Failure of Google's "Homes with Tails" concept correlates to dearth of consumer telecom coops

Britain mulling broadband speed disclosure for every home - AlphaBeatic: The idea is reminiscent of “Homes with Tails,” a paper published back in 2008 by Columbia Law School professor Tim Wu and Google public policy manager Derek Slater. In the paper, the duo envisioned a future where consumers owned the fibre connections to their homes, obviating the need to go through an ISP to connect to the internet. Such fibre connections would lower the cost of internet service and raise the value of the homes. A typical home with a fibre connection was worth $4,000 (U.S.) more than one without, the duo argued.

Home ownership of fibre was attempted in Ottawa several years ago, but the idea never got off the ground. Bill St. Arnaud, the project’s founder, attributed the problems to central exchange providers, who were unwilling to open up their networks to allow competition for the likes of Bell and Rogers. There was also the issue of trying to convince home owners to spring for building the fibre connections, which can run thousands of dollars. Consumers are accustomed to effectively renting their internet connections, rather than owning them, so it may have been an idea ahead of its time.

This also explains why consumer telecom cooperatives have not sprung up in the United States to build and own fiber infrastructure serving member premises. People have been conditioned to see telecommunications as a consumer commodity purchased from a centralized corporate provider. Even though these monopolistic providers have no incentive to avoid redlining neighborhoods they don't want to serve and have a lousy customer service ethic, people would rather bitch about shitty service options when renting their telecommunications circuit than pony up a few thousand dollars to own it and set their own terms of service. Even when that investment would raise the value of their property by amount of the investment as research has shown. Brings to mind the old adage that one gets what one pays -- or not -- for a product or service.

FTTN: An alternative Google fiber model to build out Internet infrastructure

Google has been getting a lot of attention lately over its current and planned fiber to the premise (FTTP) builds in Kansas City, Austin, Texas and potentially Provo, Utah. But Google is unlikely to expand that model to the outer suburban, exurban and rural areas of the United States anytime soon for the same reason the incumbent telephone and cable companies have declined to do so: too few potential subscribers to justify the business case for the sizeable investment.
 

However, Google may be able to make the numbers pencil better with a fiber to the node (FTTN) network in these unserved and underserved areas, mixing in aerial fiber cable plant where the cost of burying fiber conduit is overly expensive. Using the FTTN model described in this November 2008 white paper, Google would bring Internet “trunk” connections to neighborhood nodes.  Property owners could join together in a telecom cooperative – compared to a condominium in the paper -- to build the final fiber segment to bridge the gap from their premises to the neighborhood nodes.  The cost of the construction for those projects in rural areas can be financed by low cost, long term loan funding offered by the federal Rural Utilities Service.

The paper notes the property owners would economically benefit given research showing adding a fiber “tail” to a residential property increases its marketability, thereby allowing property owners to recoup and potentially profit from any upfront investment they would have to make to fund the cooperative and get wired up.

It’s worth noting that although disclaiming official representation of Google, the white paper titled Homes with Tails: What if you could own your Internet connection? is co-authored by Derek Slater, a Google policy analyst. Back when Slater wrote the paper, Google wasn’t in the fiber infrastructure business. Now that it is, Google management would be well advised to dust off Slater’s paper and give it another look.

FCC's National Broadband Plan needs bottom up incentives to bridge last mile

America's telecommunications infrastructure is least complete along the so-called last mile (referred to by some as the "first mile") that bridges middle mile distribution backhaul to homes and businesses. The U.S. Federal Communications recognized this in a footnote in a chapter addressing broadband availability in its recently released National Broadband Plan, noting 7 million housing units lie outside cable company networks or more than approximately 11,000-12,000 feet from telco distribution equipment providing DSL service. Six million housing units lack access to terrestrial broadband capable of providing downloads at speeds the FCC minimally defines as broadband because they are situated more than 16,000 feet from the nearest DSLAM.

The FCC's plan sets a goal of providing at least 100 million homes access with download speeds of at least 100 Mbs per second and upload speeds of at least 50 Mbs per second by 2020. In an interim report released in September, the FCC estimated reaching the "100/100" goal would cost as much as $350 billion.

