Sunday, March 30, 2014

Colorado measure would bar Internet infrastructure subsidies to small towns served by satellite ISPs

Broadband act could expand service in Chaffee County - Free Content: As introduced, the bill’s language would define unserved areas as: areas outside a municipality or a city with less than 5,000 people in which a majority of households do not have access to at least one satellite and one non-satellite broadband provider.
Summed up in two words: Useless and laughable. It basically tells Coloradans with no other premise Internet options to go suck a satellite and be happy with the crappy customer experience, bandwidth "fair access" caps and poor value. A bill only the incumbent preservatives could love. Indeed, they probably drafted it.

Event highlights scarcity of high-speed Internet in rural areas | The News Leader |

Event highlights scarcity of high-speed Internet in rural areas | The News Leader | During a break, Korte explained how he, his wife, and their business, The Balance Group, switched to 4G cellular broadband service. However the data limits cellphone providers set make business more expensive, Korte said.

They’ve had to stick with it, though, and absorb the cost from exceeding data caps.

“I go to the (cellphone provider) and say, ‘Well, we need 300 gigabytes a month. That would probably do it.’” Korte said. “They laugh at it, and tell me to go to the cable company.”
Like many residents in Augusta County and those served by the two-dozen other rural, local government officials gathered for the workshop, cable service doesn’t extend to his home.

This pretty well sums up the sorry state of Internet infrastructure in much of the United States and trying to get by on mobile wireless.

Tuesday, March 25, 2014

The case for overbuilding incumbent telcos and cablecos

Twentieth century, metal wire-based legacy incumbent telephone and cable companies naturally don’t like it when progress inevitably emerges in the form of 21st century fiber optic to the premise (FTTP) telecommunications infrastructure offering the proverbial better (and faster) mousetrap as well as protection against technological obsolescence. Particularly if they have opted not to construct it and someone else is planning to do so. Especially if the new fiber infrastructure benefits from government subsidies. No fair, incumbents protest. That’s government subsidized competition that picks winners and losers and we’ll lose.

That argument cuts both ways, asserts Christopher Mitchell of the Minnesota-based Institute for Local Self Reliance (ILSR), one of my favorite incumbent spin busters. Incumbents have benefitted from favorable governmental policies that have been in place for decades including the availability of high cost subsidies and public policy that permitted them to maintain a monopoly. Not allowing government subsidization of FTTP infrastructure built by non-incumbents in the footprints of the incumbents, Mitchell suggests, is a double standard.

Given that telecommunications infrastructure must be broadly dispersed in order to be economically viable and adhere to Metcalfe’s Law, Mitchell accurately notes FTTP infrastructure builders must be able overbuild outmoded incumbent infrastructure when they opt not to upgrade to FTTP -- and receive government subsidies for doing so if available. That’s eminently fair and good old American progress – the same progress that brought electricity to large swaths of the nation in the 1930s when market forces alone could not do so.

As for the incumbent argument they will come out losers, Mitchell observes incumbents have made losers out of nearly 20 million Americans who according to a 2012 Federal Communications Commission estimate live in neighborhoods incumbents redlined and declined any wireline premises Internet connectivity, leaving them to dialup and satellite.

Click here to hear Mitchell and ILSR colleague Lisa Gonzalez elaborate in a 13-minute podcast.

Saturday, March 22, 2014

U.S. at inflection point on premises Internet infrastructure

The United States is at an inflection point relative to premise Internet infrastructure serving homes and small businesses. The “walled garden” business model of legacy incumbent cable and telephone companies has reached the limits of its reach. Connecting the remaining 20 to 30 percent of premises outside the wall isn’t economically practical as testimony at a U.S. House Small Business Subcommittee hearing this week in upstate New York illustrates.

Mark Meyerhofer, a government relations administrator for Time Warner Cable, said while there has been a change in the national mindset that favors a greater focus on unserved areas, nevertheless “It remains extremely challenging to extend broadband to most rural areas of New York State, where geographic isolation and topographic issues make it economically infeasible for companies to reach these areas,” Meyerhofer explained. “Investments simply cannot be recouped before it is time to reinvest.” Although Meyerhofer was specifically referring to only one part of the country, his testimony applies elsewhere across the nation including many suburban and exurban areas where service gaps exist. That economic reality of the walled garden Internet also applies to Google Fiber, which plans to expand into several metropolitan areas.

