Report: GFiber parent Alphabet seeks outside investment as part of spin off strategy

Metro fiber to the premises (FTTP) player GFiber is seeking external investment to capitalize its expansion. Reuters (via yahoo! finance) reports GFiber’s parent company Alphabet has retained an investment bank to start the process of selling equity in the company, citing a source close to Alphabet's efforts.

Reuters quoted the source as saying the goal is to spin off the unit, formed in 2010 as the nation grew impatient to migrate from its legacy copper telephone service delivery infrastructure to fiber-delivered Internet protocol-based voice, video and data.

"This next step of raising external capital will enable them to scale their technical leadership, expand their reach, and provide better internet access to more communities," Ruth Porat, Alphabet's president and chief investment officer, told Reuters in a statement. 

GFiber’s debut -- branded as Google Fiber -- was enthusiastically welcomed by localities looking for a more rapid alternative to bring fiber connections than the slow walking legacy incumbent telephone companies. But the company faces the same high capital expenses that come with utility infrastructure construction. It identified no overwhelming technological or marketing advantage over the incumbents as a Google 10X project, throttling back expansion plans in 2016, most notably and somewhat embarrassingly in its Silicon Valley region headquarters. "There’s no flying-saucer shit in laying fiber," Google co-founder Larry Page later explained.

In a move similar to Alphabet’s seeking outside investment capital for GFiber, AT&T in late 2022 entered into a joint venture with private equity firm BlackRock to build fiber connectivity to an initial 1.5 million customer locations beyond AT&T’s current footprint branded as Gigapower. Gigapower CEO and retired AT&T executive Bill Hogg, asserted in 2023 that Gigapower will be “much larger than any other provider in the space. The scale at which we are going to operate will be a differentiator in the U.S. marketplace.”

GFiber parent Alphabet’s move appears aimed at rivaling Gigapower’s plans. GFiber has a presence in 18 states and plans to expand to 25 new metros, finalizing a franchise for the Las Vegas metro this week, a metro also on Gigapower’s target list. It too will be entering the metro, according to the Las Vegas Review Journal.

Metro fiber “overbuilder” SiFi Networks announces $350 million JV debt raise

SiFi Networks, an investor owned delivery fiber infrastructure company, announced its Future Fiber Networks LLC joint-venture with European pension fund APG raised $350 million of bank financing in its debut debt raise. The company said the financing will be used alongside APG’s $500 million equity investment in Future Fiber “to deliver future-proof FTTH connectivity and smart city solutions across the U.S. via its fiber wholesale business model.”

SiFi Networks is one of several non-incumbent fiber players targeting metro markets in the U.S. including most prominently Google Fiber and Ting Internet. Sonic, currently in Northern California, is another among what incumbent telephone and cable companies describe as “overbuilders” within their nominal service territories.

West Des Moines, Iowa offers model for states, regions to scale up open access fiber telecom infrastructure

To ensure the timely modernization of legacy metallic telecommunications delivery infrastructure to fiber to the premise (FTTP) infrastructure at significant scale, new models for its construction and operation are needed. Investor-owned providers using vertically integrated, closed access networks tend to restrict capital investment to densely populated areas compatible with their business models that demand a rapid return on investment.

Subsidies of up to 75 percent of construction costs may be available in the near term through the federal Infrastructure Investment and Jobs Act (IIJA) of 2021. But eligibility restrictions on the funding will likely result in it being allocated only in the most remote and insular parts of the country since those restrictions are designed to protect the markets of incumbent providers that have a presence outside of those areas. That will leave it to the states to come up with new approaches.

One promising appearing model is emerging in West Des Moines, Iowa. The municipality finances and builds the basic supporting infrastructure – in this case buried conduit. But it could also be aerial fiber on metal half height poles placed in existing rights of way, for example. A private sector network operator – here Google Fiber – installs the telecommunications infrastructure: the fiber, network electronics and premise connections. It shares part of its end user revenues with the local government to finance bond debt incurred by the government to construct the supporting infrastructure. Since it is operated as an open access network, other providers can pay a fee to access it and the end users it serves.

