Thursday, October 30, 2008

Netflix Tivo deal still not ready for prime time

SAN FRANCISCO - Home entertainment trendsetters Netflix Inc. and TiVo Inc. are finally joining forces to deliver more movies and old TV episodes to their mutual subscribers, consummating a relationship that was supposed to come together four years ago.

This deal is still four years too early and not yet ready for prime time given the pathetic state of America's broadband telecommunications infrastructure. The throughput speeds for downloading movies simply don't hack it in much of the nation and many homes are still unable to get even basic broadband connections.

Fairpoint chooses WiMAX where DSL fails

Fairpoint Communications, the successor to Verizon in much of New England, has opted to deploy fixed terrestrial broadband to make up the shortcomings of underpowered DSL. Fairpoint has selected WiMAX technology based on equipment provided by Nortel Networks Corp. and Airspan Networks that will provide throughput of 1 to 3 Mbs.

Friday, October 24, 2008

Telcos cynically cite demographic data to justify failure to invest in broadband infrastructure

Here's some typical telco funded propaganda on broadband. It's designed to shift and downplay the focus away from the lack of broadband availability due to inadequate telco infrastructure to broadband adoption rates. Once that's accomplished, it's time to play the socioeconomic card and decry low computer literacy among certain demographic groups.

Bottom line, the telcos are looking to justify their failure to upgrade their plants over the last mile to support broadband by blaming poor, older and less educated people who say they don't use computers and don't need broadband. In other words, we don't need to deploy broadband because you're simply too ignorant to use it even if we did.

Thursday, October 23, 2008

California PUC considering expanding eligibility for broadband build out subsidies

The California Public Utilities Commission is soliciting comment on potentially expanding eligibility for 40 percent grant funding from its California Advanced Services Fund (CASF) to build out broadband infrastructure in unserved and underserved areas of the Golden State. The commission has set aside $100 million for qualifying projects to be funded over a two-year period, paid for by a 0.25 percent surcharge on end-users’ intrastate telephone bills.

Proposals to serve unserved areas were due July 24 and underserved areas by Aug. 25. Only entities with a certificate of public convenience and necessity to offer telecommunications services or those registered with the CPUC provider of wireless telecommunications services were eligible to submit project proposals by those dates. The CPUC is now considering accepting proposals from municipalities, community-based cooperatives, Native American tribes as well as funding economic development corporations to issue loans to finance projects.

"We further anticipate significant unserved and underserved areas will remain after grant of the current pending applications," CPUC's Oct. 15 ruling states. "During our first round of applications we received significant interest from serious potential applicants who were uncertificated internet service providers in areas geographically close to unserved or underserved areas."

Friday, October 17, 2008

Survey suggests telcos should channel CAPEX to wireline -- and not wireless -- broadband

While mobile broadband has been much ballyhooed over the past few years, the vast majority of those with mobile devices don't utilize their Internet capabilities to watch videos, play games or even send email. That's according to a Accenture Research survey out this week picked up here by Telephony Online.

This survey strongly implies people want broadband at home much more than they do outside the home. For telcos, that means investing more in wireline -- and particularly fiber optic infrastructure -- and less in wireless broadband. The demand for home-based wireline broadband services is also likely to grow as people spend less time and money outside of the home and cocoon during the economic downturn.

Monday, October 13, 2008

Telco market segmentation has shrunk U.S. residential wireline service area map, setting stage for locals to take over last mile

The widespread prevalence of broadband black holes throughout the United States — which can be found in urban, suburban, semi-rural and rural areas — has brought to light a major change in the landscape of residential telecommunications service. In modern times, residential telecommunications has meant near universal service to all but the most remote areas.

With the advent of high speed Internet, the residential wireline market is no longer a single one but has been segmented by the telcos who maintain monopolistic control over their markets. Over the past 2-3 years, the boundaries of broadband black holes have hardened and delineate the two segments.

The more accurate description is the residential market hasn’t been so much segmented but rather shrunk. One only need compare the telcos’ maps of where they provide Plain Old Telephone Service (POTS) and areas where advanced Internet protocol-based services are offered to graphically see the shrinkage.

This is a permanent alteration of America’s telecommunications map. Despite telcos’ promises to “turn up” advanced services to these areas over the past decade, it’s now apparent that these statements are a time buying PR ploy to keep regulators and politicians at bay. Now the residential wireline telecommunications map is posed to shrink even further with the limited rollout of fiber to the home service by Verizon and AT&T’s technologically constrained deployment of its fiber to the node Project Lightspeed as both companies migrate from DSL.

This redrawing of America’s telecommunications map has major implications for so-called “last mile” residential wireline. Where they don’t provide last mile IP-based access, the telcos will instead serve as first and middle mile telecom providers. Small local telcos and the residents themselves will become the default last mile providers. Where it makes business sense, smaller telcos that specialize in serving communities will deploy fiber to the node and fiber to the home. Where the numbers don’t pencil out for the small telcos, the residents will deploy their own fiber and fund it though voluntary cooperatives and special taxing districts.

