Friday, January 29, 2010

Last mile fiber project lands broadband stimulus award, sparks strong interest from other rural electric coops

Telecommunications equipment manufacturer Pulse is reportedly getting deluged with inquiries from rural electric cooperatives after it successfully partnered with a rural electric cooperative in Northeast Missouri to score $19 million in last mile broadband stimulus funding from the USDA's Rural Utilities Service (RUS) Broadband Initiatives Program (BIP).

What's sparking (pun intended) interest in the
Ralls County Electric Cooperative project is its fiber to the premises design that utilizes "distributed tap architecture" for easy deployment of drops that's cost effective at population densities of as few as four homes per mile, reports Light Reading's Cable Digital News.

The take away from this story isn't about the technology alone. It shows there is tremendous interest in the cooperative business model to bring advanced telecommunications services to unserved and underserved areas of the United States just as coops did a century ago when rural electric and other utility cooperatives were first formed.

U-Verse won't bail AT&T out of its residential wireline woes

Here's a notable report by Todd Spangler of Multichannel News on AT&T's revenues from its hybrid fiber/copper VDSL triple play U-Verse service that suggests while posting increases in customers and revenue, they may be too little and too late to offset a dramatic decline in AT&T's residential wireline market segment. In a Dec. 21, 2009 filing with the U.S. Federal Communications Commission, AT&T in unusually blunt language called the downward trend a "death spiral."

Spangler reports that while AT&T's U-verse revenue nearly tripled over 2009 (despite a sharp economic downturn) and is approaching an annualized rate of $3 billion, it nevertheless represents less than five percent of total wireline segment revenue. Spangler notes even that strong growth isn't sufficient to offset flagging wireline segment revenues, which fell six percent in 2009 to $65.7 billion.

Meanwhile, AT&T disclosed this week it would spend $2 billion on its wireless infrastructure -- money that won't be going into wireline CAPEX to build out the U-Verse footprint. Doing that is a costly proposition given U-Verse involves expensive field distribution equipment that can deliver service only 3,000 feet over existing copper cable plant -- plant that often requires even more money to bring it up to technical standards to reliably carry VDSL signals. That's not an issue in new neighborhoods, where U-Verse is delivered over fiber to the premises. But few such locales are being developed with new home construction at its lowest level in decades.

In sum, U-Verse isn't likely going to bail AT&T out of its troubles in residential wireline and may ultimately lead to the big telco pulling out of the market segment to concentrate on wireless in the retail market as I predicted in September 2008.

Friday, January 22, 2010

App-Rising: As U.S. copper telecom infrastructure ages, no national consensus on next step

Check out this dreary assessment of the state of U.S. telecommunications infrastructure from App-Rising:

In particular, look at Kentucky. They showed a 40% decrease in measured connection speeds just in the last quarter. Numbers like this have me worried that perhaps the century-old copper telephone wire is rapidly deteriorating and impacting DSL performance, or perhaps the cable providers' shared networks are overwhelmed with demand, or maybe wireless broadband is constrained by insufficient backhaul.

What makes Kentucky even more troubling is that they're supposed to be a leader in encouraging the deployment and adoption of broadband. What does that say about the health of the country if a state that's been seen as a leader is falling off this badly.

It makes me start to wonder if we might have a national emergency on our hands in states like Kentucky and others where broadband speeds are dropping. It leads me to think that perhaps we need a national commission to study these issues in depth and get to the bottom of what's happening as no state should be slowing down ten years into the 21st century.

Thursday, January 21, 2010

California PUC approves $7.9 million supplemental broadband stimulus funding for 9,000 square mile Central Valley wireless project

The California Public Utilities Commission today conditionally approved a resolution providing $7.9 million in supplemental funding for a major wireless broadband project requesting federal funding via broadband infrastructure subsidies allocated in the American Recovery and Reinvestment Act of 2009. The supplemental funding allocated from California PUCs' California Advanced Services Fund covers half of a 20 percent recipient match required under the National Telecommunications and Information Administration's (NTIA) Broadband Technology Opportunities Program and is contingent on federal funding approval.

The California Valley Broadband (CVB) project, proposed by a the consortium of Moreno Trenching Ltd, Mika Telecom Group and MT2 Telecom, LP, plans to build wireless infrastructure that will serve about 77,195 households in Fresno, Madera, Merced, Sacramento, San Joaquin, Solano, and Stanislaus counties. The consortium claims it will deliver Internet connectivity and VoIP over nearly 9,000 square miles at speeds of up to 20 Mbs on the download side and up to 6 Mbs uploads using two unregulated (WiFi) frequencies and one licensed (WiMAX) frequency "to accommodate range, terrain, tree and other interference issues."