This model for the construction and operation is particularly well suited to exurban and small town America that like West Des Moines are only partially served by legacy providers using metallic infrastructure.

To make it rapidly scale to meet burgeoning demand for connectivity, this model provides a framework for a statewide or regional scope – for example local governments forming a regional telecommunications authority like California’s Golden State Connect Authority. Like roads and highways and airports -- the Golden State Connect Authority regards advanced telecommunications infrastructure similar to regional airports – very substantial financing capacity is needed beyond that which individual local governments can provide. In addition, the limited, one off grant subsidies that have been the predominant financing model don’t provide funding sufficient for the task at hand.

Public option open access fiber provides much needed alternative to commercial “broadband.”

A major benefit of public option open access residential fiber connectivity offered by a regional or local governmental entity or consumer telecommunications cooperative is it provides an accessible and affordable alternative to commercial “broadband” service sold in multiple incrementally priced speed tiers offered in select neighborhoods.

Most residential users don’t know what their throughput level is. They are only aware of throughput when there’s a functional issue such as websites taking a long time to load, choppy video and/or audio on calls, or video streams that pixelate or buffer too much and produce the dreaded “spinner.”

Instead of a speed tiers used by commercial broadband ISPs, open access fiber service can instead offer a single national throughput service level standard. Starting out, that should be the 100 Mbps symmetrical standard proposed in the telecom infrastructure component of the Biden administration’s American Jobs Plan. Over time, the standard would be increased to accommodate continued growth in bandwidth demand generated by devices and application services. VOIP should be included for those households that want voice telephone service rather than relying on commercial mobile wireless service.

Along with a single throughput standard, there should be a flat monthly rate, similar to that offered when Google Fiber made its debut in a few U.S. metros a decade ago. Ideally, that should be around $45 a month with a $20 lifeline rate for qualifying low-income households.

Google Fiber's impact overrated

Incompas 2020 Policy Summit: Unraveling Broadband Challenges And Opportunities for Competitors, Communities: Blair Levin, policy analyst at New Street Research and nonresident fellow at the Metropolitan Policy Program at the Brookings Institution, said during the summit that these elements largely were influenced by the National Broadband Plan team’s conversations with the private sector. “While everyone thinks of Google Fiber as a business, there’s no question that it accelerated the next-generation networks from AT&T and CenturyLink as well as the cable industry,” Levin said.

Um, no. Google Fiber folded up its tent and began decamping in 2016 after a brief six-year-long presence in the fiber to the prem (FTTP) business. It provided no sustained and meaningful pressure on the big telcos and cablecos and their infrastructure plans due to its abandonment of the race, drawing mockery from AT&T. Had Google Fiber provided an impetus to AT&T, it would have replaced the legacy copper in its service territory with fiber over the past decade rather than respond with ridicule.

What Google Fiber proved was the poor progress the U.S. has made modernizing its legacy copper telecom infrastructure to FTTP as evidenced by the more than 1,100 communities that asked it to deploy in 2010.

German government needs options for rapid FTTP deployment

Vodafone calls for German government help with ultrafast broadband rollout | News | DW | 05.05.2019: However, in an interview with Welt am Sonntag newspaper, Vodafone's German chief, Hannes Ametsreiter, said that connecting from the network to individual homes, the so-called last mile, was "extraordinarily challenging."

"It is enormously expensive to rip the road on your own," Ametsreiter said, suggesting that Germany looks at how broadband is rolled out in Spain and Portugal, where the state invests in the infrastructure, laying empty pipes, just as it builds highways.

This is called "dig once" in America. It's a perfectly sensible policy. But it can't meet the urgent need to rapidly replace obsolete copper cable built for the period of analog voice telephone service with fiber to the premise. It will have to go on utility poles where buried conduit does not exist.

Then when future road restoration or other trenching projects are undertaken and conduit installed, the aerial fiber can then be retired. Additionally, there are lower cost methods to deploy aerial fiber near energy lines such as lightweight All-dielectric self-supporting (ADSS) cable that can speed aerial deployment.

