"Middle mile" and America's incomplete, balkanized telecom infrastructure

On broadband internet availability | Kenbridge Victoria Dispatch: Mid-Atlantic Broadband was created with an investment by the Tobacco Commission and a matching investment from the federal government 15 years ago. It was created as a non-profit company to connect the tobacco region to the major internet centers around the world. It has been extremely successful in providing connections for the data centers in Mecklenburg (H-P Enterprises and Microsoft) as well as other companies in the region. Mid-Atlantic was not established to provide services to households, but rather to be a partner with providers who would hopefully provide the “last mile” to your house or business. Regrettably, those last-mile providers have not been as aggressive as we had hoped. (Emphasis added)

That last sentence illustrates the usually unfounded belief that building advanced telecommunications fiber trunk lines will stimulate the deployment of infrastructure to customer premises. Even though the logical purpose of so-called "middle mile" infrastructure is to feed infrastructure serving those very premises.

Sell side market failure typically results when hopes for those connections are based on a vertically integrated, investor owned business model. The return on investment for such entities is too long to make the business case for connecting premises other than so-called "anchors" such as schools, libraries and business parks. It's part and parcel of America's widespread pattern of balkanized, incomplete telecom infrastructure and disparate access.

Western MA microcosm of U.S. telecom infrastructure crisis

We Need Fiber in Western Mass — and In Our Politicians, Too. — Medium: What’s infuriating is how our telecommunications regulatory system failed us. It has been many years since the government realized that speedy internet connectivity is a vital necessity, like electricity or phone service. Indeed, in the early part of the century President George W. Bush promised that affordable high speed Internet would be available to all Americans — by 2007. President Obama made similar promises. There was considerable precedent.

Levy's right. As I discuss in my 2015 eBook Service Unavailable: America's Telecommunications Infrastructure Crisis, it's been known for many years the United States needed to modernize its telecom infrastructure by replacing the metal cable of the legacy telephone and cable companies with fiber optic infrastructure to deliver digital today's Internet protocol-based services. But no transition plan was put in place and executed. So here we are today with woefully inadequate infrastructure. What's happening in western Massachusetts is a microcosm of how the broader national crisis is playing out.

To get telephone services in rural areas, the FCC established a Universal Service Fund. Something similar was proposed for last-mile internet. But it has yet to appear. In Massachusetts, federal stimulus funds went to “middle-mile” efforts — not actually providing service to homes. Schools and libraries in Western Mass had internet, but not actual people.

Segmenting telecom infrastructure into "middle mile" and "last mile" is part and parcel of the incremental thinking that has led to the current crisis. As Levy points out, middle mile gets built but the last mile is frequently neglected. Instead, we need to think of telecom infrastructure more holistically as a single, integrated delivery mechanism. Just as an interstate highway links to secondary roads and together form useful transportation infrastructure, the middle mile is useless unless it can connect to the last mile. Connecting as many premises as possible also observes Metcalfe's Law, wherein the value of a communications network increases with the number of users connected to it.

Unpacking incumbent opposition to KentuckyWired

Tom Eblen: Some telecoms, anti-government groups oppose new state broadband network | Lexington Herald-Leader:  The Kentucky Telecom Association, which represents 15 rural Internet providers, thinks KentuckyWired should be reconsidered, claiming it would duplicate existing infrastructure and undermine existing businesses that need their state and school service contracts.

There is likely an element of truth in incumbents' claims that publicly owned middle mile telecom infrastructure would duplicate existing privately-owned infrastructure in some parts of the state. But that doesn't mean it shouldn't be built. However, it should be part of an integrated plan to build a complete network of publicly owned last mile fiber to the premise infrastructure.

KentuckyWired is a partnership between the state and several companies that are building and would operate the 3,200-mile “middle-mile” network linking all 120 counties. From each county, any Internet provider could lease network space, build “last-mile” lines and compete to offer services to homes and businesses.

This is wishful thinking based on a fundamental misapprehension of the market economics of private owned telecom infrastructure. Investor-owned Internet service providers aren't typically going to be interested in connecting to publicly owned middle mile infrastructure to build out fiber to serve all premises. For two main reasons. First and most important, because the ROI on last mile is too far out in the future to make investment worthwhile. Second, because connecting their last mile networks to publicly owned middle mile infrastructure is contrary to the proprietary, closed access architecture of their business models that prefer maintaining control over both the middle and last miles.

There's a third and less likely possibility -- that KentuckyWired will make it easier for local governments to build FTTP infrastructure serving their residents. It's improbable for most except for those with pre-existing municipal utilities due to local governments lacking the financial wherewithal as they struggle to meet existing and future obligations such as employee pensions.

