Broadband operators must conquer the home to meet threat from Google and Apple

Broadband operators must conquer the home to meet threat from Google and Apple: The threat posed by the big Internet players, especially Google and Apple, to traditional Telco operators has been talked about for over a decade, but has not yet materialised substantially as far as core services such as broadband and pay TV are concerned.

That is now changing fast as the battle enters the home where the prizes may initially be small but will amplify greatly over the next few years. Indeed with relatively few homes yet having a network worthy of the name, it is all up for grabs in what could become a winner takes all game around the emerging IoT (Internet of Things). (Emphasis added).

Very true. It's far too premature to be thinking about IoT given the primitive and deficient state of telecommunications infrastructure that's still largely based on the pre-Internet telephone and cable TV networks.

No fast or slow lanes for Internet? New rules proposed | The Sacramento Bee

No fast or slow lanes for Internet? New rules proposed | The Sacramento Bee: "Net neutrality" means that whether you're trying to buy a necklace on Etsy, stream the season premiere of Netflix's "House of Cards" or watch a music video on Google's YouTube, your Internet service provider would have to load all of those websites equally quickly.

This is a much less important problem in the United States than inadequate Internet infrastructure that leaves millions of American homes and small businesses to substandard slow dialup, satellite or costly bandwidth rationed mobile wireless connections. The Federal Communications Commission recently reported that Internet infrastructure is not being deployed in a timely manner.

Yet another AT&T premise infrastructure deployment by press release

Included in AT&T’s announcement today of its acquisition of DirectTV is yet another in a long legacy of Internet premise infrastructure deployments by press release over the years including Project Pronto, Project Lightspeed and Project VIP that were essentially PR gambits.

AT&T said cash generated by unspecified "merger synergies" (most likely lower costs for TV programming) will enable it to provide premise Internet service to 15 million customer premises in its service territory utilizing a combination of technologies including fiber to the premises and fixed wireless. The planned infrastructure deployments will be completed within four years of the closure of the DirecTV transaction, according to AT&T.

Most likely “Project DirecTV” or whatever AT&T calls it will be forgotten within a year or two and any reduced TV programming costs will instead be allocated to shareholder dividends and executive compensation.

New Telehealth Program Aims To Increase Specialist Care in Northern California - California Healthline

New Telehealth Program Aims To Increase Specialist Care in Northern California - California Healthline
Adequate Internet infrastructure providing sufficient bandwidth is identified as a major challenge to the implementation of the program, which would alleviate the need for patients in rural areas to travel long distances to visit healthcare providers.

California screamin: Internet policy quagmire fosters failure

Plan for rural broadband collapses | The Press Democrat
This story illustrates the real world consequences of what happens when legacy incumbent wireline Internet providers control government subsidy programs designed to help cover the cost of deploying Internet infrastructure. They refuse to accept the subsidies themselves for high cost areas and lobby to influence the eligibility rules so that others can't easily qualify for funding.

These comments in the story from Cathy Emerson, manager of two consortia involved in expanding Internet access and Mitch Drake, head of the company that applied for subsidy funding from the California Public Utilities Commission, sum up the sorry situation:

“We're looking at a significant Catch-22,” Emerson said. “The federal
and the state programs are trying very hard to make use of legislative
moneys that have been collected, intended to be used for broadband
deployment. And yet the very language of the legislation has been so
effectively edited to the favor of the incumbents that it's extremely
difficult to try to offer services to these rural-most pockets.”

“I call this the great stalemate,” said Drake. “There's a huge need in
Northern California, and we've got a program that was designed to take
care of the need, and we've got incumbent carriers who made this
financial decision, for one reason or another, not to serve these rural
communities. But at the same time they are the biggest opponents,
preventing anyone from doing anything about it.”

It's going to get even harder for non-incumbent providers and local governments to qualify for the CPUC's California Advanced Services Fund network construction subsidy dollars in this year's funding round under revised rules recently adopted by the CPUC. Steve Blum has the depressing details in this blog post.

Market failure – not market competition – spurs community Internet infrastructure projects

A major misconception -- largely advanced by legacy incumbent telephone and cable companies – is local governments build Internet infrastructure because they want to compete with the incumbents. Competitive markets are those characterized as having many sellers and many buyers. That’s not possible with Internet infrastructure due to high barriers to entry and high ongoing operating costs.

Local governments build Internet infrastructure not to engage in market competition with incumbent legacy cablecos and telcos. They do so in response to market failure where the incumbents cannot profitably serve local needs. Lacking sufficient potential profits, the incumbents naturally aren’t going to be inclined to upgrade and build out fiber networks. 

In terms of those left off the Internet “grid,” the scale of this market failure in the United States is substantial. The U.S. Federal Communications Commission (FCC) estimates about 19 million Americans live in homes where Internet service isn’t available.

