy and concern the U.S. will end up uncompetitive relative to other industrialized nations measured on broadband Internet access will fan the unease.

Public policymakers could ultimately require AT&T to sell off regions within its service area where it does not commit to deploy infrastructure ensuring near universal broadband access by a future date. Congress is already laying the groundwork for such a move with legislation that would map out America’s broadband black holes.

Skeptics might argue such strong regulatory action is improbable because unlike in 1984, AT&T competes with cable companies and other telcos to offer broadband-based services. Not necessarily. Cable companies often aren’t anywhere to be found in AT&T broadband black holes. Moreover, there’s a lack of competition among telcos since their market practice is to avoid competing in each other’s territories with wire line-based services.

Wednesday, July 18, 2007

Media fails to ask what's being done to lower broadband infrastructure costs

The high cost of installing wireline-based broadband infrastructure is cited as the main reason for the lack of broadband access that leaves gaping broadband black holes across the landscape. Providers simply shrug and tell desperate dialuggers and satellite suckers, "Tough, it simply costs too much to serve you."

But why is it among the growing media coverage of the nation's broadband shortcomings no one is asking or discussing what telcos and cable companies are doing to lower costs to make broadband more widely available? It's a major oversight that has led to a one-sided, circular debate that does nothing to solve the problem.

Friday, June 29, 2007

Falling U.S. broadband penetration rate called "national embarassment"

Newsweek is out with an article reporting the United States has fallen to 15th place among economically developed nations when it comes to the number of households with broadband Internet access.

FCC Commissioner Michael Copps is quoted as calling the findings by the Organization for Economic Cooperation and Development a "national embarrassment."

Copps describes the growing gap between America's broadband haves and have nots as the nation's most recent infrastructure challenge and one that demands rapid action.

"Every generation in America has had an infrastructure challenge. And the response has been canals, turnpikes, railroads and the interstates," he told Newsweek. "But in the 21st century, it seems that no one is looking out for us. We're frittering our future away."

Sunday, May 13, 2007

HD Net's Cuban calls for broadband infrastructure investment

"[T]he reality is that the consumer internet,…has matured, and its future, unless there is significant investment will constrain economic development in this country.”