IIJA challenge process sets stage for battles between WISPs and telcos

The advanced telecommunications infrastructure (ATI) component of the Infrastructure Investment and Jobs Act (IIJA) allows for challenges of proposed projects that request states award 75 percent grant subsidies appropriated for ATI in the bill. Challengers can claim a proposed project does not meet the funding eligibility standard of at least 80 percent of premises within the project scope as being “unserved." That's defined as being unable to obtain reliable service with a minimum throughput of 25 Mbps/3Mbps with latency sufficient to support real-time, interactive applications. The statute authorizes states to adjudicate challenges. The National Telecommunications and Information Administration can reverse state determinations and modify the challenge process.

The challenge process sets the stage for battles between fixed Wireless Internet Service Providers (WISPs) and telephone companies once the funding becomes available next year. Verizon, AT&T are looking at C-band spectrum as a cheaper alternative to building fiber to the home. Should these telcos seek IIJA grant subsidies to expand their fixed premise wireless presence using C-band spectrum as AT&T CEO John Stankey suggested this week, WISPs could conceivably contest proposed projects as ineligible because WISPs already offer service meeting the minimum throughput standard. WISPs could use the same rationale to challenge proposed telco fiber to the premise (FTTP) builds using IIJA subsidy funds. Either way, FTTP deployment – already decades behind where it should be in terms of modernizing legacy copper telephone lines and building capacity for future bandwidth demand – would be further delayed.

WISPs are likely to view both IIJA subsidized telco expansion scenarios as an existential threat to their business model. Telcos could easily undercut their relatively high monthly rates for fixed prem wireless service. Telcos also benefit from greater economies of scale and lower costs since they could deploy their own fiber backhaul circuits. And telco owned FTTP would decimate WISPs since most customers would quickly switch to telco fiber once it became available and at lower monthly rates than WISP service. 

The forthcoming fixed wireless fights -- and most importantly the prolonged delay of modernizing copper to fiber -- could be avoided if the IIJA was revised to establish an FTTP infrastructure subsidy eligibility standard rather than the throughput-based standard in the bill as enacted.

U.S. at inflection point on premises Internet infrastructure

The United States is at an inflection point relative to premise Internet infrastructure serving homes and small businesses. The “walled garden” business model of legacy incumbent cable and telephone companies has reached the limits of its reach. Connecting the remaining 20 to 30 percent of premises outside the wall isn’t economically practical as testimony at a U.S. House Small Business Subcommittee hearing this week in upstate New York illustrates.

Mark Meyerhofer, a government relations administrator for Time Warner Cable, said while there has been a change in the national mindset that favors a greater focus on unserved areas, nevertheless “It remains extremely challenging to extend broadband to most rural areas of New York State, where geographic isolation and topographic issues make it economically infeasible for companies to reach these areas,” Meyerhofer explained. “Investments simply cannot be recouped before it is time to reinvest.” Although Meyerhofer was specifically referring to only one part of the country, his testimony applies elsewhere across the nation including many suburban and exurban areas where service gaps exist. That economic reality of the walled garden Internet also applies to Google Fiber, which plans to expand into several metropolitan areas.

The other challenge faced by the legacy incumbent providers (but not Google Fiber) is the ever growing demand for more Internet bandwidth. It’s similar to the problem facing manufacturers of silicon-based microchips that eventually will reach a physical barrier where no additional circuitry can be crammed onto the chip. That will require the incumbent providers to change out their metal wire-based premise service infrastructure with fiber optic connections to accommodate the additional bandwidth demand and stave off technological obsolescence. But barring a revolutionary breakthrough that significantly reduces the cost of constructing fiber to the premise infrastructure, their shareholders aren’t likely to approve of such large capital expenditures that could cut into dividends as shown by Verizon’s 2012 pullback of its FiOS fiber to the premise product offering.

Given the growing consensus that the so-called “last mile” premise Internet infrastructure challenge can’t be met within a commercial framework, it strongly suggests other business models including a nonprofit cooperative or public works approach similar to that used for roads and highways will be necessary in many areas of the U.S.

Telecom Giants Drag Their Feet on Broadband for the Whole Country - Newsweek

Telecom Giants Drag Their Feet on Broadband for the Whole Country - Newsweek

Of course they drag their feet; it's their fiduciary duty to shareholders to do so. This story spotlights the inherent conflict in relying on the private sector alone to construct telecommunications infrastructure needed by a much larger constituency: the American public.

