Wednesday, April 13, 2016

Key U.S. telecom issue is market failure, not market competition

Verizon FiOS finally coming to Boston as mayor announces $300M fiber network - The Boston Globe: “Today, 90 percent of Boston residents have only one option for broadband,” said Jascha Franklin-Hodge, Boston chief information officer. “The free market only works for consumers when companies compete for their business. And when this project is complete, the majority of Boston residents will have real choice for the very first time.”

*  *  *
In a report on high-speed Internet access last year, the Federal Communications Commission said 45 percent of American households have only one provider for such access.“We have seen first-hand that competition does in fact encourage other providers to build-out or upgrade broadband services,” the commission wrote. A good example of that dynamic is Google Fiber, the Internet giant’s push to install high-speed Internet in select US cities, said Deb Socia, executive director of Next Century Cities, an Internet advocacy group.

This is a parochial misconceptualization of America's telecommunications infrastructure crisis. It's not about competition or the lack thereof in a "free market." Telecommunications infrastructure has never been and will never be a competitive market offering in a market with many sellers and buyers. There cannot be many sellers because the microeconomics simply don't support it. In telecom infrastructure, the "free market" isn't so free -- it's highly constrained by large CAPEX and OPEX costs. The desire for competition is driven by the tendency of many to view "broadband" as other consumer services where consumers are accustomed to having the ability to choose among many vendors. That thinking is flawed insofar as it neglects the underlying infrastructure necessary to deliver it.

The real issue for the United States isn't market competition. It's market failure and the disparate infrastructure access that leaves 34 million Americans unable to obtain telecommunications service capable of delivering high-quality voice, data, graphics and video, according to figures released by the U.S. Federal Communications Commission earlier this year.

Tuesday, April 12, 2016

Fat lady singing on AT&T residential landline service; big telco going out with a whimper

New AT&T Plans Guarantee Pricing for 2 Years; Customers Can Save More Than 40% on on TV, Home Internet and Voice | AT&T: Choose DIRECTV You’ll get our DIRECTV SELECT™ All Included package for $50 a month, guaranteed for two years when you add it to an eligible new or existing AT&T service, like wireless or home Internet. The monthly equipment fees for up to four TV receivers are now built into the cost and guaranteed for two years. Taxes are still separate, since those vary based on where you live.

Add in High-Speed Internet and Voice

When you have DIRECTV you can add home Internet service with speeds up to 6 megabits per second for an additional $30 a month. And you’ll get a Wi-Fi gateway included at no extra charge. All guaranteed for two years. Also, when you pay for both services on a single bill you’ll automatically receive unlimited home Internet data – a value worth $30 a month.



The above excerpt from an AT&T news release issued April 11, 2016 shows AT&T retreating from its VDSL-based U-Verse product that offered Internet throughput that could marginally -- with ample data compression -- support video offerings. It's now offloading its video TV programming to DBS via its recent acquisition of DirecTV and dialing back Internet to first generation ADSL with "up to" speed of 6 Mbs (A fine print footnote tamps that down further, noting "Actual speeds are not guaranteed.")

The fat lady is singing. This latest product bundle marks AT&T's final landline offering in the residential premise market. The big telco is going out with a whimper. Legacy class DSL service isn't going to be able to support growing consumer preference for OTT and on demand video delivered via Internet versus TV programming packages offered over AT&T's DirecTV holding. Nor does it even measure up what the U.S. Federal Communications Commission defines as minimum standard Internet service of 25 Mbs. Moreover, AT&T's announced plans in 2015 to deploy fixed "wireless local loop" Internet service to about 13 million residential premises in its service territory not offered landline Internet service appears to have been a head fake, with no reported deployments.

Monday, April 11, 2016

AT&T seeks state sanction to exit residential premise service, transition customers to mobile wireless

Fellow blogger Steve Blum of Tellus Venture Associates calls bullshit on AT&T for sponsoring California legislation that would relieve it from its premise landline universal service obligations under Title II of the federal Communications Act. Blum has the same problem with the bill as I do. It's dressed up as enabling AT&T to transition from copper POTS service to Internet protocol-based service. As Blum points out, AT&T can do that without the need for enabling legislation. It has chosen not to make an orderly transition over the past two decades. That's a business issue, not one of regulatory policy.

