Analysis & commentary on America's troubled transition from analog telephone service to digital advanced telecommunications and associated infrastructure deficits.
Sunday, December 30, 2012
Google Fiber expansion unlikely to solve America's incomplete infrastructure problem
This Wired piece is sparking speculation that Google might in fact be planning an effort to expand its proprietary fiber to customer premises infrastructure supported not just by customer service charges but also by its own content, similar to the incumbent cableco business model. "If it turns out Google Fiber helps Google sell more (and more valuable) ads and content," the Wired article notes, then building out more fiber would support Google's business model. However, the article notes that the cost of doing so would strain even Google's vast economic resources, leaving the U.S. with what President Barack Obama described in his 2012 State of the Union Address as an "incomplete high-speed broadband network."
Another recent article posted at ZDNet points to the same conclusion.
Sunday, December 02, 2012
Telecom infrastructure demands competing business models
That's why investor owned incumbent telco and cable providers haven't built out fiber to the premise infrastructure. Their shareholders expect a certain return on investment within five years or less as well as hefty dividends. Infrastructure projects have long term time horizons that aren't compatible with their business models.
Some of those interviewed in the articles assert that UTOPIA and other publicly operated telecommunications networks shouldn't be competing with incumbent, investor owned telcos and cablecos. I disagree. The challenges of constructing and operating telecommunications infrastructure demand competition to produce the best business models demonstrating the greatest potential for long term viability. It's not an easy task. The incumbent providers been unable to produce one. That has led to extensive market failure in wireline telecommunications services, leaving millions of Americans without premises Internet access. UTOPIA and other non-incumbent operators despite their shortcomings are to be commended for making the effort to develop alternatives to build and construct this essential infrastructure for the 21st Century.
Thursday, July 26, 2012
Google Unveils Superfast Internet in Kansas City, Mo. - NYTimes.com
Google Unveils Superfast Internet in Kansas City, Mo. - NYTimes.com: Milo Medin, the company’s vice president of access services, said the technology and technical capacity were available to create this product on a global scale, but economics, such as the cost of constructing the fiber network in communities, presented a barrier.
Google's demonstration project does nothing to alter the cost and business model constraints that require communities to build their own fiber networks rather than investor owned providers. While everything may be up to date in Kansas City, unfortunately for much of the United States it is not when it comes to premises Internet access.
It also starkly illustrates the dismal state of Internet capable premises telecommunications infrastructure in America -- accurately described as "incomplete" by President Barack Obama in his January State of the Union address -- where many must still rely on obsolete dialup modem technology that was state of the art when Obama's predecessor Bill Clinton was starting his first term two decades ago. One city does not a network make.
Saturday, May 21, 2011
FCC: "Significant and persistent" Internet infrastructure deployment gap leaves 26 million Americans offline
"While use of mobile broadband is growing, that growth to date is mainly in lower speed ranges that may not be able to support the applications and services identified by Congress, such as high-quality video," the FCC's report states. "MetroPCS and others ask the Commission to reverse its conclusion, given the prevalence of wireless technology," the report continues. "While MetroPCS and others have noted the general expansion of mobile wireless across the country, they failed to demonstrate that wireless broadband is provided at 4 Mbps/1 Mbps actual speed (or reasonable proxy) in the unserved areas."
Most importantly, the FCC identifies the key reason why so many Americans remain disconnected: investor owned providers can't profitably earn a return on their investment -- mostly upfront and ongoing labor costs -- in order to justify building out their networks to serve more premises. "In the absence of programs that provide additional support, the private sector will not bring broadband to Americans living in areas where there is no business case for operating a broadband network," the report states.
Short of labor costs declining dramatically, that will continue to be the case. And unless communities explore alternative nonprofit business models such as municipal and cooperatively-owned open access fiber to the premises infrastructure, the FCC will continue to report on a "significant and persistent" infrastructure gap next year and subsequent years.
Thursday, March 24, 2011
More patient capital the key advantage of community telecom infrastrucuture
Settles correctly notes there is money to be made for private players -- if they are willing to partner with communities in open access fiber projects and abandon the outdated business model of 100 percent ownership and monopolistic control.
Friday, October 22, 2010
Making fiber to premises a reality requires consumers to think like business owners
However, a fundamental change in thinking must occur if these alternative business models are to come to fruition and bring the services people need now and in the future as bandwidth demand grows exponentially. People must think of themselves as not just consumers but also as owners.
Consumer cooperatives were formed in the U.S. a century ago to provide voice telephone service where investor owned telcos could not make a business case to provide service. Now that the telephone network is being replaced by the Internet, the time is at hand for the revival of this business model.
While coops offer significant structural cost savings that can make the business case pencil out for deploying an open access fiber to the premises network, those advantages cannot be realized until consumers think of themselves not just as a consumers but also as a business owners since a coop is a business, albeit owned by its customers. Being an owner requires doing diligence and assuming some degree of risk and not just asking what the coop may be able to provide them personally and at what price.
Without this shift in thinking, consumers will continue to be at the mercy of the incumbent telcos and cable companies and what services they choose to provide (or not provide as is often the case) and forced to pay whatever they want to charge for them in order to earn a return for their shareholders. Rather than benefit remote shareholders who could care less who gets fiber to the premises in their communities, it's time for consumers to say "enough" and take control of their telecommunications service.
Monday, October 11, 2010
Burgeoning telecom bandwidth demand emulates Moore's Law
In 1965, Intel co-founder Gordon E. Moore successfully predicted semiconductor processing power would double about every two years. A trend similar to Moore's Law is now occurring in fiber optic capacity. And just in time as this New York Times article notes, pointing to burgeoning demand for Internet bandwidth:
The need for core network improvement is pressing, said Stojan Radic, a professor of electrical engineering at the University of California, San Diego. “We are looking at a point soon where we cannot satisfy demand,” he said. “And if we don’t, it will be like going over a cliff.”
Demand is continually growing, somewhere below street level, as details of our e-mail, bank balances and national security zip along on light waves. And consumers can’t get enough video clips on YouTube, television shows on Hulu, and movies streamed to them by Netflix that they watch on their computers and TVs.
This has implications for telecommunications services, which in theory could deliver a better Internet experience and new applications with far more bandwidth. While technological advances will allow more bandwidth to move along the fiber of the Internet backbone and middle mile distribution networks, this increased capacity hits a major bottleneck at the so-called last mile that connects to customer premises.
This segment of the network is still largely made up of metal wire designed for the single purpose of delivering analog phone service or cable TV. The business models of the telcos and cablecos don't allow them to make the capital expenditures necessary to upgrade the last mile to fiber, creating an urgent need for alternative providers that can devise viable business models that can make the fiber connections for consumers.