Saturday, September 29, 2012

Google's Kansas City fiber build doesn't change underlying infrastructure economics

This Kansas City Star article discusses the implications of Google's rollout of fiber to the premise (FTTP) infrastructure in Kansas City.

The newspaper interviewed Josh Olson, a technology industry analyst for Edward Jones & Co.  Olson sees the Google fiber deployment as a template to boost user demand for higher bandwidth and speeds.  If new applications that can run on this gigabit speed capable infrastructure emerge, it would increase pressure for incumbent cable and telephone companies in other markets to upgrade their networks. However, Olson goes on to dismiss that notion, noting incumbent telcos and cablecos can make money off their existing services.  Of course they can when these are the only wireline services available to most U.S. homes and small businesses unless their communities build their own fiber networks operated by local governments or consumer cooperatives.

And as industry analyst Dave Burstein points out, Google's fiber deployment in a single U.S. city cannot change the underlying economics for incumbent providers that must earn a rapid return on investment to keep their shareholders happy -- a business model that directly conflicts with the long term ROI associated with high cost infrastructure projects.  Plus telecommunications company shareholders are accustomed to receiving high dividends -- money that can't be directed toward CAPex.

“The problem is it costs a lot of money to climb all those poles and dig all those trenches to make it happen,” Burstein told the Star. “You don’t make money in three years, but you make money in 10 years."

Read more here:

Verizon Won’t Expand FiOS Beyond Current Franchise Obligations, CFO Tells Investors | Stop the Cap!

Verizon Won’t Expand FiOS Beyond Current Franchise Obligations, CFO Tells Investors | Stop the Cap!

This development makes it eminently clear that for those communities in Verizon's wireline service area that don't now have its FiOS fiber to the premises service, they will have to build their own community owned infrastructure.  Verizon is getting a better ROI on wireless, but wireless can't provide the bandwidth and headroom homes and businesses require.

Saturday, September 22, 2012

AT&T may invest in rural lines rather than divest, CEO says

AT&T may invest in rural lines rather than divest, CEO says: AT&T has said it would consider selling its rural access line unit, but Mr. Stephenson hinted earlier this year that such a sale could prove complex. The difficulty comes from the lines spanning multiple states and therefore needing several regulatory approvals that would likely take significant time.

On Wednesday, he said finding an internal solution for the business would avoid having to go through that process.
There is also a simple business fact at play.  Who wants to buy obsolete copper cable plant?

He also noted that AT&T's wireless service could ultimately prove to be a solution for fixed-line broadband connections in less-dense markets as its next-generation LTE network rolls out.

"LTE can become a fixed-line replacement or even better than what you get from fixed line," he said.
If Mr. Stephenson is talking about first generation ADSL, he would be right.  But wireless cannot equal or exceed wireline fiber to the premise.

Sunday, September 16, 2012

Public utility district Internet as alternative to Google fiber

Most rural communities lag in the type of broadband Internet service available in urban areas. But northeast of Spokane, in Newport and the surrounding hills and valleys, around 5,000 homes and businesses have the chance to connect soon to a fiber-optic system with lightning-fast speed.

The network being built by the Pend Oreille Public Utility District will allow users to download and upload data all the way up to 1,000 megabits, or 1 gigabit, per second - far faster than the 10 to 20 megabits that is a popular consumer choice today.

It will rival the Google Fiber system rolling out in the Kansas City area and is fast enough to download a movie in seconds, conduct video conferencing at home, and watch multiple high-definition TV programs simultaneously online.

“We believe it’s kind of the footprint for the future of rural communities,” said Joe Onley, manager of the Community Network System for the Pend Oreille PUD

I expect PUDs like this one and consumer cooperatives will take the lead in building out fiber. The key reason is the time to return on investment is too long for private sector players, whether they be AT&T, Verizon, or Google.  And that applies in all areas -- not just rural locations.

Tuesday, September 04, 2012

The great paradox of Silicon Valley traffic

This item from Silicon Valley's Mercury News reporting on increased traffic congestion as a propitious sign the economy is picking up speed is thick with irony. An excerpt:

Santa Clara County's busiest bottleneck -- where Highway 101 splits Interstates 280 and 680 -- featured more vehicles in 2011 than ever during an average day, according to Caltrans data. The most heavily traveled stretch on the Peninsula, Highway 101 in San Mateo, set a record last year for rush hour vehicle counts after an extra traffic lane was added to meet the demand.
The irony?  Over the past three decades, Silicon Valley companies revolutionized information technology that makes it possible to work and conduct most business remotely from most anywhere and at any time without the need to commute to a central office during set time schedules, feeding the burgeoning "rush hour" traffic.  Yet thousands of people are working as if none of it ever happened and it's still 1975. 

Authors William A. Draves and Julie Coats provide an explanation in their 2004 book Nine Shift.  Silicon Valley invented what they term the Internet Age.  But that invention was produced by Industrial Age companies.  They predict suburbs and commuting -- vestiges of the Industrial Age -- will go into decline during the first two decades of the 21st century, mirroring a two-decade-long shift from a primarily agrarian society to an industrial one during the first 20 years of the 20th century.

Sunday, September 02, 2012

My Turn: A critical look at the state's broadband policy | Burlington Free Press |

My Turn: A critical look at the state's broadband policy | Burlington Free Press | What is happening now and why is that a problem? Much federal money has been coming into the state in support of broadband and the state has allocated some of its own. Some of the federal money is going into fiber optic networks to be built by Waitsfield/Champlain Valley and by VTel in its home territory.

But most of the money supports two technologies: DSL and fixed wireless. The problem with this is that neither of these technologies can deliver the broadband service that will soon be required.

Vermonter Henry Swayze couldn't be more correct in his criticism that federal telecom subsidies should not be directed toward stopgap technologies that can't offer adequate reach, throughput and future network demand capacity.  It's an inefficient, wasteful use of public money.  It would be like subsidizing a high speed transcontinental railroad system that's a patchwork of metro streetcar systems that end at the edge of towns, forcing people to walk to the next town to continue their journey. 

Silicon Valley professionals head to the Sierra Nevada foothills

The Sacramento Bee reports Silicon Valley transplants are moving to Loomis in Placer County for a better real state values and an enhanced quality of life outside the bustle of the Bay Area.  A key driver of the shift: staying connected to Silicon Valley by working remotely from home.  

But that raises questions not addressed in the Bee article.  First, is the telecommunications infrastructure sufficient in some of these semi-rural areas to support remote work?  Many Sierra Nevada foothill locales are still on dialup Internet connections or have spotty, slow legacy DSL service.  Second, how does this trend jibe with the predominant Silicon Valley work culture based on collegial beehiving in open office architecture at massive corporate "campuses?"  Or does this workshifting 150 miles away from Silicon Valley campuses represent a counter trend?
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