The bill is essentially seeking state sanction to transition AT&T residential landline customers to its mobile wireless service. The thing is, that's not premise service under Title II's universal service obligation. However, with the U.S. Federal Communications Commission not enforcing its 2015 Open Internet rulemaking bringing IP-based services under Title II's universal service requirement, AT&T faces no regulatory consequence for "mobilizing the world" of its residential customers with service not engineered or priced for residential premise service.

Wednesday, April 06, 2016

AT&T miscasts telecom infrastructure as competitive market requiring level playing field

AT&T GigaPower Ready to RSVP | Light Reading: AT&T has been known for taking action, politically and in the courts, to fight municipalities that want to build and operate their own networks, but Harrison insisted her company does not oppose government-owned networks. "We only want to have a level playing field for all competitors, so everyone works by the same rules and regulations," she said. That means a municipality can't favor its own network when it comes to using public rights of way or issuing permits in a more timely fashion.

Translated, that means we (AT&T) want to control the rules on our terms, not the public's. That's an overreach on AT&T's part. The government and the private sector are not equal partners and cannot be because unlike a private company, the government is obligated to act in the public interest. If the government wants to provide telecommunications as a common carrier utility consistent with the U.S. Federal Communications Commission's Open Internet rules (and accordingly serve all properties unlike AT&T's rampant redlining and cherry picking), it can do so regardless of what AT&T or any other legacy incumbent desires.

Finally, AT&T as a monopoly market player knows better than to cast telecommunications infrastructure as a competitive market of many sellers where a level playing field is necessary to ensure fair competition. It is not.

Service Unavailable: The Failure of Competition - Community Broadband Bits Podcast 196 | community broadband networks

Service Unavailable: The Failure of Competition - Community Broadband Bits Podcast 196 | community broadband networks: If you are paying close attention to discussions about broadband policy, you may have come across Fred Pilot's reminders that competition is not a cure-all for our Internet access woes across the United States. The blogger and author joins us for episode 196 of Community Broadband Bits.

Fred Pilot's new book, Service Unavailable: America's Telecommunications Infrastructure Crisis, discusses some of the history behind our current challenges and proposes a solution centered around federal funding and cooperatives.

We discuss the switch from telecommunications as a regulated utility, to which everyone was guaranteed access, to a system relying on competition, in which some people have many choices but others have no options. We also discuss the merits of a national solution vs encouraging more local approaches with federal financial assistance.

Christopher Mitchell interviews me for his Community Broadband Networks podcast. Give it a listen.

Monday, April 04, 2016

Barring ambitious federal program, state & local government P3s with legacy providers not a solution for U.S. telecom infrastructure deficits

CenturyLink, Frontier and TDS mull public, private fiber network partnerships - FierceTelecom: CenturyLink (NYSE: CTL), Frontier Communications and TDS are amongst a growing group of service providers that are considering partnering with local communities to build out and upgrade their networks to support higher speed residential and business services. Jennifer M. Fritzsche, senior analyst for Telecommunication Services - Wireless/Wireline at Wells Fargo, said that while CenturyLink, Frontier and TDS are looking at working with local communities, the one remaining barrier is who will oversee and operate these networks.

Actually, the bigger -- and biggest barrier -- is funding. These legacy players lack business models to generate adequate funding to build out fiber to the premise infrastructure serving all premises within their service territories within a reasonable time frame. But so do state and local governments. Especially as they continue to cope with the aftermath of the Great Recession and many competing needs for public funding such as deteriorated roads and highways and other infrastructure and enormous public pension obligations.

Some local governments and particularly those with pre-existing telecom or electric power infrastructure such as those mentioned in this article are the sole viable candidates for these P3 arrangements. That could change if the federal government launched an ambitious program appropriating the many billions needed to ensure every American home, business and institution has a fiber connection.