Despite their claims of having invested billions in telecom infrastructure, investor-owned telcos simply don't have enough cash to finance the transition of their networks from the old, copper POTS (Plain Old Telephone Service) cables to modern, fiber optic-based networks. Given that circumstance, they are leaving the old networks in place throughout most of their service territories. But since these networks are decades old and require a lot of costly maintenance, telcos are asking regulators to relieve them of the duty to maintain them to ensure every premise can get telephone service, sparking consumer push back.

Telcos engage in nonsensical, circular argument over regulation designed for POTS

IIA Report: Time To Begin Full IP Transition - 2013-10-08 14:53:14 | Broadcasting & Cable: Only 5% of U.S. households rely solely on traditional home phones and that means the current regulatory framework is lagging the marketplace and siphoning off investment from new infrastructure.

That is according to a just-released report from the Internet Innovation Alliance, a broadband adoption and deployment advocacy group whose 175 members include AT&T and fiber-maker Corning.

The report, from analyst Anna-Maria Kovacks, finds a "plethora of choices" for voice, video and data including from wireless devices, cell phones, wired Internet VoIP and Internet applications (Skype), and that 99% of communications traffic is now IP-delivered. She said that despite the speed differentials between wired and wireless — wired is faster — wireless was a legitimate competitor and could deliver even a competitive video service.

From the end users perspective, she said, it would be possible to make them happy with LTE as well as fixed wired broadband.

The legacy telcos are engaged in a disingenuous circular argument.  Their business models don't allow them to revamp their legacy copper cable plants -- over which they offer only outdated dialup Internet access for many premises -- to fiber to the premise (FTTP).  Oddly, however, they wonder why they remain subject to a regulatory scheme designed for POTS (Plain Old Telephone Service) delivered over Public Switched Telephone Networks (PSTN).  The answer is pretty self evident. They only have to look at their own networks and service territories for the answer. If they deployed FTTP networks to all of their customers, then their question would be relevant.

As for mobile wireless, it is not a substitute for premise service (can you spell M-O-B-I-L-E?) since it can't offer sufficient bandwidth capacity to serve various IP devices in the home ranging from video, voice service and personal devices like tablets.  It comes with bandwidth caps for good reason since compared to FTTP, mobile wireless can't even come close in carrying capacity.

DSL turbocharging schemes remain just that

DSL Renaissance Underway?: Zero Touch Vectoring
Vectoring technology is a relatively new innovation for DSL which basically is a noise cancelling technology which reduces cross talk in copper pairs, allowing DSL to achieve much faster bandwidth throughput as a result. Some vendors are claiming they can squeeze 100 Mbps out of VDSL2 vectoring, albeit at rather short distances. It’s very much a FTTN technology, where VDSL2 connects to the home from a fiber fed cabinet.

These stories continue to appear year after year as vendors hope telcos will adopt their latest sooper dooper DSL turbocharging scheme.  Problem is while telcos aren't investing FTTH CAPex, they aren't investing CAPex or OPex in their aging legacy copper cable plants either and are instead concentrating on the mobile wireless space where more rapid ROIs are to be had.

And the above reference to "Zero Touch" for many telco customers has an entirely different meaning: DSL won't touch their premises because the DSL signal can't propagate far enough over old copper to reach them. Zero Touch=Zero Service.

Phone cos. lose broadband subscribers for 1st time - Yahoo! News

Phone cos. lose broadband subscribers for 1st time - Yahoo! News

And the telcos won't be able to catch up to the cablecos either.  Not when replacement of obsolete telco copper cable plant with fiber to the premise doesn't reach ROI fast enough and needed revenues to pay fat dividends are growing on the mobile wireless side of the house.

Internet Providers Testing Metered Plans for Broadband - NYTimes.com

There’s a clash between what users expect from broadband service and what is actually delivered to them, said Chris Balfe, the president of Glenn Beck’s media company, which created an online TV channel nearly a year ago. He has noticed sluggishness at home when trying to view YouTube videos. “As a broadband video provider it’s frustrating, but as a user it’s absolutely infuriating,” he said.

This New York Times piece makes the case for community owned fiber to avoid incumbent cableco and telco manipulation of their natural duopoly (or monopoly in some cases) to create bandwidth scarcity.  It's important to create a perception of bandwidth scarcity in order to preserve bandwidth rationing and the unit-based billing of their decades-old business models.  Communities can and should disrupt that business model and build their own fiber to the premises networks.  Enough is enough.