The other challenge faced by the legacy incumbent providers (but not Google Fiber) is the ever growing demand for more Internet bandwidth. It’s similar to the problem facing manufacturers of silicon-based microchips that eventually will reach a physical barrier where no additional circuitry can be crammed onto the chip. That will require the incumbent providers to change out their metal wire-based premise service infrastructure with fiber optic connections to accommodate the additional bandwidth demand and stave off technological obsolescence. But barring a revolutionary breakthrough that significantly reduces the cost of constructing fiber to the premise infrastructure, their shareholders aren’t likely to approve of such large capital expenditures that could cut into dividends as shown by Verizon’s 2012 pullback of its FiOS fiber to the premise product offering.

Given the growing consensus that the so-called “last mile” premise Internet infrastructure challenge can’t be met within a commercial framework, it strongly suggests other business models including a nonprofit cooperative or public works approach similar to that used for roads and highways will be necessary in many areas of the U.S.

Thursday, March 20, 2014

Good wireline Internet connectivity becoming a job requirement

One clear indication of the role good Internet connectivity plays in the economy is starting to show up in job postings. This telecommute position with Aetna, for example, states the following job requirements:

Minimum internet requirements for a telecommuting position include:
· A separate wired Internet connection
· Minimum download speed of 6MB
· Minimum upload speed of 1MB
· Satellite and other wireless Internet are NOT supported

Monday, March 17, 2014

Sprint Chairman Masayoshi Son: A New Visionary In Our Midst?

IVP Capital TMT Advisory - SpectralShifts Weekly

I'm skeptical of Son's assertion that wireless is the solution to the U.S. premises fiber Internet infrastructure deficit. What's surprising is the incumbent telcos have been trying to sell this canard to divert attention away from their own wireline premise shortfalls. That's hardly disruptive or visionary.

What would impress me is breakout, actionable thinking that offers a functional alternative business model that would enable rapid build out of universal fiber to the premise.

Telecom Giants Drag Their Feet on Broadband for the Whole Country - Newsweek

Telecom Giants Drag Their Feet on Broadband for the Whole Country - Newsweek

Of course they drag their feet; it's their fiduciary duty to shareholders to do so. This story spotlights the inherent conflict in relying on the private sector alone to construct telecommunications infrastructure needed by a much larger constituency: the American public.

Despite their claims of having invested billions in telecom infrastructure, investor-owned telcos simply don't have enough cash to finance the transition of their networks from the old, copper POTS (Plain Old Telephone Service) cables to modern, fiber optic-based networks. Given that circumstance, they are leaving the old networks in place throughout most of their service territories. But since these networks are decades old and require a lot of costly maintenance, telcos are asking regulators to relieve them of the duty to maintain them to ensure every premise can get telephone service, sparking consumer push back.

Wednesday, March 12, 2014

Tuesday, March 11, 2014

Iowa governor sets goal of universal premise Internet service

Iowa Poll: Aid for broadband gets Iowans' OK | The Des Moines Register | While adoption and satisfaction are relatively high, Gov. Terry Branstad’s Internet expansion initiative aims for 100 percent.

“The governor’s bill is titled the ‘Connect Every Iowan’ bill, not ‘Connect Some Iowans’ or ‘Connect a majority of Iowans,’ ” said Adam Gregg, the governor’s lobbyist. “... We want to encourage ubiquitous access all throughout the state.”
This should be a goal for every state. But setting a goal without a realistic plan to reach it will only produce disappointment. Branstad's plan for getting there is based on providing tax incentives to spur the construction of necessary infrastructure. Problem is tax incentives alone cannot overcome market failure -- when there is insufficient economic incentive to invest in infrastructure reaching every home and business. To reach that goal, Iowa and other similarly situated states would have to form and fund state Internet infrastructure authorities to subsidize municipal networks and telecommunications consumer cooperatives.

Since states adjacent to Iowa tend to also suffer from market failure that leaves many of their residents off the Internet grid, Bradstad might also consider negotiating a compact with these states as he is currently doing for the health insurance exchange marketplace to form a regional Internet infrastructure authority. The very fact the Bradstad is acting on this issue in Iowa points up the deficiencies in U.S. federal government policy that leaves many Americans in Iowa and other states with less than universal premise Internet access.

Friday, March 07, 2014

Broadband Spring emerges in Tennessee

Tennessee Legies Go Into Pro-Public Broadband Frenzy | Building the Gigabit City

Craig Settles reports on what appears to be the start of what I'm calling "Broadband Spring," powered by a decade of frustration and pent up demand to modernize telecommunications infrastructure to fiber to the premise architecture -- along with the realization that legacy incumbent telephone and cable companies are part of the problem and not part of the solution to getting that infrastructure in place.

This development could represent a tipping point where the public interest of modernizing the U.S. telecommunications infrastructure to fiber to the premise is outweighing the private interest of the legacy providers. It would be a welcome thaw after a 10-year-long winter of recession and failed public policy that has stood in the way of moving forward with this critical infrastructure.