The CVB project faced multiple challenges from incumbent telco and cable companies who claimed they already serve census block groups in the proposed CVB footprint. But PUC staff rejected the bulk of the challenged census block groups finding the incumbents didn't offer broadband as the California PUC defines it: at least 3 Mbs for downloads and 1 Mbs on the upload side.

It remains to be seen however how the NTIA will respond to protests the incumbents lodged against CVB's proposed project that is pending approval for the 80 percent BTOP subsidy.

In allowing incumbents to contest proposed broadband infrastructure projects in the first round of stimulus funding that closed last summer, both the NTIA and the Rural Utilities Services of the U.S. Department of Agriculture -- which is also distributing a portion of the broadband stimulus funds -- set the stage for an adversarial process that by implication would require the agencies to adjudicate contested applications. However, it's likely they are less able than the California PUC to carry out that function since the PUC can reference the state's broadband availability maps and has dedicated staff evaluating comparatively far fewer proposed projects.

Since putting in place a process to resolve applications contested by the incumbents and make findings of fact regarding whether the area of a proposed infrastructure project is underserved or unserved requires substantial time and resources, my guess is the two federal agencies simply put contested applications into a "hold" file while trying to figure out how to square the applications with incumbent telco/cable objections. That would explain why so many now impatient applicants haven't heard anything whatsoever after rushing to get their applications in by the first round funding deadline in mid-August of 2009 after having been initially led to believe they'd know by the year end holidays at the latest whether their projects were approved for funding.

This sets the stage for political blow back from federal and state representatives in areas where broadband stimulus projects in their districts are stuck in limbo after hearing from frustrated constituents asking them to expedite approval of their applications. The incumbents couldn't stop the broadband stimulus provisions from becoming law in the rush to enact ARRA one year ago. So they may instead opted to fend off threats to their territorial hegemony (remember, an incumbent telco/cable "service territory" doesn't mean everyone is served) in a "death by a thousand cuts" strategy to vector and shoot down stimulus applications one by one.

Friday, January 15, 2010

Yet another flawed analysis of forthcoming U.S. broadband plan

Here's another in an ongoing series of flawed analyses in the mainstream media lately on the U.S. Federal Communications Commission's statutorily mandated task to develop a plan to ensure build out of advanced telecommunications infrastructure accessible to all Americans.

The problem with them is they incorrectly conflate lack of competition with market failure to suggest why this infrastructure isn't fully built out. It's the latter and not the former that's the cause. There isn't robust competition in a failed market because the business economics and externalities keep vendors out, leading to the formation of broadband black holes. The lack of competition is the symptom, not the underlying disease. Why is it that no one seems to get this simple, basic reality in the current coverage of the FCC's forthcoming broadband plan?

Second and final broadband stimulus funding rules issued

The U.S. Department of Agriculture's Rural Utilities Service (RUS) and the National Telecommunications and Information Administration (NTIA) today issued guidelines for the second and last funding round to disburse $7.2 billion allocated for broadband infrastructure and adoption in the American Recovery and Reinvestment Act (ARRA) of 2009.

Here's a news release on the Notice of Funds Availability (NOFA) as well as links to the NOFAs for the NTIA's Broadband Technology Opportunities Program (BTOP) and the USDA/RUS Broadband Initiatives Program (BIP).

Given the delays in awarding funds from the first broadband stimulus round that closed last August, I expected this NOFA might not appear until mid-March at the earliest. Particularly given the NTIA and USDA solicited comments late last year on the funding requirements that elicited plenty of complaints and suggestions to digest.

I suspect the delays in making first round broadband infrastructure awards -- in large part likely due to numerous incumbent challenges -- prompted the NTIA and USDA accelerate the timetable in order to meet the ARRA requirement the broadband stimulus funds be fully disbursed by Sept. 30 of this year.

Unlike the first round, the latest NOFA calls for separate applications to each agency, with the NTIA concentrating on middle mile telecommunications infrastructure. I suspect by putting last mile far down on the list of funding priorities, the NTIA is hoping to cut down on the number of incumbent challenges tying up infrastructure awards in non-rural areas.

The RUS/BIP NOFA covers both middle mile and last mile infrastructure with an emphasis on the latter in unserved rural areas. Any area in which at least 50 percent of premises lack access to broadband of 5 Mbps combined for upstream and downstream throughput and is at least 75 percent rural combined is eligible under the BIP guidelines.

If a proposed BIP project area includes premises with no access to wireline -- or fixed or mobile wireless service -- offering throughput at the now obsolete Federal Communications Commission definition of broadband of at least 768 Kbs down 200 Kbs up, it is deemed "unserved" under BIP.

Unfortunately, the BIP squanders precious funds with a new separate category to underwrite discounted satellite Internet service, which in the view of this blogger is contrary to the ARRA's intent to fund advanced telecommunications infrastructure and not stopgap, substandard substitutes such as satellite.