Another option is microtrenching provided the road surface is sufficiently thick with a stable base. But it must be ensured the microtrench slot is deep enough lest the conduit be forced out of the microtrench as Google Fiber recently learned to its dismay in Louisville, Kentucky.

Will forthcoming FCC rule on pole attachments and enhanced PON technology lead to reboot of Google Fiber?

Google Fiber Blog: FCC Supports OTMR - Faster and Fairer Rules for Pole Attachments: Fortunately, there is a better way. It is called One Touch Make Ready (OTMR), which is a system where a new attacher does much of the make ready work itself, all at one time. OTMR is a common sense policy that will dramatically improve the ability of new broadband providers to enter the market and offer competitive service, reducing delays and lowering costs by allowing the necessary work on utility poles to be done much more efficiently. This also means fewer crews coming through neighborhoods and disrupting traffic, making it safer for both workers and residents.That’s why we’re so excited by the news that the FCC is poised to pass a rule that would institute a national One Touch Make Ready system, with the goal of significantly increasing the deployment of high-speed broadband across the United States. As the FCC stated, “OTMR speeds and reduces the cost of broadband deployment by allowing the party with the strongest incentive — the new attacher — to prepare the pole quickly to perform all of the work itself, rather than spreading the work across multiple parties.”

The big question here is whether this will spur a serious reboot of Google Fiber as an aerial fiber overbuilder, forsaking its originally preferred buried conduit deployment architecture and its attendant construction delay and high cost burdens.

Along with liberalized pole attachment rules, another factor is enhanced Passive Optical Network (PON) technology that could reduce deployment costs and allow Google Fiber to move beyond the urban and suburban areas it initially targeted to exurban and possibly rural areas. In these areas, Google Fiber would more rapidly capture market share since incumbent telephone and cable companies tend to have partially deployed networks that leave many premises unconnected.

Google Fiber doesn't have a wireless alternative because it would require huge technological breakthrough

Google Fiber Broadband Hype Replaced By Delays And Frustration | Techdirt: To be fair, Google's PR folks can't offer answers of what comes next because Google itself doesn't know what the wireless technology that will supplant fiber will look like. But even Google's wireless promises have been decidedly shaky. After acquiring urban wireless provider Webpass two years ago, some of that company's coverage markets have actually shrunk, with the provider simply pulling out of cities like Boston without much explanation. And many of the executives that were part of that acquisition have "suddenly" departed for unspecified reasons. At this point it's certainly possible that once Google Fiber is done with its multi-year, numerous wireless tests it settles on a cheaper (but still expensive and time consuming) alternative to fiber.

There's a simple answer here. It's because Google doesn't have (not yet, as least) an unconventional wireless technology that can replace fiber. That would require breakthrough technology that can get around the physics of radio spectrum that makes it difficult to reliably deliver bidirectional IP data streams to multiple users while penetrating objects and precipitation without interference. In other words, to get fiber's throughput, nothing tops fiber.

Milo Medin, Google's then vice president of access services, said as much at the 2013 Broadband Communities Summit, disabusing the notion that wireless can replace fiber and thus eliminating the cost of building the necessary infrastructure to support it:

Some argue that fiber networks are not really needed because of wireless network growth. As an engineer, quite honestly, this kind of talk makes my brain hurt. Wireless network growth is driven by fiber. All those base stations that smartphones connect to are increasingly connected by fiber because, as speeds go up, fiber is required to carry that kind of traffic.

In other words, wireless needs a lot of what some hope it can more cheaply substitute: fiber.

Google Fiber reconnoiters, seeks 10x advantage over incumbents with fiber deployment

Ruth Porat on Google Fiber pause: At the Morgan Stanley Technology Conference, where Porat was speaking, an analyst asked about Fiber's change in strategy and the company's new milestones. Porat said that Fiber's rollout has been paused until the company finds a way to make the service 10 times better. "As we were looking at our rollouts going back to 2015, 2016, our view was that we had not done enough," Porat said. She said that Fiber hadn't achieved its "10x moment," which is Google-speak for getting a 10-fold improvement over existing technology.

