Thursday, August 27, 2009

First round of U.S. broadband stimulus funding draws deluge of applications

It's a good thing the Obama administration sees the $7.2 billion in grants and loans for broadband infrastructure allocated in the American Recovery and Reinvestment Act of 2009 (ARRA) as a mere down payment on building out the nation's incomplete telecommunications infrastructure.

The two federal agencies overseeing the disbursement of the funding -- the Commerce Department's National Telecommunications and Information Administration (NTIA) and the Department of Agriculture's Rural Utilities Service (RUS) -- announced today they received proposals requesting seven times the $4 billion set aside for the first funding round. Two more rounds later this year and early in 2010 will dispense the balance of the allocated ARRA funding.

Link to the agencies' press release here.

Wednesday, August 26, 2009

Universal broadband could "change face of Britian as we know it"

Universally available high speed Internet connectivity would redistribute Britian's population and alter its economy, according to a study reported today by Sky News.

The report also revealed that UK businesses could save up to £31.7bn, if more people were able to work from home.Robert Ainger, Orange's director of corporate business said: "The long-entrenched domination of the South East in Britain's economic structure could at last be coming to a close, with many workers wanting to trade their city lives to work from more rural and idyllic parts of the country."Our report reveals that a digitally connected country could change the face of Britain as we know it."

The findings could have even larger implications for the United States as advanced telecommunications infrastructure is more widely built out.

Socio-economist Jack Lessinger predicted in his 1991 book Penturbia: Where Real Estate Will Boom After the Crash of Suburbia that Americans would emigrate from large metro area suburbs for smaller towns outside of metro areas. Around the same time, early proponents of telecommuting or telework -- your blogger among them -- began to see how telecommunications could fuel the trend that same way freeways fed the surburban boom immediately following World War II.

Thursday, August 20, 2009

FCC wants comment on defining broadband

The Federal Communications Commission has issued a public notice requesting comment on how it should define broadband, a question that arose not long before the Obama administration assumed office at the start of the year. The notice contains a caveat on focusing on throughput speed:

Much of the discussion of any proposal to define “broadband” tends to center on download and upload throughput. Download and upload throughput are important, but neither is precise or diverse enough to describe broadband satisfactorily.

Indeed. The issue isn't broadband itself, but the poor state of the U.S. telecommunications infrastructure that has tended to keep the focus on speed and latency, largely because it's so lousy in much of the nation that its ability to deliver what could even be charitably described as broadband is sketchy and often nonexistent.

Broadband should be instead be defined as fiber infrastructure to the premises. As the FCC notice suggests, any definition based what the pipes can carry rather than the pipes themselves will devolve the discussion into a "how many angels can dance on the head of a pin?" debate and result in the the lowest possible standard chosen in order to dispose of the question in the most politically expedient manner.

Fiber is proven technology and remains the most obsolescence proof advanced telecommunications infrastructure going to best accommodate the growing volume of bandwidth hungry applications and multiple services.

Tuesday, August 18, 2009

Second NOFA for broadband stimulus funds should include seed funding for telecom coops

Cooperatives are in the news a lot this week. Specifically, health care cooperatives as a more politically palatable alternative to a Medicare- like government insurance "public option" plan that is generating a lot of controversy as Congress crafts an overhaul of private U.S. health care finance.

Sen. Kent Conrad (D-N.D.) is currently fleshing out the concept, which would reportedly include about $6 billion in seed funding to help the health care cooperatives get up and running.

As the National Telecommunications and Information Administraiton (NTIA) and the Department of Agriculture's Rural Utilities Service (RUS) prepare the Notice of Funds Availability (NOFA) for the second round of federal economic stimulus subsidies for broadband infrastructure this fall, they should include a similar provision for telecom consumer coops. Getting adequate funding and/or loan guarantees to cover the not insignificant cost of experts and consultants to put together a preliminary network design and business case analysis/long range business plan in time to meet the NOFA application deadline can be an insurmountable hurdle for coops that might otherwise propose solid plans to better connect areas that are unserved or underserved when it comes to broadband.

The guidelines for the first NOFA (applications are due this week) allowed for up to five percent of project planning costs to be refunded -- but only if the project is approved. However, that creates a Catch-22 for coops since they can't even develop a proposal that meets the NOFA requirements without these costs covered at the outset, which means a lot of potentially meritorious projects could fall by the wayside.

The second NOFA should include a preliminary step to allow telecom coops that have or have applied for 501(c)(12) tax exempt status to apply for grant funding or loan guarantees to cover project planning costs on the condition that they engage qualified consultants on an arms-length basis and put forth a good faith effort to complete the work within a relatively short period of time (60 days, for example).

They would then have to propose their projects immediately thereafter if the planning work shows the proposed project would meet the NOFA guidelines and be economically sustainable. If the project turns out not to be so based on preliminary design and business planning, that would give coops the opportunity to tweak their proposals to comply with the guidelines or drop them, saving both them and the federal agencies the time and effort of reviewing unfeasible proposals.

Full disclosure: Your blogger is founder and president of a startup telecom cooperative in El Dorado County, California.

Friday, August 14, 2009

Big telcos, cablecos say no thanks to broadand stimulus funds

This week saw the nation's three big telcos (AT&T, Verizon, Qwest) and the dominant cable company issue a firm "no thanks" to the $7.2 billion in broadband infrastructure grants and loans in the American Recovery and Reinvestment Act.