The "100/100" goal is laudable. But a more pressing infrastructure shortfall now mires millions in the early 1990s with dialup access or subpar satellite Internet access that's a national embarrassment that should only be offered in Alaska or the north woods of Maine. The FCC report estimates bridging that gap would require existing providers to spend $24 billion on upgraded and expanded infrastructure. Investor-owned legacy providers aren't going to spend that kind of money. So the FCC proposes remaking the Universal Service Fund and other programs designed to subsidize legacy voice telephone service in high cost areas into the Connect America Fund (CAF). Recognizing this would yield just $15.5 billion over the next decade, the FCC's plan also calls on Congress to appropriate additional subsidies of a "few billion dollars" annually over the next 2-3 years to accelerate construction of advanced telecommunications infrastructure.

The weakness of the FCC's plan is that it relies too much on investor-owned telco and cable providers already burdened with outdated, legacy wire plant and the inherent limitations of their for-profit business models. These providers must naturally place their proprietary business interests ahead of any national goal for transitioning the nation's currently outmoded telecommunications infrastructure to one that delivers a range of Internet-protocol based services via fiber over the last mile. Consider, for example, that neither of the nation's largest telcos are currently expanding their own plants to bring fiber to customer premises. AT&T has except for some greenfield developments chosen to build out fiber only to neighborhood nodes, relying on legacy copper wire connections to reach customers. Verizon recently called a halt to further expansion of its FiOS fiber to the premises plant.

While the FCC's plan urges Congress to boost funding of the Rural Utilities Service's Community Connect program intended to provide funding for broadband to communities that are otherwise unserved, it doesn't go far enough. Instead of largely relying legacy providers to build out advanced telecom infrastructure from the top down to reach the last mile, it really needs to provide incentives that work from the bottom up.

One that holds promise is giving home and small business owners tax breaks to build their own last mile fiber much like current tax law provides incentives for solar power generation equipment. Tax breaks for properties with fiber "tails" as they were described in a November 2008 paper issued by the New America Foundation would help local governments and telecom cooperatives build fiber infrastructure since the tax savings would make it easier for property owners to pay fees for connection costs or fund coop memberships. Building out broadband infrastructure is primarily a business model problem. Providing tax credits for fiber "tails" would provide impetus to urgently needed alternative business models for modernizing America's telecom infrastructure.

Brigham City, Utah: Pioneering America's telecom future

America's brightest and most promising version of its advanced telecommunications future is playing out in Brigham City, Utah. Residents there aren't waiting for the incumbent telco and cable companies to build fiber infrastructure to reach their premises. In the pioneering spirit of the great American West where consumer cooperatives formed a century ago to provide telephone service, they're doing it themselves, reports App-Rising.

According to App-Rising, 1,600 residents have paid $3,000 to install fiber to their homes, which will give them access to various providers via one of the nation's first open access networks, UTOPIA.

The concept is right out of a working paper issued one year ago by the New America Foundation authored by Derek Slater and Tim Wu titled Homes with Tails What If You Could Own Your Internet Connection. Like those for solar power, the paper recommends state and federal tax credits to create incentives for homeowners to buy their own fiber.

This concept has great potential to fill in the great many broadband black holes found throughout the West. As the Federal Communications Commission prepares recommendations to Congress due in two months on government policy to expand broadband access, it should put this open access, consumer owned fiber to the premises model -- and tax credits to encourage its use -- on the top of its list.

Feds should prioritize broadband stimulus funding for local telecom cooperatives

Google's got a spot on solution to remedy the existing flawed and incomplete U.S. telecommunications infrastructure model that cannot deliver advanced communication services over much of the so-called "last mile." Decades ago, local property owners built their own telecom cooperatives when basic phone service -- like high speed Internet today -- wasn't available to them, notes Google policy analyst Derek Slater in this April 30 Gizmodo video. They can now adopt the same concept to bring fiber to their neighborhoods, he says. Slater's presentation follows on a white paper he co-authored Homes with Tails What If You Could Own Your Internet Connection that was issued last November.

The federal agencies responsible for disbursing $7.2 in economic stimulus funding to build advanced telecommunications infrastructure should give telecom cooperatives and other local entities funding priority to help make this a reality. America's telecom future isn't with the failed top down strategies of the past. The way to go is bottom up empowerment of communities that have been left on the wrong side of the digital divide for years. Policymakers should also adopt Google's call for state and federal tax income tax credits to provide incentive for homeowners to invest in their own fiber connections.