It's been a tough couple of years for Fiber. Launched in 2010 with the promise of bringing fast and affordable internet service to municipalities across the country, the initiative has endured cost-cutting measures, layoffs and two CEO resignations since becoming part of the Alphabet unit Access. Porat said that Alphabet was holding off on pushing Fiber into new markets until it could find a better way to "bring technology to bear in a meaningful way." She said that the company won't start "accelerating the rollout" again until it can prove that it has a valuable new deployment and delivery method.

Google Fiber faltered because it offered no overwhelming technological, cost or marketing advantage over legacy incumbent telephone and cable companies. AT&T even mocked it as a bumbling rookie as it paused fiber infrastructure deployment in several U.S. metro areas last year. Now it's reconnoitering until it can find one.

Last October, Phil Dampier of Stop the Cap! penned this post mortem on Google Fiber's ill fated initial foray into fiber to the premise (FTTP). To achieve that 10x deployment advantage, Google Fiber will have to develop an innovative FTTP deployment methodology that is far less labor intensive given labor accounts for the vast majority of fiber deployment costs. And one that doesn't involve the ponderous mass digging up of streets and front yards to bury fiber conduit.

As former Google advisor and co-founder Larry Page put it in Dampier's blog post, "There’s no flying-saucer shit in laying fiber." But it will have to find some (and maybe enlist the help of some of those flying saucers) in order to achieve the radical workaround it needs to rocket past slow moving incumbents as well as new entrants hobbled by high construction costs.

Barring extraterrestrial technological assistance, Google Fiber might look at more conventional albeit cutting edge technology to reduce the labor cost of hanging fiber on utility poles such as employing UAVs to lift fiber spans between poles as installers make the connections and splices.

New Google venture plans neighborhood "built from the Internet up."

In 2016, Google Fiber began reconnoitering away from its plan to overbuild legacy incumbent telephone and cable company infrastructure with fiber to the premise telecom infrastructure in select metro areas of the United States. Taking on incumbents in existing parts of these metros proved too slow and costly and Google Fiber had no overwhelming technological or marketing advantage relative to them.

Another Google venture takes a different tack. Rather than overlaying fiber optic telecom infrastructure on an existing neighborhood, it would build an entirely new “smart” neighborhood where there are no incumbent providers. One that’s “built from the Internet up… merging the physical and digital realms,” according to a description of the project – dubbed Sidewalk Labs – in this Slate article. A pilot to roll out the concept in an undeveloped portion of Toronto, Canada Eastern Waterfront kicked off in late 2017. (Click here for news release).

Google Fiber enters building by building urban battle for MDU connectivity

Google Fiber picks MDU cherries in Orange County: Google Fiber is figuring out how to play small ball and still get thousands of fiber to the home subscribers. In its latest blog post, Google tells how it’s expanding its fiber footprint – actually, making lots of tiny paw prints – in the southern California multi-dwelling unit market…

The subscription-based business model employed by incumbent telcos like AT&T as well as newer entrants like Google Fiber clearly favors density because it generates decent ROI on fiber to the premise (FTTP) capital investment. The higher the density the better as these players engage in a form of business urban warfare, fighting for market share building by building.

The problem is not everyone lives in or prefers to live in multi dwelling unit (MDU) properties. In MDUs, the vertically integrated model in which the providers own both the fiber infrastructure as well as proprietary telecommunications services delivered over it works well enough to make a strong business case. But when the density drops, it becomes iffy.

Ironically, that can leave even relatively affluent, low density neighborhoods of single family detached homes without fiber connections as the large investor-owned providers chase after dwelling density. Alternative business models are urgently needed. Without them, these higher value properties could end up becoming devalued due to their lack of fiber connectivity.

Stop the Cap! The End of Google Fiber Expansion: Where Did It All Go Wrong?

