Saturday, April 21, 2012

SB 1161 doesn't touch California's real telecom problem

There was a fair amount of mainstream media coverage this week of pending California legislation that would state public policy that the state's Public Utilities Commission does not have regulatory jurisdiction over Internet protocol (IP) services.  As this Sacramento Bee story reports, consumer groups fear SB 1161 would give monopoly incumbent telcos too much free reign as they migrate away from plain old telephone service (POTS) delivered over twisted pair copper.  The telcos and the bill's author, Sen. Alex Padilla, support the policy to remove regulatory uncertainty and allow unfettered expansion of the Internet and IP-delivered telecommunications services to homes, businesses and institutions.

SB 1161 would neither help nor hinder that goal.  California's real problem is incomplete Internet infrastructure that leaves millions of Californians disconnected from the Internet.  Since telecommunications services tend to be a natural monopoly market, the fears of consumer groups of any form of reduced regulatory oversight are understandable.  However, their concerns would make more sense if all Californians had fiber connections to the Internet via a monopolistic provider.  They don't.  California's telecommunications market suffers from market failure because the high cost business models of the incumbent telcos (and cable companies) don't allow them to achieve that level of service.  Accordingly, the CPUC should do a better job of assisting alternative, lower cost business models emerge -- such as consumer-owned telecom cooperatives -- take root and thrive.  So far, the CPUC has failed to do so.

Saturday, April 07, 2012

Drop DSL and go suck our sooper dooper satellite!

Satellite Internet providers that serve a captive market of those who are off the Internet grid because of a lack of terrestrial infrastructure now hope to attract DSL subscribers by offering higher speeds. But as this USA Today article points out, converting DSL customers won't be easy since they have to buy the dish and installation. Not to mention they'd be getting much higher latency, hardly worth the trade off for higher speeds.

Satellite providers are a national embarrassment that point up how just how much of the United States remains a backward Internet backwater. The service should only be available in the Alaskan wilderness and places like Buford, Wyoming (Pop. 1).

Sunday, April 01, 2012

Why America needs lower cost, coop business models to complete Internet infrastructure

The excerpt below from Timothy B. Lee's discussion in the current issue of National Affairs of what ails America's regulation of Internet infrastructure states a strong case for alternative, lower cost business models such as telecommunications cooperatives to bring fiber connections to nearly all premises and to keep cable companies from gaining near total market dominance:

FiOS is Verizon's attempt to solve this problem by replacing its slow telephone cables with fiber-optic connections capable of offering speed that can compete with Comcast's. But in 2010, Verizon announced that it was winding down its FiOS installation efforts. Verizon plans for the network to reach around 18 million households, but not in some major metropolitan areas, including a few (like Boston) at the heart of its service area. News reports cited the high costs of the project as a reason why it was not being extended to all homes in Verizon's territory. Meanwhile, AT&T's project to partially replace its copper network with fiber, "U-Verse," is also being hampered by high costs. U-Verse service is faster than a traditional DSL line, but it is significantly slower than Verizon's and Comcast's high-speed networks, and it will not reach all households in AT&T's service territory. This might explain why, in the third quarter of 2011, Comcast added more than twice as many subscribers as did the seven largest telephone incumbents combined.

Saturday, March 31, 2012

Bell wireline monopoly stymies wireless Internet

The physics of radio spectrum place a natural limit on wireless Internet capacity. That limit is exacerbated by the wireline telco monopolies who restrict wireline backhaul connections to cell sites, writes Level 3 Communications CEO James Q. Crowe in this Forbes article.

Crowe details uncompetitive market practices aimed at creating artificial market scarcity of wireless backhaul and calls for action from Washington to break up the big telcos' wireline cartel.

