Connecticut should tell AT&T to hit the road

AT&T is at loggerheads with Connecticut regulators that want it build out its infrastructure to serve more residents and businesses as a condition of getting approval to deploy its triple play (voice telephone, Internet access, Internet protocol TV) "U-Verse" offering in the state.

AT&T contends it can't do so profitably and is threatening to pull the plug on U-Verse in Connecticut. Good riddance; this technologically challenged turkey probably won't fly anyway. Connecticut should stick to its guns and tell AT&T in clear terms that building a swiss cheese telecommunications infrastructure filled with broadband black holes is not acceptable.

This is a prime illustration of the need for the locals to take charge and create public-private partnerships with locally owned and operated telecommunications providers and tell the big, out of state corporations who would create broadband winners and losers to hit the road.

Aspirational sloganeering won't build last mile fiber

Half of Connecticut says it wants fiber-optic Internet —and soon - The Washington Post: Although the state has fiber-optic cables connecting all 169 towns, that infrastructure typically ends in nodes serving the local town hall or police and fire stations. The next step will be to connect individual homes to that network. As many as 1.8 million Connecticut residents would get access to fiber if the public-private partnership plans move forward.

That figure also represents a significant opportunity for Internet providers. ISPs would not only be able to tap into a lucrative subscriber base for fiber-optic services, said Vallee — they'd be able to do so at little cost to themselves, thanks to the infrastructure that's already been built and state incentives to streamline the building process.

There are two big questions not addressed in this story: Who will build the residential fiber infrastructure and how will it be financed? Without those details, talk of Connecticut being "number one" for fiber connectivity is merely aspirational sloganeering.

It's also misleading to suggest that ISPs will be able to deploy that infrastructure "at little cost to themselves." Cost barriers to building last mile fiber infrastructure are significant and the primary reason why once anchor institutions are connected to fiber, homes and small businesses are left unconnected as is the case here. Connecticut and other states need realistic and well thought out plans to meet and overcome them.

Connecticut AG, AT&T clash in court over broadband build out

As this blog reported in early August, Connecticut Attorney General Richard Blumenthal wants to ensure the "connect" in Connecticut means the entire state and not just selected local jurisdictions when it comes to broadband access.

Blumenthal therefore is moving to force AT&T to deploy its triple play U-Verse service under state rather than local regulatory jurisdiction. AT&T is fighting back, taking Blumenthal to court to challenge his order.

This is a high profile legal showdown worth watching as a state AG with a strong consumerist reputation is basically telling the telco/cable duopoly that with market domination comes the responsibility to serve everyone as is current regulatory policy for basic telephone service.

First indication of AT&T withdrawal from residential wireline market

Sensing AT&T's lukewarm commitment to its residential wireline business segment, in 2008 I predicted that AT&T would abandon the segment in the first half of 2010. The telco is still in the residential wireline business as 2013 draws to a close. But a slow withdrawal could now be underway, one state at a time starting with Connecticut.

Bloomberg reports today that AT&T will spin off its Connecticut residential landline unit, including Internet and TV services to Frontier Communications for $2 billion.

AT&T relies on copper cable plant to deliver premises Internet service, scotching plans dating back to the late 1980s developed by regional bell operating companies AT&T absorbed in the 1990s to replace the last mile copper network with fiber optic cable. That reliance has technologically limited the reach of AT&T's Internet-based service offerings since copper was designed to carry analog voice service and not digital Internet signals that can be reliably delivered over only short distances using copper.

AT&T's relationship with Connecticut hasn't been a copacetic one. In 2007, then-Attorney General Richard Blumenthal pressured the telco to make its U-Verse product offering available to all residences in the state. Blumenthal, now a U.S. senator, said this week the deal should be reviewed to ensure it is in the interest of consumers.

Connecticut consumers squawk over poor Internet service quality from Frontier

More than a decade ago, AT&T was looking to offer TV programming via Internet protocol (IPTV) as part of its U-verse branded triple play service offering. To deliver that bandwidth intensive service, rather than replace its decades old copper plant designed to deliver what's referred to as "plain old telephone service" or POTS with modern fiber to the premise infrastructure, AT&T instead opted to soup up its Digital Subscriber Line (DSL) service to a more robust version, VDSL.

