Thursday, February 28, 2008

Vermont towns strive to enter modern era of telecommunications

Their residents understandably sick and tired of sluggish "dialug" Internet connectivity that was state of the art technology in the early 1990s, the Associated Press reports more than 20 Vermont towns are forming a community owned, subscriber funded nonprofit to deploy fiber optic telecommunications infrastructure.

According to the AP, a financial institution would finance the system and lease it back to the nonprofit, which would cover the lease with subscriber fees that would run around $120 a month for a "triple play" bundle of TV programming, voice and Internet service.

Tuesday, February 26, 2008

Firm claims to give new lease on life to DSL--at "up to" 400 Mbs

A Canadian firm claims it has developed proprietary DSL transmission technology that would allow DSL to run over copper pair at speeds "up to" 400 Mbs, easily lapping cable. Moreover, boasts Calgary, Alberta -based Genesis Technical Systems Corp, its Bonded DSL Rings(tm) Technology (BDR), is so economical to deploy that telcos could get back their investment in one year, even in rural areas.

The company elaborates in a press release issued today:

High quality television over copper telephone lines can be a reality for Telcos using Bonded DSL Rings(TM). Bandwidths of up to 400 megabits per second - at a cost much lower than fiber - are achievable using BDR. This will allow Telcos to compete head-to-head with cable companies at a price point that is attractive to consumers and very profitable for Telcos.

The company claims it demonstrated BDR's viability in proof of concept demonstrations at trade shows in 2007. The real proof of concept as this company likely well knows is whether telcos buy its claimed breakthrough that provides extended life to DSL, an interim wireline broadband technology on the road to fiber.

There have been a number of companies claiming breakthroughs such as this in DSL technology. Given the fact that copper is a poor transmission medium for broadband due to the tendency for signals to degrade quickly over short distances, such claims should be met with a healthy degree of skepticism.

In addition, a diagram of the technology's components at the Genesis Web site shows it requires remote field equipment. The telcos have long had remote DSL terminals. The issue isn't lack of technology but rather an unwillingness on the part of the telcos to invest in infrastructure and equipment to deliver broadband.

Monday, February 25, 2008

Local government units could build own broadband infrastructure under proposed California legislation

Following the January release of a report by Gov. Arnold Schwarzenegger's Broadband Task Force finding nearly 2,000 California communities lacking high speed Internet access, legislation has been introduced that would authorize community service districts (CSDs) to offer broadband service within their jurisdictions.

SB 1191 would allow allow CSDs to "acquire, own, improve, maintain, and operate broadband facilities and to provide broadband services, until a private person or entity is ready, willing, and able to acquire, construct, improve, maintain, and operate broadband facilities and to provide broadband services, and to sell those services at a comparable cost and quality of service to the district and its property owners, residents, and visitors." If and when a qualified private broadband provider steps up and shows an interest in serving the community, the legislation requires the CSD to sell or lease its broadband infrastructure to the provider at fair market value.

In 2007, a California Court of Appeal ruling cleared the way for public utility districts to provide advanced telecommunications services, rejecting a legal challenge by a cable TV company.

Saturday, February 23, 2008

AT&T has itself to blame and not economy for slowing residential wireline revenues

Last month, AT&T's chairman and CEO Randall Stephenson told an industry conference a slowing economy is taking a toll on the telco's residential wireline broadband market segment.

That doesn't exactly square with a forecast by the Telecommunications Industry Association (TIA), which said yesterday that the telecommunications industry should see strong growth over the next three years, driven largely by increasing demand for broadband.

Reports Grant Gross of IDG News Service:

The trade group expects the worldwide telecom market to grow to $4.6 trillion by 2011, compared to about $3.9 trillion in 2006. About $1.3 trillion of the 2011 market will come from the United States, the TIA said.

Driving these increases will be broadband, with its consumption doubling in 2006 and quadrupling again in 2007, said Arthur Gruen of Wilkofsky Gruen Associates, a consultancy that focuses on telecom and other industries. Video and entertainment applications are pushing customers to buy more broadband and telecom providers to build more capacity, he said.

