Sunday, December 30, 2012

Google Fiber expansion unlikely to solve America's incomplete infrastructure problem

As I recently blogged, market failure dogging the U.S. telecom infrastructure that continues to leave millions off the Internet grid calls for new business models.  Nearly six years ago, I speculated big Internet content amalgamators flush with cash (i.e. Google, Yahoo!) could might acquire legacy telcos and cablecos and upgrade their incomplete and inadequate infrastructure with their own.  That post wasn't fully on the mark because it didn't include the possibility that the content players' "big play for the pipes" as I termed it would be to overbuild the incumbents with their own infrastructure as Google recently did in a single American city: Kansas City. 

This Wired piece is sparking speculation that Google might in fact be planning an effort to expand its proprietary fiber to customer premises infrastructure supported not just by customer service charges but also by its own content, similar to the incumbent cableco business model.  "If it turns out Google Fiber helps Google sell more (and more valuable) ads and content," the Wired article notes, then building out more fiber would support Google's business model.  However, the article notes that the cost of doing so would strain even Google's vast economic resources, leaving the U.S. with what President Barack Obama described in his 2012 State of the Union Address as an "incomplete high-speed broadband network."

Another recent article posted at ZDNet points to the same conclusion.


Thursday, December 27, 2012

Europe Hurting Telecom Industry: Alcatel-Lucent CEO

Europe Hurting Telecom Industry: Alcatel-Lucent CEO: European regulations are stifling innovation within the telecom industry and preventing its growth, Ben Verwaayen, CEO of Paris-based telecom equipment maker Alcatel-Lucent has told CNBC.

"It's not just a French problem it's a European problem. If you look to why it is that the U.S. is so much [more] ahead than Europe it's because of the business environment and what you're allowed to do because this is a regulated business. The situation in Europe is very unfortunate," Verwaayen said in an interview telecast on Thursday.
U.S. ahead of Europe?  With about 20 million Americans lacking facilities-based Internet service?  Clarification, please.

Sunday, December 23, 2012

BellLabs: Soaring VOD, OTT Video Usage Shaking Up the IP Edge

BellLabs: Soaring VOD, OTT Video Usage Shaking Up the IP Edge: Bell Labs researchers make their forecasts in a report titled “Video Shakes Up the IP Edge,” in which they predict that by 2020, U.S. video consumers will access a whopping seven hours of video each day, up from 4.8 today. Consumers also will turn increasingly to tablets to watch videos whether at home or on the go, says BellLabs.

This trend will be accompanied by “a dramatic shift in viewing habits,” as viewers switch from watching broadcast content to video-on-demand (VoD) services, demand for which will grow to 70% of daily consumption from 33% today, the report says. The researchers also note that cloud services, news sites and social networking applications will become more video-based and be accessible anywhere, anytime via tablets, which suggests Internet video content will increase 12 times.

These trends, according to Bell Labs’ predictions, “will stretch the capabilities [of] the residential broadband networks many service providers use today. As the delivery of video content rapidly moves from traditional broadcast TV to the ‘unicast’ delivery of personalized content to individuals, disproportionate pressure will be placed on the ‘IP edge’ of these networks,” where most of the network ‘intelligence’ needed to deliver personalized content on-demand resides.

In case anyone was wondering why fast fiber to the premises Internet infrastructure is now an imperative.  And consider the additional demand should personal video communications take off as a new (not so new, actually) app.

Mississippi map malarkey

A fundamental purpose of a map is to plan a route to an end point – a destination.  But when it comes to what’s called “broadband mapping,” the goal isn’t the destination.  In fact, this wasteful activity has resulted in a circular journey to nowhere, diverting precious resources that could otherwise be invested in building out Internet telecommunications infrastructure as this boondoggle out of Mississippi painfully illustrates. 

It’s a good thing the United States chose not to remedy the market failure that produced large gaps in electric power and telephone service availability in the early part of the 20th Century by engaging in folly such as drawing up maps of existing electrical and telephone service and promoting electricity and telephone adoption where there was no service.  If that had been the policy, many areas of the nation might not have had power or telephone service until well into the 1950s and 1960s.