Tuesday, March 20, 2012

“Broadband adoption” is an irrelevant non sequitur

More than a decade after the term “broadband adoption” was relevant, studies such as this one issued today by TechNet continue to use the phrase as if the United States was on the eve of the new millennium and Y2K was a topic of concern. In 2000, discussing “broadband adoption” was pertinent since “broadband” Internet connections were relatively new and distinct from the then commonplace dialup “narrowband” service delivered over legacy copper cable telephone networks.

In 2012, broadband adoption is a non sequitur since both the term “broadband” and the notion that people are migrating in large numbers from “narrowband” are badly outdated. Nowadays, the Internet can deliver voice telephone and TV video in addition to websites and email that was relatively novel for many in 2000.

People adopted voice telephone and TV decades ago. What has changed is the means over which these services are provided. Internet protocol technology and fiber optic connections allow voice, video, websites, email and many yet to be popularized applications to be delivered to peoples’ homes.

TechNet is talking about the wrong subject. The real issue isn’t “broadband adoption.” The real issue is lack of adequate Internet infrastructure. President Obama so in his January State of the Union speech in which he spotlighted America’s "incomplete high-speed broadband network.” While the president’s choice of terminology — “broadband network” — is technologically obsolete from this writer’s perspective, he is clearly on the right track in identifying the problem as one of infrastructure.

It’s time to retire the term “broadband adoption” to the history books and get on with modernizing the nation’s telecommunications infrastructure to provide all American homes fiber optic connections and the many Internet-based services they can provide.

Tuesday, March 06, 2012

Verizon's residential LTE "HomeFusion" likely to serve only fringes of small number of metro areas

Verizon's announcement today of its HomeFusion wireless residential Internet service offering based on its nascent 4G cellular LTE service appears aimed at picking up marginal residential market share in suburban and exurban fringes of U.S metro areas where wireline connectivity from incumbent telcos and cable providers is sketchy. These are also areas where Verizon might otherwise deploy its FiOS fiber to the premise residential wireline product but will not because the company has called a halt to further FiOS expansion.

It's not likely HomeFusion will be broadly deployed in predominantly rural and quasi-rural areas. Like Verizon's mobile wireless offerings, it's bandwidth metered and can't offer the ample headroom for bandwidth demand growth -- much of it driven by video -- that fiber does. In order to improve Internet deployment and access in these areas, these communities will have to build their own fiber to the premises networks constructed by local governments or telecom cooperatives.

AT&T has effectively thrown in the towel in serving these areas. HomeFusion represents Verizon's last ditch effort to pick up some limited revenues in these underserved markets.

Wednesday, February 29, 2012

Protecting investor-owned Internet providers from market failure is bad public policy

This USA Today profile of Lafayette, Louisiana's municipally-operated fiber to the premise network raises significant policy questions as to the proper role of the private and public sectors in providing premise Internet connectivity. It notes Lafayette like other community fiber projects faced significant resistance from private sector telco and cable providers bent on preserving their territorial hegemony even when their business models don't permit them to upgrade their networks to provide robust Internet connections to homes and businesses. The push back comes in the form of lawsuits, public information (or disinformation campaigns, depending on one's perspective) and state legislation barring local governments from building publicly owned and operated telecommunications infrastructure.

It's understandable the incumbent telco and cable companies would want to protect their service territories from competition given that telecommunications infrastructure -- like roads and highways -- tends to be a naturally monopolistic (or at best, duopolistic) market. That kind of market creates a winner takes all situation in which the winners in turn pick winners (those who are provided good Internet service) and losers (premises deemed too costly to serve and left off the Internet grid). Their problem, however, is the losers are naturally getting restless and petitioning for relief such as recently proposed Colorado legislation designed to lay the groundwork for the state to directly serve areas lacking connectivity.

The incumbent telco and cable companies may wish to rethink their current strategy of locking down failed markets and barring the door to public providers. The courts could well cast a jaundiced eye toward such uncompetitive market conduct and state laws designed to preserve what in many areas of the nation have become telecommunications backwaters due to what President Obama described in his January State of the Union address as "incomplete" Internet infrastructure.