Stop the Cap! The End of Google Fiber Expansion: Where Did It All Go Wrong? : The bean counters also arrived at Google Access — the division responsible for Google Fiber — and by October 2016, Google simultaneously announced it was putting a hold on further expansion of Google Fiber and its CEO, Craig Barratt, was leaving the company. About 10% of employees in the division involuntarily left with him. Insufficiently satisfied with those cutbacks, additional measures were announced in April 2017 including the departure of Milo Medin, a vice president at Google Access and Dennis Kish, a wireless infrastructure veteran who was president of Google Fiber. Nearly 600 Google Access employees were also reassigned to other divisions. Medin was a Google Fiber evangelist in Washington, and often spoke about the impact Google’s fiber project would have on broadband competition and the digital economy. Porat’s philosophy had a sweeping impact on Alphabet and its various divisions. The most visionary/experimental projects that were originally green-lit with no expectation of making money for a decade or more now required a plan to prove profitability in five years or less. (Emphasis added).

In adopting that five year ROI cutoff, Google Fiber effectively placed itself under the same financial constraints governing slow moving legacy telephone and cable companies it hoped to overbuild with fiber to the premise (FTTP). Having ventured into FTTP nearly a decade ago with no overwhelming technological or marketing advantage and using the same recurring monthly subscription business model -- including TV programming -- as the incumbents, it should surprise no one it's retreating.

As a former advisor to Google co-founder Larry Page was quoted as saying in Phil Dampier's post mortem excerpted above, "There’s no flying-saucer shit in laying fiber." Indeed. So unless Google Fiber figures out how to teleport fiber conduit into the ground or develops fiber cables that hang in mid air defying gravity -- thus avoiding the need for pole access -- it's pointless for Google Fiber to remain in FTTP.

Google Fiber's parent company, Alphabet, has a unit simply dubbed "X" to develop "moonshot" inventions profiled in the November 2017 issue of The Atlantic. Perhaps X will be able to obsolete FTTP and the Internet itself by coming up with a way to store quantum bits of information in the substrate of space time and encrypted by a form of blockchain technology to ensure data integrity.

Google Fiber's Kansas City experiment demonstrates need for publicly owned advanced telecom infrastructure

Google Fiber made Kansas City better but didn't transform it | The Kansas City Star: There may be a lesson here. Digital technology has undoubtedly transformed our world, disrupting media, entertainment, politics, retail, money management and more. But the miracle is at the end of the pipeline — the miracle isn’t the pipeline itself. Most Americans now see internet service as a utility, and price remains an important consideration. That could explain why Google Fiber is rethinking its role in getting digital service to the home.

Internet protocol-based advanced telecommunications is indeed a modern utility for residential, commercial and institutional premises just as electricity and telephone service before it. However, what remains unclear is the appropriate business and pricing model. Electricity is correctly billed on a consumption basis. Use more megawatts, pay more. That makes sense because the generation of those megawatts incurs costs directly attributable to their production. But the same cannot be said for the gigabits and terabits that power advanced telecommunications carrying voice, video and data.

The Kansas City Star correctly observes price of this most new utility is a consideration. It's because ISPs bill using a monthly recurring charge as do other utilities. Every household budgets based on its monthly recurring costs such as mortgage or rent payments and utilities. But is that the right pricing model for advanced telecommunications, particularly when the monthly recurring charge is based on bandwidth? While large businesses and data and call centers might be in the market to buy bandwidth, most consumers are not. They merely want reliable telecommunications service that doesn’t distort, slow down or stall and don’t care about the bandwidth that ensures that level of service.

 

The only way to ensure that service standard going forward as the bandwidth requirements of advanced telecommunications services evolve and grow is fiber to the premise telecom infrastructure. It’s the only technology that provides sufficient headroom for whatever services may be coming in the foreseeable future as well as adequately supporting today’s. In that regard, Google Fiber got the technology side of the equation right. But as the Star suggests, the business model essentially copied that used by legacy telephone and cable companies needs rethinking.