Over the next several years, fiber will come to be viewed as a utility not unlike electric power and water and will appear on residential MLS real estate listings. Properties that lack fiber optic access will be at a distinct disadvantage to those that have fiber, creating a strong incentive for property owners to work together to bring fiber to their neighborhoods to better capitalize on recovering real estate values following the current market downturn.

Saturday, October 11, 2008

Green movement could spur public sector investment in fiber to the home

When the 1996 Telecommunications Reform Act was enacted, it was anticipated it would drive competition giving most Americans fiber optic service by 2006. Didn't happen. Plenty of mid-mile fiber got laid but much of it was never lit up following the dot com bust of 2000. Then in the years following the dot com downturn, telcos opted to avoid the CAPEX of fiber over the last mile and instead retain and depreciate their aging legacy copper cable plants and deploy underpowered DSL service over them that left millions without broadband access.

Now the Fiber to the Home Council (FTTH) expects increased interest in reducing carbon emissions will drive fiber over the last mile. Updating the last mile to fiber will deliver substantial environmental benefits in the short term outweighing the environmental costs of deployment in as little as six years, the FTTH says, citing a study by the consulting firm PricewaterhouseCoopers (PwC).

The study found that by 2010 and later, an estimated 10 percent of the working population with FTTH service would telecommute an average of three days a week because bandwidth improvements will make working from home more feasible. That's a lot less driving and reduced gasoline consumption and savings on road maintenance and construction.

Since government is in business of building and maintaining roads, it indirectly benefits by investing in last mile fiber such as selling bonds to finance its build out as Monticello, Minnesota and other local governments have done. At this point, it appears to be far easier to make the business case for fiber to the home in the public sector -- which can raise more patient capital -- than the private sector where telcos and other providers require rapid returns on their capital investments that has discouraged them from deploying fiber to the home.

Thursday, October 09, 2008

Private, public sectors clash on broadband deployment

As fiber optic guru Tim Nulty accurately observed, wireline telecommunications infrastructure is a natural monopoly. That fact has spawned conflict between the private and public sectors over which will build out infrastructure to provide modern IP-based services. At issue in this confrontation that has played out throughout much of the United States over the past decade is who will get first rights to build since whoever deploys infrastructure first dominates the market given its monopolistic nature.

But there's more to it than that. Both sides have conflicting agendas. The private sector telcos and MSOs (cable companies) want to maintain an open ended option to build whereas public sector entities like muncipalities motivated by constituent pressure to rapidly deploy, pressure that naturally increases over time as demand for broadband-based services from consumers and businesses grows. In that regard, time is on the side of the public sector. That reality has spurred private sector players to employ litigation to buy time to preserve the option to serve a given area.

Case in point: this week, a Minnesota judge ruled this week that Minnesota cities have the authority to issue bonds to finance community fiber-optic networks. Monticello, a town of 12,000, has been locked in a legal battle with its incumbent phone company, TDS Telecom, which filed a complaint to prevent the city from building a network its citizens overwhelmingly approved in a referendum last year, according to Christopher Mitchell, Director of the Telecommunications as Commons Initiative for the Institute for Local Self Reliance (ILSR). “All along, we have said that this lawsuit is frivolous and was merely a delaying tactic,” Mitchell said in a news release. Mitchell adds that TDS "was merely trying to protect its monopolistic interests, much to the detriment of the citizens of Monticello who clearly want a local, accountable alternative to existing services.”

More delay could be in store. ILSR reports Monticello had to put the project on hold until the case was decided and escrowed funding until the case is fully resolved and all appeals are exhausted.

At present, the rules allow private sector providers to game the system to buy time. Even if they lose on the merits of muni fiber project legal challenges as in this case, they still win because they've achieved their goal of buying time to exercise their option to build. The problem is that option is currently open ended at a time when the nation is falling farther and farther behind on broadband and time is of the essence.

It needs to be tightened up with legislation that would give either public or private sector providers the option to build broadband infrastructure and subject the party exercising the option to deploy it to stringent oversight including incremental progress deadlines, late penalties and completion bonds.

Friday, October 03, 2008

Limited DSL range disappoints in Western Massachusetts, divides towns into digital haves and have nots

As reported earlier this year, Verizon is rolling out DSL in 24 Western Massachusetts towns. But state Rep. Denis Guyer, D-Dalton, is hearing from irate constituents who understandably believed that if their town is getting the service, that's just what it means and are flummoxed that they're still stuck with dialup or forced to suck a satellite.

The problem is Verizon is using underpowered DSL technology -- which should be dubbed "Doesn't Serve Lots"-- that can only serve parts of the towns. This puts pols like Guyer who are pushing to bring their districts into the modern age of telecommunications in a tough spot since voting districts don't necessarily coincide with DSL availability limits. For those covered by Verizon's DSL deployment, pols like Guyer look like a hero. But from the perspective of his constituents outside Verizon's DSL service limit, he looks like a ineffective bum. As this blog notes, like politics all broadband is local.

The item published in the North Adams Transcript is aptly headlined Guyer says Verizon's Broadband not so broad. So true for not only Western Massachusetts but sadly anywhere in the U.S. served by feeble telco DSL.
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