Saturday, December 08, 2012

Telecom coops offer much needed alternative to build out U.S. Internet infrastructure

This Wall Street Journal article explores the Faustian bargain AT&T, America's largest wireline telecom provider, struck with the U.S. Federal Communications Commission to begin winding down its obsolete copper Publicly Switched Telephone Network (PSTN):
Mr. Stephenson himself has made it clear that AT&T would rather just sell off its regulated phone territories the way rival Verizon has done. But those sales haven't worked out swimmingly for the buyers, so now buyers can't be found, and neither would regulators likely bless further sales.  AT&T's plan, then, amounts to a compromise: AT&T will spend several billion dollars making undesirable investments if Washington will relieve it of the unsustainable regulatory burdens associated with the old copper voice network.
This is not an optimal solution for either AT&T's shareholders or for the many Americans who despite AT&T's expansion plans would remain disconnected from the Internet and the Voice Over Internet Protocol (VOIP) service it could provide to replace voice telephone service delivered over the nation's aging copper Publicly Switched Telephone Network (PSTN).  An alternative is clearly needed.

The good news is one exists as does its funding mechanism: cooperatives.  In the 1930s, the U.S. Department of Agriculture's Rural Utilities Service (RUS) made funding available to coops to build the needed infrastructure to deliver electric power and phone service.  The RUS remains in place today.  Given the problems investor-owned telcos like AT&T face deploying needed Internet infrastructure as shown in the WSJ story, the RUS should be given a higher profile and adequately funded to facilitate the much needed telecom coop alternative for the construction and operation of Internet infrastructure.

Sunday, December 02, 2012

Telecom infrastructure demands competing business models

The Salt Lake Tribune has published a set of articles on UTOPIA, a public open access fiber network.  For other publicly owned and operated telecommunications infrastructure, the take away is they are like building and financing toll highway systems over a period of many years.  A prudent, long term financial plan is essential and their success can't be measured in isolation over the short term.

That's why investor owned incumbent telco and cable providers haven't built out fiber to the premise infrastructure. Their shareholders expect a certain return on investment within five years or less as well as hefty dividends.  Infrastructure projects have long term time horizons that aren't compatible with their business models.

Some of those interviewed in the articles assert that UTOPIA and other publicly operated telecommunications networks shouldn't be competing with incumbent, investor owned telcos and cablecos.  I disagree.  The challenges of constructing and operating telecommunications infrastructure demand competition to produce the best business models demonstrating the greatest potential for long term viability.  It's not an easy task.  The incumbent providers been unable to produce one.  That has led to extensive market failure in wireline telecommunications services, leaving millions of Americans without premises Internet access.  UTOPIA and other non-incumbent operators despite their shortcomings are to be commended for making the effort to develop alternatives to build and construct this essential infrastructure for the 21st Century.

Wednesday, November 28, 2012

Broadband delayed again� - News - The Charleston Gazette - West Virginia News and Sports -

Broadband delayed again� - News - The Charleston Gazette - West Virginia News and Sports -

This sickening story highlights the pathetic, on the cheap state of today's U.S. telecommunications infrastructure. Providers battle over subsidies that would be better invested in fiber to the premise infrastructure rather than stopgap, obsolescence-prone DSL and terrestrial wireless.

And the DSL provider (Frontier) has the temerity to suggest since it offers its West Virginia customers satellite Internet service -- a national disgrace that should only be serving locales north of the Arctic Circle -- it is therefore providing sufficient service.

Wednesday, November 07, 2012

AT&T forced to invest in wireline plant to stem residential cord cutting

This item from Bloomberg/Businessweek helps explain why AT&T is opting to invest $6 billion in its wireline infrastructure.  The telco has been bleeding residential connections for years as these customers have dropped landline service and migrated to mobile wireless.  This is particularly true for those residential customers not offered wireline Internet service and thus had no reason to keep their landline account active.

AT&T is apparently now hoping to win those customers back and retain those thinking of cutting the cord by providing them Internet service via its proprietary, VDSL-based U-verse IPDSLAM service.  According to an AT&T news release today announcing its 3-year, $14 billion CAPex plan, U-verse IPDSLAM will provide Internet access and Voice Over Internet Protocol (VoIP) to 24 million customer premises in AT&T's wireline service area by year-end 2013.