Thursday, March 06, 2014

Resolution Seeks High-Speed Internet For All Putney Residents | Vermont Public Radio

Resolution Seeks High-Speed Internet For All Putney Residents | Vermont Public Radio: “The governor made us a promise at town meeting here last year that he would get everything wired 100 percent, no ifs, ands or buts,” Field says. “I’ve got the quote.”

Instead, area lawmakers got an earful from residents who say they’re tired of hearing that Putney already has Internet service.

"Close to 300 of us in Putney only have dial-up," says Field. "In my case I pay $80 a month to Can’t Skype, can’t stream anything. My wife’s a pediatrician in town. She can’t do her electronic medical records."

Nancy Braus says people on her road are getting Internet from Comcast or Fairpoint. But not her house. Braus has a daughter who’s deaf.
A couple of observations on this story:
  • It's an example of the blow back politicians face after years of promises to address deficiencies in premises wireline Internet service with little or no tangible results.
  • Ms. Braus's comment illustrates the highly granular nature of broadband redlining that renders government subsidy programs based on mapping and funding only "unserved" and "underserved" areas impractical. One address is offered service by incumbent wireline providers while another nearby premise is not.

Wednesday, March 05, 2014

U.S. Internet policy fails expectation of universal premise service

For nearly every American who has been alive since the end of World War II, the availability of telephone service at a home or business premise is taken for granted. Need a phone line or several lines? Contact the phone company, order them and they’ll get hooked up.

With wireline premises Internet service, it’s been a very different story. According to the U.S. Federal Communications Commission as of 2012, 19 million Americans couldn’t order an Internet connection because none was available for sale. Some of those Americans live in California’s Gold Country, located in the western foothills of the Sierra Nevada. And they can’t understand why if people in Sacramento -- or in many cases just down the road -- can get wireline Internet service, why can’t they? Plus they hear messages like this one that only five percent or fewer premises are unserved and have a hard time believing their home or business is one of them, particularly when nearby premises do have service.

It’s therefore unsurprising that “[m]any residents without access feel a sense of entitlement to broadband (Internet) service,” according to the Gold Country Broadband Consortium’s annual progress report. The consortium is among 14 regional consortia formed by the California Public Utilities Commission in 2011 to promote local Internet access and adoption of Internet-delivered services.

Unfortunately, neither California as the largest state nor the nation as a whole has a public policy to meet the expectation that Internet service in 2014 should be as ubiquitous as telephone service. Nor as the case with telephone service is there a workable subsidy program to ensure high cost areas are served.

Tuesday, March 04, 2014

California screamin: Internet policy quagmire fosters failure

Plan for rural broadband collapses | The Press Democrat
This story illustrates the real world consequences of what happens when legacy incumbent wireline Internet providers control government subsidy programs designed to help cover the cost of deploying Internet infrastructure. They refuse to accept the subsidies themselves for high cost areas and lobby to influence the eligibility rules so that others can't easily qualify for funding.

These comments in the story from Cathy Emerson, manager of two consortia involved in expanding Internet access and Mitch Drake, head of the company that applied for subsidy funding from the California Public Utilities Commission, sum up the sorry situation:
“We're looking at a significant Catch-22,” Emerson said. “The federal
and the state programs are trying very hard to make use of legislative
moneys that have been collected, intended to be used for broadband
deployment. And yet the very language of the legislation has been so
effectively edited to the favor of the incumbents that it's extremely
difficult to try to offer services to these rural-most pockets.”

“I call this the great stalemate,” said Drake. “There's a huge need in
Northern California, and we've got a program that was designed to take
care of the need, and we've got incumbent carriers who made this
financial decision, for one reason or another, not to serve these rural
communities. But at the same time they are the biggest opponents,
preventing anyone from doing anything about it.”
It's going to get even harder for non-incumbent providers and local governments to qualify for the CPUC's California Advanced Services Fund network construction subsidy dollars in this year's funding round under revised rules recently adopted by the CPUC. Steve Blum has the depressing details in this blog post.

Sunday, March 02, 2014

Slow broadband wipes 20% off house prices - Telegraph

Slow broadband wipes 20% off house prices - Telegraph: Slow broadband speeds can wipe as much as 20 per cent off the value of properties and lack of superfast connectivity in an area can be a dealbreaker in house sales, property experts have said.

With growing numbers of people going online to perform tasks ranging from working to grocery shopping and streaming entertainment, good broadband has become critical.

Property search website Rightmove has now added a broadband speed checker to every one of its listings alongside factors such as quality of local schools and transport links.
It's only a matter of time before we'll see this spread to the United States where plenty of residential properties nominally in the service areas of incumbent telephone and cable companies nevertheless lack Internet connections.
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