FCC issues proposed order creating Connect America Fund

The U.S. Federal Communications Commission has released its proposed order revamping the Universal Service Fund (USF) that has for decades subsidized plain old telephone service (POTS) in high cost areas. The USF will now be directed to support Internet connectivity as the Connect America Fund (CAF). The CAF will instead subsidize telecommunications infrastructure to serve what the FCC estimates to be 18 million Americans who involuntarily remain off the Internet “grid” because it costs too much to connect them.

Whether the proposed order would achieve that and do so in a timely manner is an open question. The executive summary of the rather inscrutable 759-page document states that “[w]hile continuing to require that all eligible telecommunications carriers (ETCs) offer voice services, we now require that they also offer broadband services.” But a close reading of the order shows no indication the FCC will expand the telcos’ existing common carrier obligation to provide voice service to all (and not just some) premises in their service areas to encompass Internet. For example, paragraph 1090 on page 398 of the proposed order:

Under section 214 of the Act (the federal Communications Act of 1996), the states possess primary authority for designating ETCs and setting their “service area[s],” although the Commission may step in to the extent state commissions lack jurisdiction. Section 214(e)(1) provides that once designated, ETCs “shall be eligible to receive universal service support in accordance with section 254 and shall, throughout the service area for which the designation is received . . . offer the services that are supported by Federal universal service support mechanisms under section 254(c).” Although we require providers to offer broadband service as a condition of universal service support, under the legal framework we adopt today, the “services” referred to in section 254(e)(1) means voice service, either landline or mobile. (Emphasis added).

That sounds like POTS and not Internet. In addition, there is no reference in the proposed order to Title II Section 214(e)(3) of the Communications Act of 1996 that empowers the FCC to "determine which common carrier or carriers are best able to provide such service to the requesting unserved community or portion thereof and shall order such carrier or carriers to provide such service for that unserved community or portion thereof." So it appears that telcos could continue to not serve some areas even while accepting CAF subsidies to serve others -- thereby perpetuating the existing problem of broadband black holes.

It’s also unclear from the proposed order how unserved areas in states where the incumbent telco has relinquished its carrier of last resort status would be able to benefit since these carriers would appear to be ineligible for CAF subsidies. Or whether telcos, even if eligible for CAF subsidies, would accept them. In California, for example, telcos have generally shunned generous subsidies available through the California Public Utilities Commission to offset the cost of constructing infrastructure to provide Internet connections to premises in unserved and underserved areas of the state.

Finally and perhaps most importantly, given that many people have and continue to “cut the cord” to landline voice service, will there be enough money to be had from phone bill surcharges that have historically funded the USF to sustain the CAF?

AT&T and Verizon’s Deteriorating Legacy Landline Networks

Phillip Dampier has posted an excellent piece summing up the current dreary state of commercial premises telecommunications service in the United States. Dampier depicts telcos as caught between the old world of central office switched plain old telephone service (POTS) and its aging and increasingly obsolete copper cable and today's world where fiber optic infrastructure delivers voice, video and data over the Internet.

Telcos can't afford to make the change over from the old world to the new. So they're trying to limit their losses by keeping their old copper POTS cable plants functioning with bubble gum, bailing wire and trash bags while boosting their bottom lines with smartphone services delivered over more lucrative mobile wireless networks that don't have the carrying capacity to substitute for fiber to the premises infrastructure.

Dampier's post makes a powerful case for community owned fiber networks. There's simply not enough money in the fiber to the premise architecture to support an investor ownership model even for large corporations and their favorable economies of scale. Without community fiber networks, much of the U.S. will remain disconnected from the Internet for the foreseeable.

Telco plans LTE for fixed premises broadband

FierceBroadbandWireless reports CenturyTel CEO Glen Post told the publicly traded telcos's quarterly conference call that it will deploy Long Term Evolution (LTE) aka 4G cellular broadband in 2010 as a platform to serve fixed premises customers in rural areas. CenturyTel serves small and mid-sized markets in 25 states, according to its Web site.

If this really occurs and isn't yet another of the vaporware technology claims common in the wireless broadband world, it could provide a superior interim fixed premises broadband pipe in broadband black holes until these areas can be wired for fiber optic cable plant.