Friday, November 02, 2012

California PUC rectifies its mischaracterization of Internet infrastructure subsidy fund


Several months ago, this blog called out the California Public Utilities Commission (CPUC) for incorrectly asserting the public policy goal of its program to subsidize the build out of Internet infrastructure in the Golden State was instead to encourage “the adoption of broadband.”

To its credit, the CPUC has rectified its gross misstatement of the law authorizing its $100 million plus California Advanced Service Fund (CASF). It did so this week, buried 18 pages deep into a proposed order that would loosen eligibility for CASF infrastructure loan and grant funding to include entities not holding a Certificate of Public Convenience and Necessity (CPCN) or a Wireless Identification Registration (WIR):

“We wish to make clear that although we propose to modify the CASF eligibility requirements to include both for profit and nonprofit broadband infrastructure providers, it is not our intent to change the focus of the CASF program. The CASF was created to fund the deployment of broadband infrastructure in unserved and underserved areas of the state, rather than the adoption of broadband services.” (Emphasis added)

The CPUC should also make it easier for consumer owned, community-based providers such as telecom cooperatives to access CASF funding for last mile (to the premises) Internet infrastructure construction – a critical infrastructure link singled out for attention in the proposed order. A key need of these providers is technical assistance grant funding to retain engineers and expert consultants to develop preliminary network designs and business case analyses. These deliverables would help ensure that the contemplated projects pencil out and would generate sufficient revenues to justify the prudent investment of CASF funds.

The CPUC should also revisit its unworkable, hair splitting exercise in futility of attempting to map out what neighborhoods are considered “unserved” and “underserved” based on throughput speed and census block groups. The inherent variation of legacy telco infrastructure Internet service from one address to the next doesn’t lend itself to these broad brush delineations. Internet service available at a given premise can be entirely different from another one just a quarter mile or a half block away.  Some overlap or "overbuilding" as it is called by incumbent providers will the inevitable consequence of progress.  But it must occur if the United States is to remedy what President Barack Obama decried in his State of the Union speech at the beginning of this year as the nation's "incomplete" Internet telecommunications infrastructure.  A network filled with holes does not a network make.

Sunday, October 21, 2012

Increased adoption of telework offers low cost means of alleviating California's transportation congestion

Dan Walters: Study of exodus from California doesn't prove its point - Dan Walters - The Sacramento Bee: [t]here are legitimate doubts about California's ability to attract the job-creating investment capital we need to emerge from recession because of the aforementioned regulatory climate, high taxes and other factors, such as poor-performing schools and congested transportation. (Emphasis added)
California's transportation congestion problem has a low cost means of mitigation: increased adoption of working from a home office -- known as telework -- that eliminates commute trips and peak hour traffic.  A U.S. Census Bureau report issued earlier this month suggests that's the trend.  According to the Survey of Income and Program Participation, the number of people who worked at home at least one day per week increased from 9.5 million in 1999 to 13.4 million in 2010, increasing from 7.0 percent to 9.5 percent of all workers. The largest increase occurred between 2005 and 2010, when the share grew from 7.8 percent to 9.5 percent of all workers, an increase of more than 2 million.

As home to Silicon Valley and companies that have innovated telecommunications and information technologies that make remote work and virtual organizations possible, the Golden State should lead the way on telework adoption. Especially since raising billions to maintain its aging, decades-old system of roads and highways is proving fiscally challenging.

AT&T likely to upgrade only small portion of residential wireline plant, analyst predicts

AT&T is likely to upgrade only a fraction of its residential wireline plant to deliver premises Internet to residences that it doesn't currently provide Internet service, according to an analysis by George Notter of Jefferies & Company discussed in this Telecompetitor article.  The telco's strategy is stated to be unveiled next month.

Notter's analysis predicts AT&T will upgrade only about 15 percent of its wireline plant to support its hybrid fiber/copper U-Verse triple play offering.  Some of the remaining premises may be offered AT&T's version of Verizon's LTE-based HomeFusion product, according to Notter. 

Sunday, October 14, 2012

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.

Friday, October 12, 2012

Wipro Launches Prepaid Broadband Solution for US Cable Market - Yahoo! Finance

Wipro Launches Prepaid Broadband Solution for US Cable Market - Yahoo! Finance

I'm not so sure that adopting a pre-paid pricing scheme like that of the personal wireless market will provide sufficient incentive and ARPU for cable companies to build out their infrastructures to capture new customers.  But from a consumer perspective, it's far better than the current practice of asking would-be customers to come up with $65,000 per mile (with no equity in return) to build out to their neighborhoods under so-called "self help" provisions of cable franchise agreements.

