Saturday, November 19, 2011

FCC issues proposed order creating Connect America Fund

The U.S. Federal Communications Commission has released its proposed order revamping the Universal Service Fund (USF) that has for decades subsidized plain old telephone service (POTS) in high cost areas. The USF will now be directed to support Internet connectivity as the Connect America Fund (CAF). The CAF will instead subsidize telecommunications infrastructure to serve what the FCC estimates to be 18 million Americans who involuntarily remain off the Internet “grid” because it costs too much to connect them.
Whether the proposed order would achieve that and do so in a timely manner is an open question. The executive summary of the rather inscrutable 759-page document states that “[w]hile continuing to require that all eligible telecommunications carriers (ETCs) offer voice services, we now require that they also offer broadband services.” But a close reading of the order shows no indication the FCC will expand the telcos’ existing common carrier obligation to provide voice service to all (and not just some) premises in their service areas to encompass Internet. For example, paragraph 1090 on page 398 of the proposed order:
Under section 214 of the Act (the federal Communications Act of 1996), the states possess primary authority for designating ETCs and setting their “service area[s],” although the Commission may step in to the extent state commissions lack jurisdiction. Section 214(e)(1) provides that once designated, ETCs “shall be eligible to receive universal service support in accordance with section 254 and shall, throughout the service area for which the designation is received . . . offer the services that are supported by Federal universal service support mechanisms under section 254(c).” Although we require providers to offer broadband service as a condition of universal service support, under the legal framework we adopt today, the “services” referred to in section 254(e)(1) means voice service, either landline or mobile. (Emphasis added).

That sounds like POTS and not Internet. In addition, there is no reference in the proposed order to Title II Section 214(e)(3) of the Communications Act of 1996 that empowers the FCC to "determine which common carrier or carriers are best able to provide such service to the requesting unserved community or portion thereof and shall order such carrier or carriers to provide such service for that unserved community or portion thereof." So it appears that telcos could continue to not serve some areas even while accepting CAF subsidies to serve others -- thereby perpetuating the existing problem of broadband black holes.
It’s also unclear from the proposed order how unserved areas in states where the incumbent telco has relinquished its carrier of last resort status would be able to benefit since these carriers would appear to be ineligible for CAF subsidies. Or whether telcos, even if eligible for CAF subsidies, would accept them. In California, for example, telcos have generally shunned generous subsidies available through the California Public Utilities Commission to offset the cost of constructing infrastructure to provide Internet connections to premises in unserved and underserved areas of the state.
Finally and perhaps most importantly, given that many people have and continue to “cut the cord” to landline voice service, will there be enough money to be had from phone bill surcharges that have historically funded the USF to sustain the CAF?

Monday, November 14, 2011

AT&T and Verizon’s Deteriorating Legacy Landline Networks

Phillip Dampier has posted an excellent piece summing up the current dreary state of commercial premises telecommunications service in the United States. Dampier depicts telcos as caught between the old world of central office switched plain old telephone service (POTS) and its aging and increasingly obsolete copper cable and today's world where fiber optic infrastructure delivers voice, video and data over the Internet.

Telcos can't afford to make the change over from the old world to the new. So they're trying to limit their losses by keeping their old copper POTS cable plants functioning with bubble gum, bailing wire and trash bags while boosting their bottom lines with smartphone services delivered over more lucrative mobile wireless networks that don't have the carrying capacity to substitute for fiber to the premises infrastructure.

Dampier's post makes a powerful case for community owned fiber networks. There's simply not enough money in the fiber to the premise architecture to support an investor ownership model even for large corporations and their favorable economies of scale. Without community fiber networks, much of the U.S. will remain disconnected from the Internet for the foreseeable.

Wednesday, November 02, 2011

Cable emerges as dominant commercial ISP

As the Internet becomes the all purpose global telecommunications medium delivering voice, video, the web and email, cable companies have emerged as the dominant Internet Service Provider (ISP).

As Susan P. Crawford explains in this Harvard Law & Policy Review article The Communications Crisis in America, compared to incumbent telcos and wireless and satellite ISPs, only cable offers sufficiently robust bandwidth and headroom going forward. Telcos can't keep up since they would incur unabsorbable costs to replace their obsolete copper cable plants with fiber -- costs that would also make their generous stock dividends obsolete.

That's not likely to change despite the Federal Communications Commission's recent reforming of the Universal Service Fund (USF) from subsidizing plain old telephone service (POTS) in high cost areas to Internet. The Connect America Fund (CAF) requires telcos merely provide first generation DSL-level connectivity of 4Mbs for downloads and 1Mbs up and allocates only $4.5 billion a year -- hardly enough to meaningfully offset the cost of changing out decades-old copper plant for fiber.

In the wireless realm, the physics of radio spectrum hamstring wireless ISPs while satellite Internet -- on the verge of obsolescence from the day it was introduced -- has clearly reached its expiration date.

With cable now the dominant commercial Internet provider for most Americans, Crawford argues for increased government scrutiny of its monopoly market power. Crawford's position may draw support from community networks that have gone up against cable companies that pull out all the political stops to preserve their monopolies. The cable guys don't always win as Longmont, Colorado showed this week and as reported by Christopher Mitchell of Community Broadband Networks. Community networks also have a technological carrying capacity edge over the hybrid coax/fiber cable plant employed by cable companies since they typically deploy full fiber to the premises networks.

Show me the infrastructure: Missouri lags on Internet access

Missouri’s digital divide is growing, a trend that threatens to leave farmers and agribusiness ventures at a disadvantage unless federal policymakers make concerted efforts to improve technology infrastructure in rural communities and small towns, according to a new study by the Community Policy Analysis Center (CPAC), located in the Truman School of Public Affairs at the University of Missouri. The study shows that Missouri is significantly behind national averages for overall statewide broadband Internet access.

Tom Johnson, the director of CPAC and co-author of the study, analyzed data from multiple sources, including the U.S. Department of Agriculture (USDA) and the Missouri Broadband Business Survey by the state’s MoBroadbandNow initiative, and found that Missouri is lagging behind other states on broadband access, a gap that may have serious implications for the future development of the state’s $12.4 billion agriculture industry.

Click here for the rest of this news release from the University of Missouri.

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