Rather than the blame the economy, AT&T need only look in the closest mirror for declining residential wireline revenues. It has halted DSL buildouts, failing to meet its "Project Pronto" goal of systemwide DSL availability by last year. The telco is currently engaged in a half hearted effort to build a halfway capable system (Project Lightspeed/U-Verse) that will meet only a fraction of the burgeoning demand for integrated IP services in the residential segment.

AT&T can hardly blame the economy when it chooses to sit back and milk existing revenues and depreciation from its aging copper cable based system rather than aggressively growing its residential business.

Monday, February 18, 2008

Lack of patient capital condemns AT&T to also ran status in coverged IP services

Taken in combination with a recent financial analysis of AT&T, a survey of telecom execs last year by IBM's Institute for Business Value suggests that while telcos look to the convergence of Internet protocol-based voice, data and video services to grow their companies, AT&T isn't likely to get a major share of the action.

The reason: a lack of "patient capital" that the company needs to upgrade its network -- particularly over the final segments before it reaches customer premises.

With digital convergence blurring industry boundaries, telecom providers now believe they can expand their addressable market to include areas of media and advertising that were once beyond their reach. Many telecom operators are investing in digital content with the expectation of offsetting declines in voice revenues.

The most promising areas of advanced content services are television and video. However, delivering all but the most basic digital content services over networks that were originally designed for voice communications and Web browsing is challenging, and telecom operators are having to upgrade their networks to compete. The returns on these network upgrade investments remain uncertain and are likely to be positive only in the long term.

"Positive only in the long term" means patient investment capital. However, a recent analysis by DSL Prime's Dave Burstein found an absence of such funding at AT&T. Rather than increasing spending on its infrastructure, Burstein found the company instead slashed capital expenditures by 50 percent since 2002, which explains AT&T's abandonment of its planned system wide DSL deployment dubbed "Project Pronto."

Sunday, February 17, 2008

Tennessee broadband build out debate highlights conflict between public and private interests

The Tennessee broadband build out bloodbath is heating up, according to the The Tennessean. The cable industry is running TV ads suggesting AT&T will redline rural areas if the state enacts AT&T-backed legislation putting the state rather than the local governments in charge of issuing Internet Protocol TV franchises.

The redlined areas will likely remain unconnected for decades from AT&T's new U-Verse fiber and copper based service offering IPTV, voice and high speed Internet. AT&T denies it redlines in the dozen states where it has rolled out U-Verse. Wrong, according to a couple of industry analysts quoted in the story. AT&T lacks patient capital to invest in providing a wider base of U-Verse service and therefore installs U-Verse infrastructure in selected areas only where it believes it will get the quickest return on investment.

This story aptly illustrates the clash between public and private interests that has produced the incomplete and balkanized crazy quilt telecommunications infrastructure that has effectively divided the U.S. into two nations: one with access to advanced telecommunications services based on broadband Internet and one without. Public policymakers are rightly concerned about this situation given the increasingly important role of broadband access to the economy.

Tuesday, February 12, 2008

Taking America's heartland by storm: WISPs swoop into areas neglected by wireline providers

Telecompetitor reports several WISPs are sweeping into several U.S. markets where wireline broadband service isn't offered. Not surprisingly, they are quickly signing up customers who have been waiting in vain for years for telcos and cable companies to provide high speed Internet:

All of these companies are targeting “underserved” rural markets with a broadband alternative. Underserved generally is a code word for markets served by large RBOCs and/or MSOs who have not invested in local broadband networks. These markets are often identified as a part of the “digital divide.” DigitalBridge says they have reached 10% penetration within 6 months of one their first market entries, Rexburg, ID. These growing rural deployments are leveraging quickly evolving broadband wireless technology and pent up demand for broadband in markets where little or no broadband competition exists.