Tuesday, October 09, 2012

Software solution touted as way to help cable companies ration, monetize bandwidth

Active Broadband Networks Ensures Accuracy of Internet Usage Data in DOCSIS Networks - Yahoo! Finance: FRAMINGHAM, MA--(Marketwire - Oct 9, 2012) - Active Broadband Networks, an innovative supplier of next-generation operation support systems (OSS) for broadband providers, today announced enhancements to its software that improve operator visibility into the integrity of Internet protocol detail record (IPDR) data collected from Cable Modem Termination Systems (CMTSs) in DOCSIS networks. Cable operators rely on IPDR data to compute subscriber Internet usage for usage metering and usage-based pricing as well as a variety of broadband service management applications, so accuracy is a critical requirement as they seek to measure, manage and monetize increasing Internet usage.

When the business model is based on getting more out of existing customers rather than expanding to get new ones, this makes perfect sense.  A key component is commoditizing Internet bandwidth so it can be segmented into discrete unit prices. The company issuing the above news release is selling a tool to cable companies to help them do just that.

Saturday, September 29, 2012

Google's Kansas City fiber build doesn't change underlying infrastructure economics

This Kansas City Star article discusses the implications of Google's rollout of fiber to the premise (FTTP) infrastructure in Kansas City.

The newspaper interviewed Josh Olson, a technology industry analyst for Edward Jones & Co.  Olson sees the Google fiber deployment as a template to boost user demand for higher bandwidth and speeds.  If new applications that can run on this gigabit speed capable infrastructure emerge, it would increase pressure for incumbent cable and telephone companies in other markets to upgrade their networks. However, Olson goes on to dismiss that notion, noting incumbent telcos and cablecos can make money off their existing services.  Of course they can when these are the only wireline services available to most U.S. homes and small businesses unless their communities build their own fiber networks operated by local governments or consumer cooperatives.

And as industry analyst Dave Burstein points out, Google's fiber deployment in a single U.S. city cannot change the underlying economics for incumbent providers that must earn a rapid return on investment to keep their shareholders happy -- a business model that directly conflicts with the long term ROI associated with high cost infrastructure projects.  Plus telecommunications company shareholders are accustomed to receiving high dividends -- money that can't be directed toward CAPex.

“The problem is it costs a lot of money to climb all those poles and dig all those trenches to make it happen,” Burstein told the Star. “You don’t make money in three years, but you make money in 10 years."

Read more here: http://www.kansascity.com/2012/09/24/3832330/google-fibers-gigabit-gamble-has.html#storylink=cpy

Verizon Won’t Expand FiOS Beyond Current Franchise Obligations, CFO Tells Investors | Stop the Cap!

Verizon Won’t Expand FiOS Beyond Current Franchise Obligations, CFO Tells Investors | Stop the Cap!

This development makes it eminently clear that for those communities in Verizon's wireline service area that don't now have its FiOS fiber to the premises service, they will have to build their own community owned infrastructure.  Verizon is getting a better ROI on wireless, but wireless can't provide the bandwidth and headroom homes and businesses require.

Saturday, September 22, 2012

AT&T may invest in rural lines rather than divest, CEO says

AT&T may invest in rural lines rather than divest, CEO says: AT&T has said it would consider selling its rural access line unit, but Mr. Stephenson hinted earlier this year that such a sale could prove complex. The difficulty comes from the lines spanning multiple states and therefore needing several regulatory approvals that would likely take significant time.

On Wednesday, he said finding an internal solution for the business would avoid having to go through that process.
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There is also a simple business fact at play.  Who wants to buy obsolete copper cable plant?

He also noted that AT&T's wireless service could ultimately prove to be a solution for fixed-line broadband connections in less-dense markets as its next-generation LTE network rolls out.

"LTE can become a fixed-line replacement or even better than what you get from fixed line," he said.
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If Mr. Stephenson is talking about first generation ADSL, he would be right.  But wireless cannot equal or exceed wireline fiber to the premise.