I'm not sure those state laws could survive judicial scrutiny in the federal courts as they effectively create a state sanctioned monopoly in telecommunications. But unlike other nations, the state doesn't actually provide the service. Instead, their function is to protect private investor owned providers from the consequences of market failure. That's poor public policy because it leaves too many effectively disconnected from the Internet and the economic, educational and other benefits it affords.

Incumbent providers may also want to considering partnering with communities instead of fighting them. As the USA Today article notes, businesses approached Lafayette about expanding the network throughout the city as a way of drawing businesses. City leaders asked BellSouth and Cox representatives to partner on the project. But they spurned a private-public partnership that could have allowed them to share in the revenues, instead opting for a short sighted win/lose strategy.

Colorado bill first step in state investment in Internet infrastructure

Government Technology has an article today on legislation introduced in the Colorado Legislature that the author, Gail Schwartz, D-Snowmass Village, describes as a first step toward the state investment in Internet telecom infrastructure shunned by private sector providers:

Schwartz said the intent of the Rural Broadband Jobs Act is to help Colorado improve access to broadband so that businesses throughout the state have opportunities to be competitive and successful.

“I am looking for a definitive assessment of underserved and unserved areas in our state that lack broadband access,” Schwartz said in an interview with Government Technology. After those areas are defined and as funding becomes available, she’d like the state to invest in the infrastructure needed to bring broadband to those underserved locations.

Click here to read Colorado Senate Bill 12-129, CONCERNING ACCESS TO AFFORDABLE BROADBAND INTERNET CONNECTIVITY IN NONCOMPETITIVE RURAL AREAS.

Tuesday, February 21, 2012

Emergence of Internet TV reinforces end of “broadband” era

The emergence of the Internet ready or “smart” TV marks the graduation of the Internet to a full featured, multiple service telecommunications service. It also marks the beginning of the end of siloed, single purpose video programming providers such as cable TV and satellite. Now that HD video content of all varieties is available via the Internet, the medium is the message in the words of mass communications theorist Marshall McLuhan and the medium is the Internet.

The Internet or “smart” TV also marks the end of the “broadband” Internet era, where the Internet was mostly used for viewing web pages and email — and later Voice Over Internet Protocol (VOIP). It’s notable that TV manufacturers aren’t marketing the latest sets as “broadband” TVs. That reinforces a point I made in December 2010 when I declared distinguishing “broadband” from dialup “narrowband” was growing increasingly irrelevant since dialup was becoming technologically obsolete. Consumers either have functional Internet infrastructure connected to their premises, or they don’t. And if that infrastructure can’t deliver HD video while simultaneously allowing them to browse the web, download email and make a voice call, they’re effectively disconnected from the Internet.

Saturday, February 18, 2012

Better telecom infrastructure, increased telework adoption would boost suburban home values

This U.S. News and World Report article suggests a big problem with the U.S. housing market is overbuilt suburbs that are incompatible with work. Homes located in the burbs are less desirable because they are far from jobs, requiring costly commutes. Other workers aren't interested in buying suburban dwellings because they need to remain mobile to move among metro areas where job opportunities arise.

What the article doesn't mention is that these homes would be far more marketable if 1) They had fiber optic connections to the Internet and 2) More information and knowledge work (and video conferencing) was done in home offices instead of requiring lengthy commutes to a cubicle simply to use a different computer. Move bytes, not bodies.

Post Office says Internet forces closings, but affected residents remain offline

Geoff Brim sent along this Reuters piece that highlights an odd irony. The U.S. Post Office is shuttering offices in rural areas, blaming the Internet for putting them out of business. But the residents of these areas are scratching their heads since so many of them remain disconnected from the Internet due to lack of wired infrastructure. As the article explains:

Internet access has spread the way most businesses expand - to areas more densely populated with people willing to pay for service. Today, rural areas remain less connected to the Internet than urban populations across every technology type, according to Commerce Department data. Nearly 90 percent of the 24 million Americans without wired broadband access live in rural areas, latest data show.