According to Telecompetitor, one of the WISPs, Oklahoma City-based Stelera Wireless, has rolled out service in Floresville & Poth, Texas using recently auctioned spectrum offering maximum speeds of 7.2 Mbps down and 2 Mbps up. However, Stelera informs me that its users get average download speeds of 1.5-2 Mbps down and 350-380 Kbps for uploads.

Notably, the WISP does not use telco circuits for backhaul connections, instead relying on its proprietary OC-3 and OC-12 microwave network. In Stelera's Texas markets, service is backhauled to San Antonio via microwave and from there via long haul ethernet to Stelera's Oklahoma City HQ POP.

Friday, February 08, 2008

At broadband crisis point, U.S. should invest $100 billion to build 100 Mbs fiber to every home by 2012

The United States is so rapidly falling behind other developed nations when it comes to broadband access that it’s reached a crisis point demanding a bold new course of action, posits a January 2008 white paper by EDUCAUSE.

EDUCAUSE describes itself as a nonprofit comprised of colleges, universities, educational organizations and corporations to advance higher education by promoting the intelligent use of information technology. The white paper, A Blueprint for Big Broadband, argues the current national policy that relies exclusively on private sector telecommunications companies to build out broadband infrastructure is flawed because they are unable to respond quickly enough to rapidly growing demand for faster speeds driven by increased use of video and other bandwidth intensive applications.

Private sector wire line broadband providers are driven by short term economic incentives and operate within — at most — five year time horizons. This has led to drastically slashed R&D spending and curtailed broadband deployments that would serve large unserved areas of the country.

The result in an incomplete broadband infrastructure that doesn’t extend to many homes and businesses, creating choke points on the “last mile.”

Instead, the U.S. should from a public-private partnership to invest nearly $100 billion to build an open access fiber to the premises (FTTP) local infrastructure to ensure every home in the nation has access to at least 100 Mbs (and capable of scaling up to 1 Gbs) by 2012.

How to raise the $100 billion? A Universal Broadband Fund (UBF) modeled after one used in Canada that would get a third of its funding from the feds in the form of direct appropriations or bond proceeds, another one third from the states, and the remainder from private or public sector providers. The UBF would allocate $8 billion per year for four years to be distributed to the states, which would put up matching funds.

"The U.S. broadband crisis is a unique challenge,” wrote the author of the 74-page white paper, telecommunications attorney and consultant John Windhausen Jr. “Unlike past threats to our future competitiveness, the solution to our broadband connectivity crisis is primarily local. The benefits of broadband connectivity are felt directly by every consumer and business, and final decisions must involve our local leaders under a comprehensive federal program. The United States needs to move beyond the rhetoric and begin to adopt a specific action plan for the future.”

The comprehensive report also includes a detailed and current summary of actions by state and local governments to improve broadband access for their residents.

I have questioned the adequacy of state government broadband initiatives since they typically provide funding in 10s to low $100 millions in the form of grants and loans, which isn’t going to be sufficient incentive to private sector providers to deploy fiber infrastructure on the scale called for in the EDUCAUSE white paper.

The key to the success of the proposed UBF is getting the federal government on board as willing partner with the states and the private sector. That’s not likely to happen unless feds are convinced of the white paper’s assertion that universal access to fast broadband will benefit the U.S. economy and its global competitiveness. Congress may be receptive to attempts to make that case given its approval this week of a $150 billion economic stimulus plan.

Monday, February 04, 2008

AT&T hikes DSL prices, newspaper reports

The Chicago Tribune is reporting AT&T is raising prices across the board for its DSL service by $5 a month. The exception, a company spokeswoman told the newspaper, is residential customers who pay $35 for the Elite plan and customers with long term contracts.

AT&T said the increase is needed to upgrade infrastructure to support more bandwidth intensive applications such as video and music files.