Currently 3G cellular broadband plays that role in some areas lacking wireline delivered broadband. But it's more appropriate for mobile broadband than for fixed premises users given the tradeoffs of relatively slow throughput speeds, high latency and low bandwidth caps. Locally owned and operated fixed terrestial Wireless Internet Service Providers (WISPs), which also presently play a major role in bridging the broadband gap created by the limited technological reach of DSL and the limited service area footprints of cable companies, aren't likely to be competitive with 4G where it's deployed.

If it can deliver with good latency numbers, LTE could also offer better coverage than 3G since it will utilize 700 MHz radio spectrum that was purchased by CenturyTel Broadband Wireless and other telcos such as AT&T and Verizon in federal auctions conducted last year. The spectrum was formerly used for television signals and is noted for its robust ability to carry through rolling terrian and trees and buildings.

LTE will also potentially offer far higher thoughput -- in the range of 10-15 Mbps, according to Sidecut Reports. That's at least five times faster than what's currently available from 3G and WISPs.

Congress should reject telco whining over broadband requirements in economic stimulus measure

Economic stimulus legislation on a congressional fast track that would allocate $6 billion (House version) and $9 billion (Senate version) for broadband telecommunications infrastructure build out to underserved areas is unsurprisingly eliciting whining from the big telcos.

Industry representatives and think tanks that front for them complain the measures' minimum connectivity speed requirements for wireline and wireless service to underserved areas as well as open access requirements would not dispose them to applying for broadband infrastructure grants, loans and loan guarantees.

What they want instead are tax breaks just as telcos received under the 1996 Communications Act that was to have brought broadband to all Americans in a decade's time. Bottom line: business as usual. Continued proprietary (and geographically limited and underpowered) DSL access over crappy, aging (depreciating from the telcos' perspective) copper cable, maintaining wireless Internet connectivity at or below the less than impressive capabilities of current deployments and continuing to tell millions of Americans to go suck a satellite or live in dial up purgatory.

Congress should reject these whiners that have led the U.S on a race to the bottom when it comes to advanced IP-based telecommunications services. The telcos propagated a broadband boondoogle with the 1996 Communications Act. Broadband access is too important to allow them to repeat the fiasco.

Maintaining open access requirements in the stimulus legislation will assist local governments and citizens by providing seed funding to form their own fiber cooperatives. That will allow them to break free of the telco/cable duopoly that has failed to provide them adequate broadband access for their current and future needs.

Self perpetuating broadband black holes a product of telcos' cynical digital redlining strategy

Since late 2006 and again this week, there have been reports of slowing growth in U.S. wireline broadband subscribers and particularly those using telco-provided Digital Subscriber Line (DSL) service. Analysts and other observers have blamed the demand side of the market, attributing the decline to a slowing economy and market saturation.

There's likely a better explanation -- and it's on the supply side of the equation. Since 2006, DSL deployments by the tier 1 telcos such as AT&T and Verizon have been slowing and are now all but halted as the companies concentrate on building out their triple play (U-Verse and FiOS, respectively) infrastructures in a relative few selected markets.

For those unfortunate enough to reside or do business in these companies' service territories where they don't offer wireline broadband connections, there's another factor at work: the self perpetuating broadband black hole. They're the natural product of the telcos' digital redlining strategy.

Since the big telcos don't do market research, they rely on what they term as "pent up demand" for services. As the broadband boom unfolded at the start of the decade, pent up demand grew. Right around the time of the first reports of a broadband "slowdown" began appearing, that pent up demand had likely recently peaked. Folks who have been asking for wireline broadband connections over a period of 5-7 years and have yet to obtain them by mid-2008 have likely concluded they never will. So they stop asking for service, ignore misguided ads for telco broadband, and pent up demand for broadband falls away. The telcos can then cynically point to the falling demand to justify their continued failure to deploy broadband infrastructure to these redlined neighborhoods.

"Copper cartel" of telcos has anti-competitive stranglehold over U.S. last mile telecom infrastructure, CLEC complains

U.S. telcos such as AT&T and Verizon comprise a "copper cartel" that maintain an anti-competitive stranglehold over the nation's last mile telecommunications infrastructure, the head of one of the largest competitive local exchange carriers created under the federal Telecommunications Act of 1996 told Congress this week.

“The predominant issue of 21st century telecommunications is broadband choice and options for businesses and consumers which allow them to choose their broadband provider based on customer need," XO Communications CEO Carl J. Grivner told the U.S. House Telecommunications Subcommittee on Telecommunications and the Internet, according to a news release issued by the CLEC. "But we continually face incumbents’ efforts to restrict access to essential last mile links that are critical to competitive broadband offerings.”