A better model would be to treat most telecommunications infrastructure as a public asset like roads and highways, funded by taxpayers at all levels of government – federal, state and local. Google Fiber and other ISPs would have a role to build and maintain those fiber thoroughfares and sell services over them on an open access basis. But they shouldn’t own them. Since they would be selling services, it would be in the economic interests of the ISPs to ensure the reliability of the network.

The current private ownership model of advanced telecommunications service is clearly broken and crippled by market failure in much of the United States lacking infrastructure capable of reliably delivering high quality voice, video and data. As the Google Fiber experiment shows, simply adding another investor-owned ISP isn’t going to solve that national problem. A new path forward is needed.

Verizon’s FiOS Deployment In Boston Is Fiber-To-The-B.S. | HuffPost

Verizon’s FiOS Deployment In Boston Is Fiber-To-The-B.S. | HuffPost

This development shows it's far easier to talk about and even promise to deploy fiber to the premise (FTTP) telecommunications infrastructure than it is to fund and construct it. It also shows even large very well capitalized companies like Verizon, AT&T and more recently Alphabet's Google Fiber unit aren't up to the task. They lack the will (investment incentive driven by strong capital returns) and the means (patient capital than can wait many years for a return on capital investment) to do the job.

As Bruce Kushnick and other observers have shown, the talk typically falls far short of real world results. It's time to face the reality that the urgency needed large scale FTTP deployment the United States should have completed a decade ago requires a well funded federal initiative to accomplish the job. As the saying goes, money talks and bullshit walks.

FCC Chair Pai wrongly describes natural monopoly of telecom infrastructure as competitive market

FCC Chairman Ajit Pai on Why He's Rejecting Net Neutrality Rules - Reason.com: If left in place, however, the Title II rules could harm the commercial internet, which Pai described as "one of the most incredible free market innovations in history. Companies like Google and Facebook and Netflix became household names precisely because we didn't have the government micromanaging how the internet would operate," said Pai, who noted that the Clinton-era decision not to regulate the Internet like a phone utility or a broadcast network was one of the most important factors in the rise of our new economy.

Companies like Google (excepting Google Fiber's now defunct venture into fiber to the premise service), Facebook and Netflix aren't network providers. Consequently, they don't face the high costs associated with building and operating telecommunications infrastructure serving homes, businesses and institutions that deters market competition and promotes market failure.

Ajit Pai: The funny thing about that is because it's precisely because the phone company was a slow moving monopolist. That's exactly the point we're trying to make. These rules, Title II rules were designed to regulate Ma Bell, and the promise with Ma Bell, the deal with the government was, we'll give you a monopoly as long as you give universal service to the country. As a result, for decades, we didn't see innovation in the network we didn't see innovation in phones and it's when you have a competitive marketplace and you let go of that impulse to regulate everything preemptively, that you finally get to see more of a competitive environment.

Pai is engaging in the distortion of describing the natural monopoly market that telecommunications infrastructure is as a competitive market. Wishing it were competitive won't make it so. The cost barriers to entry are simply too high. Just ask Google Fiber. Or the 34 million Americans who have experienced sell side market failure, their homes and small business not offered landline connections capable of delivering high-quality voice, data, graphics and video, according to figures released by the U.S. Federal Communications Commission in 2016. Market failure is hardly an indicator of a robustly competitive market.

Pai's predecessor Tom Wheeler indulged in the misguided notion that telecom infrastructure could be competitive market, even though the FCC under his leadership adopted the 2015 Open Internet rulemaking predicated on regulating Internet service as a natural monopoly, classifying it as a common carrier telecommunications utility.

Competition isn't the answer for better premise telecom service

California lawmakers give cable utility perks, without utility obligations: Historically, there was a difference between telephone companies, which have been state regulated utilities for more than a century, and cable companies, which were originally franchised by local governments but managed to escape that oversight ten years ago. At least in California. Today, the differences are diminishingly small, particularly in urban and suburban markets where cable and telephone companies sell the same services and enjoy a comfortable, unregulated duopoly.