The initiative, dubbed by AT&T as Project Lightspeed, is a hybrid design that brings fiber to field distribution units. Customer premises are connected to those units using the existing POTS copper infrastructure. This is the proverbial weak link in the chain given the often deteriorated condition of the copper pairs in these cables.

That weak link may now be coming home to roost in Connecticut for Frontier Communications, which purchased AT&T's wireline operations in the state earlier this year. Arstechnica reports complaints about Frontier's service have gone through the roof and state regulators and officials are scheduling hearings.

Connecticut AG wants to force AT&T to serve entire state with IPTV

Now here's a turnabout. Over the past two years, AT&T has lobbied states for laws that allow them to go around local governments and get statewide "video franchises." Looking out for their constituents, most local governments (unlike El Dorado County, California) naturally want advanced broadband telecommunications services including video available for all of their residents. But Ma Bell and other telcos -- as well as the cable companies -- instead want to pick and choose winners and losers when it comes to determining who will get service.

Connecticut isn't one of the two dozen or so states that put a statewide franchise law on the books. Nevertheless State Attorney General Richard Blumenthal worries that AT&T will work with the locals to leave much of the state on the wrong side of the digital divide and has petitioned the state's Department of Public Utility Control urging it to require Ma Bell to get a statewide franchise.

"Because AT&T serves virtually the entire state, the company needs to apply for a statewide license requiring it to eventually provide IPTV (Internet Protocol Television) service to all households, Blumenthal said in a press release. AT&T, which already offers IPTV in a few communities, had wanted to provide the service without state regulation and only in selected areas, according to Blumenthal's office.

Don't let the references to cable or video franchises and IPTV confuse the main issue. This issue isn't about TV or video competition. It's all about broadband buildout and closing the widespread digital divide.

New England state a microcosm of last mile telecom access barriers, disparities

A consultant's report prepared for the State of Connecticut on the state of its telecommunications infrastructure found significant access barriers and disparities. From the summary:

From our urban surveys in Hartford, Connecticut we found evidence of higher-quality fiber and cable broadband services in proximity to the poorly served locations. However, the individuals at those locations reported that service providers decline to connect users to those services, or will do so only at a prohibitively high cost—approximately $10,000 to $30,000 for a short street crossing. Also, services are costly—from $1,000 to $2,000 per month.

We found based on our field survey in rural areas that most areas had copper telephone service, areas in proximity to towns have cable TV, and there is frequently a third fiber telecommunications provider on major routes between towns and in in proximity to State buildings, fire stations, and libraries. However, these services were not readily available to many institutions and businesses—requiring significant effort by the institutions to understand their options and to be connected.

The report also found small business suffer poor telecommunications service. They are unable to obain the level of service they need relative to available services, face long delays in obtaining services, or are unable to obtain service even when infrastructure is relatively nearby.

 The full report issued this week by the state's Office of Consumer Counsel can be accessed here.

FCC's Sohn: Wired Broadband Competition Lacking | Broadcasting & Cable

FCC's Sohn: Wired Broadband Competition Lacking | Broadcasting & Cable: Gigi Sohn, senior counselor to FCC chairman Tom Wheeler, told a New Haven, Conn., audience Monday that "the simple truth is that meaningful competition for high-speed wired broadband is lacking."

She came not to bury broadband, but to praise the state's 1 gig community broadband project as a way to provide that "lacking" competition.

Viewed in the context of landline Internet infrastructure as a whole, Sohn is correct. It's a natural monopoly due to high cost barriers that keep out potential competitors as well as inefficiencies that make building parallel infrastructures as nonsensical as building multiple competing roads and highways serving the same area. If they were privately owned and operated for profit -- as is most telecommunications infrastructure in the U.S. -- the likelihood of their having a net present value greater than zero is slim to none.

What this story as well as many others lamenting the lack of "broadband competition" fail to mention is how Connecticut's project does offer competition to the consumer for Internet services via open access fiber infrastructure that provides wholesale access to Internet Service Providers (ISPs) as an alternative to the vertically integrated, closed access infrastructures used by the legacy telephone and cable companies as well as Google Fiber. ISPs would then compete to sell their services to consumers. From the CT Gig Project website:

Competition:

The open-access model would introduce true competition into the Internet
marketplace. The idea is to build the infrastructure and then give Internet
providers equal access to utilize it. Your Internet choices should be made
based on price and service, not solely by the town boundaries you reside in.