I'm doubtful of the company's stated rationale for the increase because it has effectively pulled the plug on upgrading its legacy first generation DSL plant and is instead directing funding to its hybrid fiber/copper Project Lightspeed deployment in selected metro areas. This deployment is in support of the telco's U-Verse all digital triple play bundle of voice, high speed Internet and Internet Protocol TV (IPTV).

The DSL price boost is an effort to merely extract greater incremental income out of existing services. That's in line with AT&T's highly risk adverse cash flow and depreciation based management strategy that shuns significant physical plant upgrades that would eliminate large swaths of its 22-state service area where AT&T offers no wireline-based broadband services.

2008 a pivotal year for wireless broadband

The year 2008 will be a pivotal one that could mark the beginning of the end of the duopolistic hold the telcos and cable companies have over broadband Internet access marked by widespread market failure and lack of competition.

The Federal Communications Commission is set to make key decisions this year that determine whether broadband will be delivered over the air and provide the much needed wireless "third pipe" for broadband delivery starting in 2009.

The FCC is currently auctioning off portions of the 700mhz spectrum that could carry both mobile and fixed broadband services. The agency is also testing revamped prototype devices
developed by a consortium including Microsoft, Google, Dell, HP, Intel, Earthlink and Phillips that would transmit broadband signals at speeds reaching as high as 80Mps that would blow nearly all existing U.S. wireline broadband providers out of the water.

The White Spaces Coalition's prototypes failed the first round of testing last year. The coalition hopes to prove the prototypes, which transmit on unused portions of digital TV broadcast frequencies, won't interfere with TV signals.

Friday, February 01, 2008

The road to America's transportation infrastructure future should be paved with fiber as well as asphalt

Rebuilding America's aging roads and highways should not involve only concrete and asphalt. Instead, the U.S. needs to install fiber optic cable to upgrade its weak broadband distribution system. Doing so takes more vehicles off roadways would allow more to work from home, which the Heritage Foundation's Ronald Utt suggested in an interview broadcast today on NPR's Marketplace:

RONALD UTT: We've been providing the public sector with all this tax revenue and what-not for roads, but we have not been getting new roads in return for it.

Utt says part of the long-term solution is to get a significant amount of commuters off the roads -- by allowing people to work from home or at least closer to home.

NTIA report on US broadband access blasted

The feds are once again drawing well justified criticism for papering over America's sprawling broadband black holes by relying on an outdated, 12-year-old formula for measuring broadband access. The formula, promulgated by the Federal Communications Commission and adopted in a report on U.S. broadband access released this week by the National Telecommunications and Information Administration (NTIA), simply measures whether anyone -- even just one address -- in a given ZIP Code can obtain broadband, defined in the circa 1996 standard of at least 200kbs in one direction.

One only needs to take a look at two states, California and Tennessee, where large areas are mapped as having no wireline broadband services to see how far off base this federal government report truly is.

One of the FCC's commissioners even took issue with his own agency's data that was used in the NTIA report. "This report relies on widely-discredited data in a strained effort that only distracts us from the real work ahead," Commissioner Jonathan S. Adelstein said in a statement.

Gigi B. Sohn, president and co-founder of Public Knowledge, blasted the NTIA report:

“The NTIA report presents a distorted view of the state of broadband in the U.S. The Administration should not be boasting about our success at a time when consumers here pay more money for slower service with have fewer choices than do consumers in other parts of the world.

“Almost 97 percent of U.S. consumers have a choice only between their cable company and their telephone company. The Administration wiped out the policies that once upon a time allowed competition to flourish here and which now sustain the competition in other countries that consumers enjoy.

“The short-sighted policies cited by the NTIA have put our economic future at risk. The rosy picture the NTIA portrayed should have recognized that reality.”

Nate Anderson of had this to say:

As broadband continues to be a key driver of economic opportunity and growth, falling behind the rest of the world will have real consequences for US high-tech leadership. Instead of addressing that crucial question, though, the report is an unabashed celebration of free-market, deregulatory policies. So enamored with their own economic theories are the authors that they resort to dogmatic lecturing throughout the paper.
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