The distinguishing characteristics of a natural monopoly are high initial capital costs, usually related to infrastructure construction, and powerful economies of scale, both of which give the first mover in the market insurmountable advantages over would be competitors. In the old analog world, telephone and television service were completely different businesses, linked only by a common dependence on wireline networks. Now, both offer voice and video, and face competition in those segments from wireless providers. But they are also almost always the only wireline broadband option and wireless service is not a credible substitute, in either practical or microeconomic terms.

This is an excellent and much needed microeconomic description of the dominant privately owned telecommunications infrastructure that dominates in the United States that is all too often absent from the current policy discussion. Many ask why there isn’t competition in the telecommunications industry like exists in most consumer products and services. If it works there, then it must work in telecommunications also. More competition is the answer for better choice and consumer value, they conclude.

But as Steve Blum explains in his blog post, that reasoning is fatally flawed. More competition isn’t possible in a natural monopoly market where high cost barriers and the power of incumbency deter would be competitors. (Just ask Google how its flagging Google Fiber venture worked out) Telecommunications infrastructure will never be a robustly competitive market, defined as one with many sellers and buyers offering consumers many choices, enabling market forces that allow consumers to choose the best value and force out uncompetitive players.

When it comes to landline premise telecommunications service, most Americans can select from no more than two providers. And sadly for millions, none at all since the business model of vertically integrated investor owned providers must naturally redline and cherry pick among neighborhoods, creating winners and losers among consumers. As long as the nation relies on this broken model, it
will continue to lag when it comes to building the world class telecom infrastructure it needs to accommodate the explosion in digital communications.

Why aggressive federal intiative needed to modernize inadequate U.S. telecom infrastructure

Virginia “Broadband Deployment Act” would kill municipal broadband deployment | Ars Technica: Virginia lawmakers are considering a bill called the "Virginia Broadband Deployment Act," but instead of resulting in more broadband deployment, the legislation would make it more difficult for municipalities to offer Internet service.

The Virginia House of Delegates legislation proposed this week by Republican lawmaker Kathy Byron (full text) would prohibit municipal broadband deployments except in very limited circumstances. Among other things, a locality wouldn't be allowed to offer Internet service if an existing network already provides 10Mbps download and 1Mbps upload speeds to 90 percent of potential customers. That speed threshold is low enough that it can be met by old DSL lines in areas that haven't received more modern cable and fiber networks.

This is a big part of the justification for an aggressive federal telecom infrastructure initiative to build and publicly own fiber optic connections to nearly every American home, business and institutions. While many have placed hope in state and local government "muni broadband" efforts, they won't scale and rapidly enough to address the nation's current and future telecom needs. The nation now faces an infrastructure crisis, getting further and further behind the demand curve as time goes on and the need for robust connectivity grows.

There are two reasons why these local efforts fall short. First and most importantly, existing state and local governments lack the many billions of dollars and debt capacity needed to finance the job. They're already strapped by deferred infrastructure maintenance such as for highways, roads, government buildings, and water and sewerage systems. Not to mention the yawning economic black hole of underfunded public employee pension obligations that sucks up state and local funds. In a similar vein, we don't read accounts of new special districts being formed to build and operate telecom infrastructure, with the locals signing on to tax themselves to pay for it.

The second is the legacy incumbent telephone and cable companies call the shots on telecom infrastructure and will do -- as the above story reports -- whatever it takes to keep control, even if it means keeping in place obsolete infrastructure and impeding technological progress with minimalist incrementalism. State and local governments are simply outgunned by boatloads of campaign cash and armies of lobbyists and propagandists intent on keeping the calendar set at 1999 in order not to disrupt their capital expenditure averse business models. Nor is there any real private sector threat. For example, Google Fiber got its ass kicked and then publicly mocked by AT&T when it ventured into the telecom infrastructure business to connect homes with fiber and forming public-private partnerships with local governments.

