Suggested amendments to proposed Community Connect Broadband Grant program rules

Too many American communities lack adequate Internet telecommunications infrastructure, a situation President Barack Obama deplored in his 2012 State of the Union speech.  Lots of these communities would like to build their own fiber to the premises networks that can connect every home and business and provide fast, future proof service while keeping local dollars in the community.

A major stumbling block facing these communities is financing the cost of retaining engineers and consultants to do the necessary initial design and business planning work before any fiber infrastructure can be deployed.  The U.S. Department of Agriculture's Rural Utilities Service (RUS) is in a position to help with its Community Connect Broadband Grant program by creating provisions for technical assistance grants to defray these costs.

RUS is currently soliciting comment on proposed rules governing the Community Connect Broadband Grant program.  As written, the proposed rules contain no provisions for technical assistance funding.   The proposed rules also fail to take into account the often spotty, hit or miss availability of wireline connectivity that exists in many of these poorly served areas. Communities have the opportunity to file comment in the rulemaking by January 15 and request these deficiencies be remedied.

Below is sample comment language communities can file with the RUS suggesting amendments to the proposed rules to allow for technical assistance grants.  This funding will help enable communities to move forward with these sorely needed projects to ensure their citizens and business owners have the 21st Century telecommunications infrastructure they need now and in the future.  Comments can be filed electronically by the January 15 deadline by clicking on the "Comment Now" button in the upper right hand part of the rulemaking proceeding page linked above.
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Sec.  1739.11  Eligible Community Connect Competitive Grant Project.

    To be eligible for a Community Connect competitive grant, the 

Project must:

        (a) Serve a PFSA in which Broadband Service does not currently 

exist. served by a telephone central switching office or similar facility where at least one premise is not 

offered wireline, facilities-based broadband service;

    (b) Offer service at the Broadband Grant Speed to all residential 

and business customers within the PFSA;

    (c) Offer free service at the Broadband Grant Speed to all Critical 

Community Facilities located within the PFSA for at least 2 years 

starting from the time service becomes available to each Critical 

Community Facility; and

    (d) Provide a Community Center with at least two (2) Computer 

Access Points and wireless access at the Broadband Grant Speed, free of 

all charges to all users for at least 2 years.

Comment: This amendment is necessary because broadband service is highly granular even in rural areas where availability of facilities-based, wireline service is spotty and can vary within communities and from premise to premise. 

Sec.  1739.12  Eligible grant purposes.

    Grant funds may be used to finance the following:

    (a) The construction, acquisition, or leasing of facilities, 

including spectrum, land or buildings, used to deploy service at the 

Broadband Grant Speed to all residential and business customers located 

within the Proposed Funded Service Area and all participating Critical 

Community Facilities, including funding for up to ten Computer Access 

Points to be used in the Community Center. Leasing costs will only be 

covered through the advance of funds period included in the award 

documents;

    (b) The improvement, expansion, construction, or acquisition of a 

Community Center and provision of Computer Access Points. Grant funds 

for the Community Center will be limited to ten percent of the 

requested grant amount;

    (c) The cost of providing the necessary bandwidth for service free 

of charge to the Critical Community Facilities for 2 years.

 (d) As technical assistance for the retention of consultants and experts for economic research and engineering and business planning and community outreach.

(e) Applications for technical assistance pursuant to Subsection (d) shall not be subject to Section 1739.17.

Comment: This amendment is necessary in order to assist communities cover initial diligence costs and to aid in the preparation of applications for Rural Utilities Service broadband loan and grant programs.  Proper diligence in the early stage of a project will help ensure the financial viability of planned projects and repayment of loan proceeds.

Sec.  1739.14  Matching contributions.

    (a) At the time of closing of the award, the awardee must 

contribute or demonstrate available cash reserves in an account(s) of 

the awardee equal to at least 15% of the grant. Matching contributions 

must be used solely for the Project and shall not include any financial 

assistance from federal sources unless there is a federal statutory 

exception specifically authorizing the federal financial assistance to 

be considered as such. An applicant must provide evidence of its 

ability to comply with this requirement in its application.

    (b) At the end of every calendar quarter, the award must submit a 

schedule to RUS that identifies how the match contribution was used to 

support the project until the total contribution is expended.

(c) No match shall be required for technical assistance funding pursuant to Section 1739.12(d)

Comment: This amendment is necessary because raising matching funding for diligence and planning purposes is considerably more difficult than for construction costs of deploying a project that has undergone diligence demonstrating its likely technical and financial feasibility.  It will help increase the likelihood of more community-based projects being undertaken and expanding the availability of broadband services.

Sec.  1739.15  Completed application.

Add new subsection (m) as follows:    

(m) Applications for technical assistance funding pursuant to Section 1739.12(d) shall include only 

those items delineated at subsections (a) and (b)(1) through (3).

Broadband Expert Survey of US Consumers Finds 94% Believe They Are Overpaying for Their Broadband Service - Houston Chronicle

Broadband Expert Survey of US Consumers Finds 94% Believe They Are Overpaying for Their Broadband Service - Houston Chronicle

In a nationwide survey of more than 30,000 online consumers conducted by Broadband Expert, an overwhelming majority of respondents -- 94% -- believe they are paying too much for their broadband package and more than 25% have only one Internet provider to choose from. Of those surveyed 77% of respondents said they would like an easy apples-to-apples solution to be able to compare plans and prices when choosing a provider.

When asked about the ease of currently shopping for and comparing plans, 35% are totally discouraged by the complexity of comparing carriers on multiple websites. Even more alarming one-third of Americans do not know where to even start to shop for and compare broadband prices and services.

“Based on our online survey, it is clear that American consumers are frustrated with the amount they are being charged for internet access and are looking for an easy way to shop for and compare digital services such as Internet, TV and phone,” said Rob Webber, CEO, Broadband Expert. Webber goes on to say that he believes “like for like comparison of internet service providers and their packages helps encourage competitive pricing and better deals for consumers”.

Americans aren't going to get the kind of market they want until the business model changes.  Due to high barriers to entry, it's not practical to have competing telecommunication infrastructure any more than it is to have competition for other types of infrastructure like roads and highways.  What's needed is publicly or consumer owned open access telecommunications infrastructure where service providers compete on price and service.

Tweed residents angry about broadband service to the area | Northern Star

Tweed residents angry about broadband service to the area | Northern Star: "When we lived in West Tweed on Kennedy Dr we got told we were too far from the interchange."

Mr Vivian was stuck with Telstra's mobile broadband solution.

"The only one we can get reception for in Tweed is Telstra 4G," he said.

"It's $60 for eight gigabytes.

"But it's so slow you might as well not use it sometimes."

This is occurring in Australia.  However, the same scenario is likely also playing out in the United States.

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.

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.

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 20^th 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.

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.

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.

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.

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.

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.

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. 

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.

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.

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.