"There's still a real digital divide between rural and urban America," said Ed Luttrell, president of the National Grange, which represents rural America. "You look at rural folks, they tend to rely much more heavily on the Postal Service for delivery of a wide variety of necessities than urban people."

Sunday, February 05, 2012

Georgia cities oppose proposed legislation curbing community networks

Representatives from several Georgia cities testified last week in opposition to state Senate Bill 313, legislation sponsored by investor-owned telecommunications providers that would bar local governments from using public funds to finance municipally owned Internet infrastructure. From the Associated Press story:

Leaders from cities including Elberton, Hogansville, Thomasville, Monroe and Toccoa lined up to tell senators that broadband is necessary infrastructure for the 21st century economic development they hope to attract — and that they are doing what they must to keep their communities competitive.

"We cannot wait for the private sector to ride to our rescue," said Tim Martin, executive director of the Toccoa-Stephens County Development Authority.

Martin is correct. Investor owned providers cannot earn a sufficiently rapid and adequate return on capital expenditures on last mile Internet infrastructure to satisfy their shareholders. That's why public funding is entirely appropriate just as it finances construction of roads and highways. This isn't rocket science -- just simple economics.

Saturday, February 04, 2012

California PUC misstates public policy goal of Internet infrastructure subsidy fund

The California Public Utilities Commission (CPUC) has adopted a decision implementing a grant and loan program to subsidize the construction of advanced telecommunications infrastructure in the Golden State through its California Advanced Services Fund (CASF). Under urgency legislation enacted in 2010, SB 1040, $100 million was allocated for grants and $15 million in revolving loans for the CASF's Broadband Grant and Revolving Loan accounts. The CASF is one of several subsidy funds administered by the CPUC to help offset the cost of providing telecommunications services in areas of the state where it is costly to provide them in order to make them more widely available.

The CASF is codified at California Public Utilities Code Section 281(a) which directs the CPUC to "develop, implement, and administer the California Advanced Services Fund to encourage deployment of high-quality advanced communications services to all Californians that will promote economic growth, job creation, and the substantial social benefits of advanced information and communications technologies..."

While not stated as a finding of law in a draft of the decision issued for public comment prior to its adoption earlier this week by the commission, the decision adopted by the CPUC nevertheless states on page 3:

"We emphasize that the ultimate goal of the CASF program is to increase the adoption of broadband."

A plain reading of that assertion does not comport with California Public Utilities Code Section 281(a), which clearly states public policy intent that the goal of the CASF is "deployment of of high-quality advanced communications services to all Californians."

The CPUC's declaration is also illogical. In order to increase the adoption of broadband, infrastructure must first be built to deliver it. That's the commission's stated purpose of the CASF Broadband Grant and Revolving Loan -- to help capitalize the construction of infrastructure capable of providing premises Internet connectivity in high cost areas where it hasn't been deployed. Moreover, the CPUC's decision distinguishes adoption from infrastructure deployment, noting at page 9 that applicants for CASF-funded infrastructure projects must submit a plan to encourage adoption of the broadband service in the proposed area(s) including the number of households the applicant estimates will sign up for the service (the take rate), the marketing or outreach plans the applicant will employ to attract households to sign up for the service.

Without deployment of the necessary infrastructure, broadband simply isn't available as hundreds of thousands of Californians trying to get by on dialup and satellite are painfully aware. And if broadband isn't available at any price, it cannot be adopted by anyone. First things first.

Saturday, January 28, 2012

Obama cites America's "incomplete" telecom infrastructure in State of Union address

Since this blog was created in 2006, it has been dedicated to the exploration of strategies and methods for the build out of America's incomplete digital telecommunications network that leaves millions disconnected from the Internet because modern telecommunications infrastructure does not reach their homes and small businesses.