As I wrote in my 2015 eBook, Service Unavailable: America’s Telecommunications Infrastructure Crisis, the United States requires an aggressive federal initiative to modernize the nation's aging and hugely inadequate telecom infrastructure so that it serves all Americans and not just some. Only the federal government has the authority and resources to make that happen and is justified in doing so given the essentially interstate nature of telecommunications.

FCC Commissioner Pai's deeply flawed "Digital Empowerment Agenda"

Ajit Pai, a member of the U.S. Federal Communications Commission, has proposed a "Digital Empowerment Agenda" relying on tax incentives to promote telecom infrastructure investment. Pai's proposal is deeply flawed because it:

• Assumes tax breaks combined with regulatory streamlining will eliminate the massive telecom infrastructure disparities in the United States. Pai need only ask legacy incumbent telephone and cable companies (and Google Fiber) why he's misguided. They will tell him the primary impediment is the return on infrastructure investment is too far in the future in certain areas and neighborhoods to justify investment. Net present value is zero or below. That's a fundamental challenge of the investor-owned, vertically integrated business model to when it comes to infrastructure capable of supporting modern advanced, telecom services. Tax incentives and regulatory streamlining may help the math, but aren't alone going to make the business case for investment and eliminate disparities.
• Reinforces existing infrastructure disparities by offering incentives for landline infrastructure in some areas of the nation but only mobile wireless in others that is inadequate for premise service.

A refreshingly honest assessment from AT&T: Building advanced telecom infrastructure is "tough."

AT&T rips Google Fiber - Business Insider: Google's service has been a big threat to AT&T and other telcos since it promised to offer faster internet speeds at lower prices. But a series of recent reports noted that Google's broadband service has garnered disappointing subscription numbers and is scrambling for a new wireless-based model as it cuts back the size of its staff. The two corporate giants have clashed before, including ongoing legal battles over access to utility poles. But the latest salvo by AT&T, which reads as part take-down, part tantrum, stands out for the undisguised derision and sarcasm it heaps on Google, while touting what it says is its own $140 billion investment in broadband.

"Moral of the story," writes AT&T VP of federal regulatory Joan Marsh, "Building reliable, ubiquitous high-speed broadband connectivity is tough."

A refreshingly honest assessment here. AT&T certainly knows it's hard building ubiquitous advanced telecommunications infrastructure, particularly when it like other legacy providers is hamstrung by a vertically integrated, "bill and keep," subscription-based business model that requires selling one customer premise at a time. The evidence: the widespread infrastructure gaps in its nominal "service territory."

If the United States continues to rely on this impaired business model, it will continue to suffer from inadequate infrastructure and disparate service access for decades to come.

Dismal state of U.S. telecom modernization enters new dilatory phase, prolonging infrastructure deficiencies

The dreary state of the modernization of America’s deficient telecommunications infrastructure -- already more than two decades tardy when it comes to the task of replacing metallic legacy telephone and cable systems with fiber optic to the premise infrastructure (FTTP) – is entering a new dilatory phase. Inspired by fellow blogger Steve Blum of Tellus Venture Associates, I’m dubbing it the “magic radio” phase. The goal: forestall FTTP infrastructure investment and instead experiment with various wireless technologies. As Blum correctly nails it, it’s based on “eternal hope that magic radios will appear one day and render wireline technology obsolete.”

It’s wishful thinking driven by the continued misguided reliance on undercapitalized investor-owned players like Verizon, AT&T and Google Fiber. All are looking into fixed premise wireless technologies, with Google Fiber the most recent, putting its FTTP builds on hold last week while it searches for the right radio magic. They all like the idea of employing wireless technologies for premise delivery because no one player has the many billions of dollars necessary to build out FTTP, spawning a search for lower cost alternatives.

The problem is the physics of radio spectrum are even more constrained than their finances. There’s only so much data than it can carry. Higher frequencies can carry significantly greater amounts. But only over such short distances that their use would require fiber to be brought so close to customer premises that the hoped for savings by avoiding FTTP deployment would be severely diminished. Not to mention the fact that higher frequencies are easily blocked and subject to interference without an unobstructed line of sight.