Telcos’ copper cable plants deteriorate with no clear plans to replace them with fiber

A crisis affecting Americans who obtain premises telecommunications services (Internet, voice, and video) from legacy telephone companies has been slowly unfolding over the past 10 years. 

These companies’ copper cable plants are growing very aged and nearing the end of their useful lives with no clear plan to replace them with fiber optic cables.

The problem has worsened in the past decade as telcos have concentrated their infrastructure investments on mobile wireless services while all but ignoring their deteriorating landline cable plants. Much of it is in such poor condition that it can’t deliver any Internet connectivity or only marginally at sluggish speeds.

One strategy going forward is to sell as AT&T is doing with its Connecticut residential landline unit. However, in parts of telcos’ service territories where the copper cable plant is ancient and a fully depreciated asset, it’s questionable as to what value any potential buyer would see in such a deal.

A possible path to resolution of this crisis could come later this year if the U.S. Federal Communications Commission opts to subject Internet protocol-based services to common carrier and universal service requirements under Title II of the Telecommunications Act of 1934.

California's "surprisingly low" ranking for broadband connectivity speed

California may be widely considered the U.S. information technology leader as the home of the famed Silicon Valley. But when it comes to broadband Internet connectivity, it doesn't even make the top 10 among states, according to Internetnews.com's report on a recent study by mammoth Web server farmer Akamai.

David Belson, Akamai's director of market intelligence, told InternetNews.com that California ranks 17th, with just 21 percent of its connections coming in at 5 Mbps or higher over Akamai's network. "It was surprising that California didn't rank higher on the high broadband list," Belson said.

The top states are Delaware with 60 percent of its connections to Akamai measured at 5 Mbps, Rhode Island (42 percent) New York (36 percent), Nevada (34 percent), Oklahoma (33 percent), Connecticut (32 percent), New Hampshire (30 percent), Massachusetts (29 percent), Maryland (27 percent) and the District of Columbia (27 percent).

A possible contributing factor is the mediocre, incomplete state of the Golden State's broadband infrastructure. In January, Gov. Arnold Schwarzenegger's Broadband Task Force reported California's broadband infrastructure is unevenly deployed with nearly 2,000 towns and communities lacking broadband access -- many in Northern California -- while other parts of the state, mostly in metro areas of Southern California, enjoy state of the art connections.

What's truly surprising isn't so much Akamai's findings but AT&T's dubious assertion in a recent California Public Utilities filing that it provides broadband to its entire service area in the state.

Digital Deprivation in a Land of Affluence

This story in today's New York Times illustrates that location and not necessarily socioeconomic status defines the digital divide -- this one in relatively affluent Connecticut.

Accelerating implosion of pay TV will hasten AT&T exit from residential wireline

The accelerating implosion of subscription pay TV offerings will hasten AT&T’s exit from the residential wireline market segment and could also result in the telco’s withdrawal of its planned acquisition of satellite provider DirecTV announced in 2014.

AT&T offers video packages with its U-Verse-branded triple play Internet-video-voice product. With the DirecTV deal pending regulatory approval, AT&T hopes to expand its audience of potential viewers and consequently, boost its purchasing power with TV programming providers as negotiations with the programming providers have hardened in recent years.

Viewers have historically regarded the TV programming packages as a poor value for the money since they typically watch only a handful of a few hundred channels. Now they can stream only the video programming they desire via their Internet connections, disrupting the triple play revenue model.

In addition, AT&T’s U-Verse product is delivered to residences over its aging legacy last mile copper cable plant that offers far less bandwidth headroom -- much of it consumed by video -- than hybrid fiber-coax (HFC) cable plants. To keep technologically abreast of cable, AT&T would have to replace its copper plant with fiber. But it is unable to easily do so, constrained by shareholder expectations for earnings and high dividends that militate against substantial capital expenditures.

That leaves AT&T with only one viable option – to continue to sell off chucks of its residential market as it did in December 2014, spinning off its Connecticut residential landline unit, including Internet and TV services to Frontier Communications for $2 billion.