Unlike in the first funding round, applicants no longer need define their projects based on contiguous census blocks. BTOP applicants must now use census block groups or tracts. BIP applicants can define their proposed service area boundaries as they wish using an mapping tool included in the online funding application.

Like the first round, the window for applications opens on short notice and remains open only briefly: from Feb. 16 to March 15. That means applicants will once again have to scramble which could like the first round in 2009 produce hastily developed and inferior quality applications.

Tuesday, January 12, 2010

Broadband expansion positively correlates with local economic growth, study finds

The Public Policy Institute of California has issued a new study finding a positive relationship between broadband expansion and economic growth, particularly among information-based industries and in areas with lower population densities.

The study is based on a comparison of Federal Communications Commission data on the number of broadband providers by ZIP code and employment data for the period 1999 to 2006.

Study author Jed Kolko however qualifies the findings given the shortcomings of the FCC data that overstate broadband availability and define broadband at throughput speeds most observers today consider outdated.

Kolko also cautions that the availability of broadband is a relatively recent phenom making it difficult to reach firm conclusions on its impact on economic activity. (Not to mention that data from the years 2007-09 were not included in the study)

In addition, the PPIC report notes increased deployment of fiber to the home infrastructure could lead to different findings. If combined with low cost videoconferencing equipment, fiber could also boost telecommuting -- for which Kolko found no demonstrable increase with the most widely available premises technologies during the study period, i.e. DSL and cable.

Friday, January 08, 2010

FCC chief: Formulating U.S. broadband deployment policy "really hard"

Federal Communications Commission Chairman Julius Genachowski offered some perspective this week on why the FCC has asked Congress for another month to complete its policy recommendations on expanding advanced telecommunications infrastructure to all Americans.

"I can't tell you that we've figured out the solution completely and I can't tell you that we'll figure out the solution to this perfectly by the time we do the National Broadband Plan," he told GigaOM, according to this Reuters dispatch. "This is really hard."

Indeed it is, because this isn't about simply tweaking the existing, incomplete infrastructure -- or "ecosystem" as some federal officials have termed it -- that leaves lots of Americans reliant on the outdated copper-based infrastructure put in place decades ago to deliver plain old telephone service (POTS).

As AT&T noted in a recent FCC filing, that system is on the verge of obsolescence. The United States now needs a new infrastructure for a new Internet-protocol based range of telecom services that go far beyond standard voice service. Genachowski has described it as "the critical infrastructure challenge of our generation."

Getting there won't be a natural extension of the old infrastructure but instead a radical overhaul calling for new business models, particularly among the last and middle mile segments.
It's as much of a business model challenge as an infrastructure challenge. That scope forces the FCC to engage in original, outside the box thinking -- which as Genachowski aptly noted is hard -- but necessary -- work.

Tuesday, January 05, 2010

NTIA director downplays enhanced infrastructure competition, wireless as U.S. universal broadband access strategy

Here are National Telecommunications and Information Administration (NTIA) Director Lawrence E. Strickling's comments to the U.S. Federal Communications Commission on the FCC's incubating policy recommendation due to Congress next month on how to best achieve broadband access for all Americans.

The notable points of Strickling's letter: neither competitive market forces nor emerging wireless technologies will necessarily get us there. While not stating so directly, Strickling implicitly acknowledges that wireline telecommunications infrastructure like electric power and water distribution is a natural monopoly due to the high cost of building it. Hence, more competition isn't going to be the answer, Strickling suggests, noting however there should be more competition among broadband Internet access services sold over that infrastructure. That means open access networks, although Strickling didn't use that term explicitly in his letter to the FCC.

As for wireless, Strickling writes, it remains unclear that it could provide a viable "third pipe" to deliver advanced telecommunications (IP-based) services to residences and small businesses. Strickling's doubts are well founded. Tim Nulty, who believes fiber to the premises can pencil out even in rural areas, explains why with an aeronautical metaphor. While wireless may offer mobility, he says, a fiber-optic network connected directly to homes boasts nearly unlimited capacity. "Think about 747s and helicopters,” Nulty told The Progressive magazine. “Helicopters are marvelous when they’re used for what they’re good at. But you don’t use them to fly thousands of people between Boston and Chicago. For that you need 747s.”

Nulty made that observation in August 2008 and it's even more relevant today as bandwidth demand has mushroomed with the proliferation of IP-based video content. It would be a mistake for policymakers to punt on wireline, betting on the come that commercial wireless providers will fill in broadband black holes given the many technological, backhaul, terrain and business model challenges they face. In some areas, they have. But it's only a temporary bridge on the road toward fiber to the premises.
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