Griver complained telcos are using provisions of the 1996 law to get around rules requiring them to sell last mile connections at wholesale rates.

Telco regulators should prohibit passive "soft" divestiture and require companies to upgrade or sell off assets

The two major telcos in the United States, AT&T and Verizon, have segmented their residential wire line markets into three groups.

The first segment is where the telcos are deploying their state-of-the-art infrastructure. For AT&T, it’s the company’s hybrid fiber-copper based VDSL “Project Lightspeed” rollout in support of its Internet/Video/Voice “triple play” U-Verse product bundle. For Verizon, it’s the telco’s FiOS fiber to the premises infrastructure that like U-Verse offers the triple play bundle but with far greater bandwidth and expansion capacity. This “prime” segment comprises only a small percentage of each company’s total residential lines.

The second residential wire line segment features “double play” offerings of broadband Internet and traditional analog POTS (plain old telephone service) delivered over copper cable infrastructure. Broadband is provided by legacy ADSL central office DSLAMs and remote terminals. This “preferred” segment comprises the bulk of the two telcos’ residential customer base.

Which brings us to the third and last market segment. Call it the “non preferred” orphan segment. It is in the words of one independent ISP being kept on life support, serviced only when necessary by makeshift “bubble gum and bailing wire” repairs. Traditional voice service can be spotty, particularly when it rains and afterwards when the sun expands and dries aging aerial cables. Broadband Internet access is nonexistent and residential customers are stuck using early 1990s era dial up technology. In many cases, DSL remote terminals have been installed but were never activated and are now considered obsolete, destined never to be “turned up” in telco parlance. While comprising about 20 percent of the telcos’ residential subscriber base, this third segment accounts for the bulk of repair costs and generates the most complaints to regulators.

This segment has been divested by the telcos, either actively or passively. An example of active divestiture is Verizon’s sale of large portions of its residential territory in several New England states including Maine and Vermont. AT&T, by contrast, has chosen the route of passive or "soft" divestiture. AT&T doesn’t want to service its tertiary residential market segment or upgrade the infrastructure within it in order to offer more services, but the company hasn’t made any efforts to spin off portions of it either. Consequently, the millions of unfortunate residents of this market segment are stuck in telecommunications limbo land where time stands still and the calendar still reads 1991.

Since these companies typically hold monopolistic positions in their third and least desired segments, regulators should prohibit the neglectful passive divestiture practiced most prominently by AT&T and give the telcos a choice: bring your services up to modern standards or sell and get out and make way for other providers who can offer better services.

More than 20 percent of U.S. local phone company customers still couldn't get broadband in last half of 2006

In September, your blogger speculated the Federal Communications Commission was delaying the release of a semi-annual report on the number of high speed telco and cable connections to the Internet covering the last six months of 2006 at the behest of telcos because it would show little or no improvement in the percentage of residential customers able to subscribe to high speed Internet from their incumbent local telephone exchange carriers.

This week the FCC finally released the long delayed report and it's clearly unflattering to the telcos. It reveals more than 20 percent of American residences could not get broadband from their telephone companies in the latter half of 2006. That represents no change whatsoever in the national average from the first six months of that year and illustrates that rather than making an effort to extend broadband to these unserved customers, telcos are hanging them out to dry, permanently stranding them on the dark side of the digital divide.

States with the highest levels of telco broadband access in the last six months of 2006 include Florida (89% ); Georgia (90% ) Colorado (86%) and surprisingly, Nebraska (89%).

States with the lowest levels of telco broadband access in the period were Maine (67% ); Arkansas (66% ); Michigan (64% ); New Hampshire (61% ); Vermont (64% ) and Virginia (66% ).

FCC delays report on broadband access

For the past several years, the Federal Communications Commission each January and June has released data on the number of high speed telco and cable connections to the Internet. The most recent report was issued Jan. 31, 2007. As your blogger reported in early February, it revealed that local telephone companies failed to provide DSL in more than 20 percent of their service areas as of June 30, 2006.

The FCC report covering the last half of 2006 was due out in June. But it's been inexplicably delayed. An FCC spokesman assured me in a July 20, 2007 email that it would be released "soon" but it's still MIA nearly two months later. A likely explanation is the FCC is delaying the report's release at the behest of the telcos since it's likely to show that telcos have made little if any progress shrinking their massive broadband black holes during the last six months of 2006.