It was thus very encouraging to hear President Barack Obama call out the nation's "incomplete high-speed broadband network that prevents a small business owner in rural America from selling her products all over the world" in his State of the Union address to Congress this week. Millions of Americans are painfully aware of just how incomplete Internet infrastructure is as they look only a couple of miles away or even just down the road or street to neighbors who have access while they do not.

The president also used his speech to call upon Congress to fund telecom and other critical infrastructure. Congress should respond to Obama's urging by providing technical assistance and construction funding for community-based networks to finish the job where investor-owned providers such as legacy telcos and cable companies cannot make a business case for doing so. This is what was done in the 1930s when market failure led to a similar problem with telephone service and electrical power and cooperatives and local governments filled in the gaps.

Tuesday, January 17, 2012

It's no longer 1996: Outdated perceptions of the Internet persist

There remains a major misapprehension in the United States -- in the nation that invented it -- that the Internet is only about email and websites when in fact it delivers Internet Protocol TV and movies. It's also the updated version of Plain Old Telephone Service (POTS) over copper to Voice Over Internet Protocol (VOIP). And that's not even mentioning videoconferencing, telehealth and distance learning. All can be delivered simultaneously over a single fiber optic connection.

Nevertheless, there remain many media accounts such as this one from Minnesota Public Radio that would have readers believe it's still circa 1996 when the Internet was a relative novelty (then mostly accessed via AOL over dialup connections). A decade and a half ago, it was understandable that as this January 17, 2012 MPR story reports there were "Many people don't believe there's anything on the Internet they need." That was a relevant perception back then. But it's badly outdated in 2012.

Friday, December 23, 2011

Why "wireless broadband" will remain in mobile market segment

This article in CED magazine explains why 4G cell service can't substitute for premises wireline Internet service:
Even if you’re a light user or a millionaire, you might still think twice about going entirely wireless. Allen Nogee, principal analyst for In-Stat, says he actually tried an LTE modem as his sole Internet connection for about four months. He was pleased with the service; however, he did eventually go back to a fixed line for a number of reasons.

Nogee says that while price is certainly an issue, depending on usage, spectrum is the truly prohibitive element that will prevent LTE from becoming an in-home solution. Nogee says that eventually the cell towers currently pumping out LTE will get crowded, and that’s when things get complicated.

“It’s a shared resource, with a set amount of spectrum, and operators only have so much spectrum,” Nogee says. “If we had no wired Internet in the United States and everyone attempted to use LTE, it just wouldn’t work. There’s just not enough capacity there.”
Another analyst, Strategy Analytics, predicts fixed wireline will remain the primary premises Internet connection and will not be displaced by 4G wireless connections where wireline infrastructure exists and serve as an alternative means of access where it does not.
“We see two parallel markets for 'Mobile Only' in the US: users in remote or underserved areas where dependable fixed broadband is unavailable, and cost-conscious casual users, who are unlikely to exceed imposed data caps, and for whom mobile data rates are ‘good enough,’” said Ben Piper, Director of the Service Provider Strategies program at Strategy Analytics.
What about tablets? Might tablet users cut the cord to these devices and instead rely exclusively on mobile wireless connections, especially since tablets are so portable? Not likely. Nearly all tablet data traffic will be transported via fixed premises Internet service, Sandvine says in its broadband predictions for 2012.

Wednesday, December 21, 2011

Documentary explores challenges and alternatives to getting sorely needed Internet infrastructure

Rob Osborn of Sacramento, California-based shibuya-tv, LLC has released his long awaited documentary, Broadband Blindness, that discusses the challenge of building adequate digital infrastructure to deliver premises Internet connectivity to meet exponentially growing bandwidth demand.

Also covered are alternative business models to construct the necessary infrastructure to customer premises including telecom cooperatives such as the one I formed in my community, the Camino Fiber Network Cooperative.