The San Francisco Chronicle reports AT&T, Verizon and Comcast say they are flush with cash to upgrade and expand their networks on their own and don't need the money. They also don't like the conditions attached to the funding, fearing it would create regulatory precedents that would threaten their closed, proprietary networks. "We are concerned that some new mandates seem to go well beyond current laws and FCC rules," said Walter McCormick, president of USTelecom, a trade group that represents telecom companies including AT&T and Verizon, is quoted as saying.

This is all well and good. Subsidies should be directed to smaller providers, local governments and cooperatives who have a greater commitment to their local areas and can likely do a far better job than the big guys.

Thursday, August 13, 2009

Migration of boomers to Penturbia will boost small town broadband

The Daily Yonder has an interesting item in today's issue that lends credence to Jack Lessinger's prediction two decades ago that America is poised to enter its fifth major settlement pattern. This fifth era -- dubbed Penturbia by Lessinger in the title of his 1990 book on the topic -- will be marked by a shift away from metro areas and suburbs to less populated smaller towns outside of metro areas.

The Daily Yonder story cites a U.S. Department of Agriculture Economic Research Service forecast that the baby boomers -- a hugely populous demographic group -- will shun the burbs in favor of Lessinger's Penturbs. A big draw will be natural amenities, which a map accompanying the article shows are primarily in the western U.S.

This is also where the nation's telecommunications infrastructure is least likely to offer broadband and other advanced telecommunications services, services the boomers are likely to expect and demand but telcos and cable companies have found difficult to profitably provide there. An influx of boomers could change those economics. And where the providers won't upgrade or expand their infrastructures, look for the boomers to form telecom cooperatives and do the job themselves.

Friday, August 07, 2009

Promises, promises: FCC building record to rebut telco broadband deployment claims

Federal Communications Commission Chairman Julius Genachowski is ramping up his agency's work on a national broadband deployment plan due six months from now as required by the American Recovery and Reinvestment Act of 2009.

As the plan is developed, the FCC will be heavily lobbied by telcos and given assurances the companies will be building out advanced telecommunications infrastructure and turning up service pronto, as one failed AT&T deployment scheme that turned out not to be such was dubbed. Therefore, the pitch will go, the best national plan is no plan. Just leave it to us and we'll get 'er done.

But such platitudes aren't satisfactory to FCC officials, who have publicly complained they have received too much empty rhetoric and not enough substantive input in response to the agency's call for industry and public comment on what a broadband plan for the United States should include.

Being a careful, methodical lawyer, Genachowski is already building the record to rebut industry puffery with facts. Multichannel News reports the FCC has retained the Columbia Institute for Tele-Information (CITI) at Columbia's Business School in New York, to fact check previous broadband deployment capital expenditure claims of telecom companies.

"CITI will provide an analysis of the public statements of companies as to their future plans to deploy and upgrade broadband networks," Multichannel News quoted the FCC as saying, "as well as an historical evaluation of the relationship between previous such announcements and actual deployment."

Wednesday, August 05, 2009

Little upside, major downside risk for incumbents challenging proposed broadband stimulus projects

There's an increasing amount of speculation in cyberspace that incumbent telcos and cable companies could opt to exercise a broadband black hole preservation provision in the rules governing the first round of federal broadband stimulus funding applications due Aug. 14. The provision allows incumbent providers to challenge proposed projects in their territories as not meeting the criteria of "unserved" or "underserved" areas under the rules.

Already law firms are warning incumbents that these projects could infringe on their footprints in thinly veiled inducements to challenge or litigate against them. As with lawsuits by incumbents against local governments that have proposed their own fiber to the premises deployments, the goal isn't to prevail on the merits but rather to delay and buy time. Moreover, while the rules place the burden of proof on incumbents to demonstrate a proposed project encompasses census blocks that aren't unserved or underserved, it's likely to be very difficult for project proponents to rebut the incumbents since the rules don't require incumbents to make their own deployment data publicly available.

The problem for the incumbents is that buying more time won't help them since their infrastructures are already built out to the extent their business models permit. Challenging proposed broadband stimulus projects has little upside and significant downside risk: fueling negative public perception and increased scrutiny from regulators likely to view such conduct as monopolistic and contrary to current federal policy to expand broadband access.

New FCC chair must consider alternative business models for telecom infrastructure

Newly minted Federal Communications Commission Chairman Julius Genachowski has kicked off a major initiative to get the United States' telecommunications infrastructure upgraded so that it can deliver broadband to all Americans.

In meetings with newspaper editorial boards, Genachowski noted 40 percent of U.S. households don't subscribe to broadband. "That's not where you want to be on something that we think is a core infrastructure for the United States," he told reporters and editors of the San Jose Mercury News this week. "And I think it is. Broadband will be our platform for commerce, for democratic engagement, and for addressing a whole series of vital national priorities."

To accomplish his goal of full build out of advanced telecommunications infrastructure, Genachowski, who is to present a plan to Congress in February to make it happen, will clearly have to consider alternative business models. The current model in which most telecom infrastructure is held by large publicly traded corporations cannot because it lacks sufficient patient capital to make the necessary investment. These companies can play an important role in providing long haul Internet backbone and much of the middle mile infrastructure. But to ensure last mile access, nonprofit telecommunications cooperatives, small local providers and local governments will have to play the same role they did in the early part of the 20th century where they provided electrical, water and telecommunications infrastructure where shareholder-held companies could not profitably do so.

Genachowski should also recommend Congress put in place incentives to help bridge the last mile gap such as tax breaks allowing property owners to deduct initial costs they would pay to join telecom cooperatives offering fiber connections to their properties.
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