Gov. Beshear, Rep. Rogers launch statewide broadband network – The Ohio County Monitor

Gov. Beshear, Rep. Rogers launch statewide broadband network – The Ohio County Monitor: Reliable, high-speed Internet is coming to every county of the state, and supporters say the broadband project will be the key catalyst for profound and sweeping growth in job creation, health access and education.

To celebrate the construction of the statewide KentuckyWired, I-Way broadband network, Gov. Steve Beshear, Congressman Hal Rogers, state and local officials and hundreds of citizens gathered at Hazard Community and Technical College to learn more about KentuckyWired and how Kentucky’s future will benefit from broadband.

The broadband project will begin in eastern Kentucky and over the next three years will spread throughout the state.

*  *  *

The leaders also called on communities and local providers to get ready for the project by preparing the “last mile,” or the Internet hookups from the broadband “highway” to homes and businesses. (Emphasis added)

It's one thing to build middle mile Internet infrastructure such as the project reported here. But the value of that middle mile infrastructure can only be fully realized when it connects homes, businesses and institutions via last mile infrastructure. Merely issuing calls to communities and local providers to build it is no assurance that last mile infrastructure be constructed in a timely manner, particularly given the business model and financial challenges. There needs to be a holistic plan to build a complete telecommunications system. Otherwise there's the very real risk of ongoing Internet access disparities as I previously commented.

Kentucky middle mile telecom infrastructure project needs solid last mile solution

 

Kentucky.gov: - Governor Beshear, Congressman Hal Rogers Launch Statewide Broadband Initiative, Beginning in Eastern Kentucky: The first stage of the project is to build the main broadband fiber lines across the state. These major fiber lines are called the “middle mile.” The “open access” network will allow the private sector to use the fiber to deliver services into communities. Once complete, other Internet service provider companies, cities, partnerships, or other groups may then tap into those “middle mile” lines to complete the “last mile” – the lines that run to individual homes or businesses.

This last sentence is key and delineates between what's actually planned to be built and what's theoretically hoped to be. Without those last mile ISPs, Kentucky will end up with an incomplete network, condemning many of its residents to continued subpar Internet service. It would be like building an expressway and having gravel or dirt roads at the exits and on ramps. As the news release from Gov. Beshear's office notes, Kentucky rates poorly compared to other states on Internet access. That sad statistic is unlikely to improve without a solid plan to build fiber to the premise infrastructure to serve the last mile.

Historically, middle mile projects like this one do a good job getting anchor institutions like schools, libraries and government offices connected. But that doesn't automatically mean nearby homes and small businesses will get connections and can even hinder their getting service as network expert Andrew Cohill has noted since the network operators tend to concentrate their efforts on serving anchor institutions and figure someone else can solve the last mile problem. That someone else has typically proven to be nonexistent. It's essentially a funding problem since there tends to be insufficient and/or uncertain future revenues to attract those interested in investing in the needed infrastructure to bridge the last mile to homes and small businesses.

In Utah, the private funding partner of the Kentucky initiative, Macquarie Capital Group, is working with the Utah Open Telecommunications Infrastructure Agency (UTOPIA) on an open access fiber to the premise project serving 11 cities. That project solves the last mile funding problem by treating the fiber to the premise infrastructure as public works, funded in part by fees assessed on property owners. Which makes sense since these properties collectively benefit by being able to access the various economic, educational, health care and other services made possible with fiber connections. Kentucky would be wise to draw upon the Macquarie/UTOPIA partnership to plan and construct a complete fiber telecommunications network that will serve all its residents in the 21st century.

Dark fiber owners seek buyers -- but last mile will determine value

Today's Wall Street Journal reports dark fiber left dormant since the dot com bust of a decade ago is on the block, its owners hopeful that the transition to Internet protocol-based telecommunications that stalled around the same time will finally take off.

But now as then, the so-called last mile (or first mile as some refer to it) remains key since the dark fiber was put in place for long haul and in some cases middle mile infrastructure. Long haul and middle mile fiber standing alone do not a network make. It takes last mile fiber infrastructure to reach customer premises.

Potential purchasers of that dark fiber must assess the odds whether there will be sufficient last mile fiber to connect to. Reliance on legacy incumbent telcos and cable companies lowers the odds. They have largely upgraded and built out their networks to the extent their business models allow. Verizon, the sole legacy telco that was building fiber to the premises, recently pulled back to concentrate on wireless service in metro areas. But if local governments and telecom cooperatives crank up construction of fiber to the premises infrastructure to fill the gap left by legacy providers, the value of these dormant dark fiber assets will likely increase.