FCC Internet metric outdated

   
The U.S. Federal Communications has issued its annual report on how Americans access the Internet and the speed of their connections. What's striking is the report still defines and measures Internet connectivity using outdated metrics better suited to a decade or more ago starting as greater than 200 kbps as a baseline and in tranches of 768 kbps, 3 mbps, 6 mbps, and 10 mbps.  Nowadays, many would regard only the latter number as defining basic Internet connectivity given increasing household bandwidth demand from multiple devices and streaming video content.

The FCC is measuring straws when it should be measuring water pipes.


Links:
Internet Access Services: Status as of December 31, 2012 (FCC, Dec. 2013)
 
FCC releases new data on internet access services (FCC news release, Dec. 24, 2013)

Colorado legislation would redirect high cost telephone subsidies to Internet infrastructure

Two Colorado legislators are developing legislation to repurpose surcharges on voice landline and cell phone service to subsidize landline telephone service in high cost, less densely populated areas of the state to instead defray the cost of building out Internet infrastructure. "By funding land lines and copper-line phones, we're funding buggy whips,” Senator Gail Schwartz, D-Snowmass Village, told the Denver Post.

Rocky Mountain State lawmakers will however face resistance from incumbent telcos who want to preserve the status quo and continue to provide Internet service over their existing copper cable plants to a subset of wireline customers while deeming the rest unprofitable to serve. Throughout much of the United States, the latter cohort are in innumerable small pockets beyond the short range of DSL signals and/or where the existing copper cable is too old and deteriorated to deliver Internet service. First formed around 2000 and still around more than a decade later, they are like thousands of little holes in a big Swiss cheese, comprised of discrete premises, roads, streets and neighborhoods. Rather than “unserved areas,” they are more accurately described as redlined addresses and neighborhoods, typically avoided by both telcos and cable companies. The unfortunate residents are forced to rely on obsolete dialup offered by telcos or satellite Internet more properly suited to remote areas of the planet while the more fortunate may have access to fixed terrestrial wireless service from a local provider.

Incumbent telcos insist rules for government subsidy programs direct funds only to “unserved areas.” But building new wireline premises infrastructure is a costly, large scale endeavor that can make filling in these numerous voids one at a time impractical even with subsidies. In California, for example, incumbent telcos have largely shunned subsidies for premises Internet infrastructure offered through a six-year-old subsidy fund, the California Advanced Services Fund (CASF), similar to that being contemplated for Colorado. They have also challenged proposed CASF wireline projects by arguing the projects would serve premises adequately served by mobile broadband services.

Only a large scale overbuild of the outmoded copper cable plant with fiber to the premise infrastructure makes sense over the long term from both a technological and economic standpoint. State and federal Internet infrastructure subsidy funds should be structured accordingly.

Internet infrastructure outpolls transportation infrastructure in UK

UK People Want Superfast Broadband More than New Airports and HS2 - ISPreview UK

Watch for this sentiment to spread to other nations including the U.S.

California PUC rectifies its mischaracterization of Internet infrastructure subsidy fund

Several months ago, this blog called out the California Public Utilities Commission (CPUC) for incorrectly asserting the public policy goal of its program to subsidize the build out of Internet infrastructure in the Golden State was instead to encourage “the adoption of broadband.”

To its credit, the CPUC has rectified its gross misstatement of the law authorizing its $100 million plus California Advanced Service Fund (CASF). It did so this week, buried 18 pages deep into a proposed order that would loosen eligibility for CASF infrastructure loan and grant funding to include entities not holding a Certificate of Public Convenience and Necessity (CPCN) or a Wireless Identification Registration (WIR):

“We wish to make clear that although we propose to modify the CASF eligibility requirements to include both for profit and nonprofit broadband infrastructure providers, it is not our intent to change the focus of the CASF program. The CASF was created to fund the deployment of broadband infrastructure in unserved and underserved areas of the state, rather than the adoption of broadband services.” (Emphasis added)

The CPUC should also make it easier for consumer owned, community-based providers such as telecom cooperatives to access CASF funding for last mile (to the premises) Internet infrastructure construction – a critical infrastructure link singled out for attention in the proposed order. A key need of these providers is technical assistance grant funding to retain engineers and expert consultants to develop preliminary network designs and business case analyses. These deliverables would help ensure that the contemplated projects pencil out and would generate sufficient revenues to justify the prudent investment of CASF funds.

The CPUC should also revisit its unworkable, hair splitting exercise in futility of attempting to map out what neighborhoods are considered “unserved” and “underserved” based on throughput speed and census block groups. The inherent variation of legacy telco infrastructure Internet service from one address to the next doesn’t lend itself to these broad brush delineations. Internet service available at a given premise can be entirely different from another one just a quarter mile or a half block away.  Some overlap or "overbuilding" as it is called by incumbent providers will the inevitable consequence of progress.  But it must occur if the United States is to remedy what President Barack Obama decried in his State of the Union speech at the beginning of this year as the nation's "incomplete" Internet telecommunications infrastructure.  A network filled with holes does not a network make.