Saturday, August 27, 2011

Verizon misses on price points for higher tier FiOS service

There are four key elements to a successful business offering: product, price, promotion and distribution channel. When it comes to the high end of its FiOS fiber to the premises (FTTP) Internet service, Verizon has most but not all of those elements.

The missing element? Price. At $200 a month for service providing downstream connectivity of 150 Mbit/s and 35 Mbit/s on the upside, "nobody's buying," reports Kathy Brown, Verizon's senior vice president for public policy according to this Light Reading story. Even in university towns, where Aspen Institute fellow and former government broadband policy guru Blair Levin wants to explore bringing gigabit service through his Gig.U project. Consumers, Brown notes, instead opt for cheaper service tiers providing connectivity at lower speeds.

Of course few are interested in buying Verizon's higher end service at $200 a month. That's an unacceptable price for most consumers. It's also an expected consequence of telco marketing strategy that rations bandwidth, creating an economic disincentive for customers to use more. Products and services cannot be successful when price points are set unrealistically high. It is also pointless to blame consumers for not buying when they are.

Sunday, July 31, 2011

Telcos propose reforming USF to subsidize legacy DSL

A half dozen first and second tier telcos including America's largest, AT&T and Verizon, are proposing to replace the existing Universal Service Fund that subsidizes switched voice service with two new subsidy programs to provide Internet connectivity in high cost areas. The proposal was made in a July 29 filing with the U.S. Federal Communications Commission.

One program would support wireline service, the Connect America Fund (CAF). The other, the Advanced Mobility/Satellite Fund, would subsidize wireless and satellite service in the least populated, highest cost areas of the nation. The CAF subsidy would be highly granular -- down to the census block level served by an existing telco central office.

The CAF is aimed at subsidizing buildout of the telcos' legacy Digital Subscriber Line (DSL) service using fiber to feed remote DSLAMs that serve premises using the existing copper cable plant. The CAF plan proposes approximating the FCC's current asynchronous minimum definition of broadband, 4 Mbs for the download side of the connection and 1 Mbs for uploads. (The CAF proposal calls for an upload speed of 768 Kbs)

The filing comes just one week after AT&T CEO Randall Stephenson declared DSL obsolete technology.
Apparently it's not for those parts of AT&T's service area where the company has opted not to invest in building out its VDSL-based U-Verse service. For those areas, legacy ADSL that offered throughput at the current FCC minimum that was state of the art technology a decade ago will have to suffice.

If these telcos had been smart and exercised even a slight degree of foresight, they would have made this proposal in the late 1990s when they first began to roll out DSL service. Or by 2000 at the latest. At that time, they clearly knew a business case couldn't be made to deploy DSL in large swaths of their service territories without some form of subsidization.

This proposal is not only tardy by a decade or more. It sets the throughput bar too low by fixing it on today's current minimum definition of broadband. With Internet bandwidth demand growing at a rapid pace to support increasingly bandwidth hungry applications -- most notably video -- today's 4 Mbs down and 1 Mbs up standard is by definition the edge of tomorrow's obsolescence. Some would argue it's already obsolete.

The incumbent telcos' proposal also comes as community broadband projects are taking off and building out in many parts of the nation that provide far faster, future proof Internet connectivity using fiber to the premise connections.

Saturday, July 23, 2011

Copper vaporware as AT&T chief declares DSL obsolete

Every couple of years or so, an article like this one by Tara Seals of V2M appears arguing legacy copper telecommunications infrastructure designed for a pre-Internet analog era is far from obsolete. Technical innovations can extend its lifespan, even as bandwidth demand is increasingly challenging its carrying capacity, particularly from Over The Top (OTT) video content:

Telcos are seeking cost-effective solutions to maximize their legacy infrastructure. Reducing crosstalk across copper bonded pairs using the ITU-T G.vector standard (G.993.5), introducing software solutions to maximize network logistics and using caching in the network are all solutions that are occurring right now, as telcos position themselves to meet the rapidly growing consumer OTT demand.

If that's the case, then why did AT&T CEO Randall Stephenson declare this week that the workhorse technology that has transported Internet protocol content over AT&T's copper network for the past decade and a half -- Digital Subscriber Line (DSL) -- is obsolete?

What about that innovation to stave off copper obsolescence? If it were for real instead of vaporware hype, it would truly provide AT&T tremendous opportunity to offer more wireline Internet services to a lot more customers over its legacy copper plant. Clearly for AT&T, that's not the case as the telco shifts away from residential wireline and is instead concentrating capital expenditures on personal wireless services.

Friday, July 08, 2011

Managing by eyeballing butts in chairs instead of work product comes with $900 billion lost opportunity cost

Despite the rapid growth of the digital economy and the Internet that makes the specific time and location for getting work done less and less relevant, "management attitudes that were born in the days of sweatshops and typing pools still dominate" the American workplace, according to a June 2011 paper authored by Kate Lister and Tom Harnish of the Telework Research Network.

It estimates that if 50 million potential telecommuters in the U.S. worked from home for half the work week, the savings to their employers, communities and themselves would would total over $900 billion annually. As framed by Lister and Harnish, that represents part of the lost opportunity cost of retaining the pre-digital economy management model.

The authors also call for ubiquitous Internet access. "Without uniform access, telework will not be available to those who need it the most," they state.

Wednesday, June 29, 2011

Horsepower to improve the business case for aerial fiber deployment

One of the toughest nuts to crack in the business case for deploying fiber optic cable plant is the cost of labor, which by some estimates accounts for 70 percent of the price tag.

Now an old world method -- horsepower -- is helping aerial fiber deployments pencil out, as this Reuters story out of Vermont illustrates.
"It just saves so much work - it would take probably 15 guys to do what Fred (a Belgian draft horse) and Claude (his human owner) can do," said Paul Clancy, foreman of a line crew from FairPoint. "They can pull 5,000 feet of cable with no sweat."

On a recent June day, the tall, burly man and his muscular workhorse toiled 10 yards off of a desolate dirt road in hilly Hardwick, Vermont. They were assisting a work crew manning trucks and together they lashed cable to existing aerial utility line strung along wooden power poles.

Saturday, June 18, 2011

Motorola CEO, FCC agree: Wireline is for premises Internet connectivity, wireless for mobile access

With telco wireless providers rolling out 4G service, some have raised hopes that it has the bandwidth to rival facilities-based customer premises wireline infrastructure to deliver the full spectrum of Internet service.

Motorola CEO Sanjay Jha dismisses that notion as unrealistic. Wireline will continue to be the optimum method of providing Internet connectivity and high bandwidth video content for “a long time to come,” Jha was quoted as saying this week by The Wall Street Journal.

Jha added that wireless spectrum in the U.S. remains “very limited,” and wireless providers will continue to be the primary supplier of Internet access to consumers outside their home.

Jha's perspective on the respective roles of wireline and wireless is shared by the U.S. Federal Communications Commission. In a May 20, 2011 report to Congress on the availability of advanced telecommunications capability as mandated by the Telecommunications Act of 1996, the Commission rejected arguments by some mobile wireless providers claiming they can provide sufficient bandwidth to substitute for wireline service.