Thursday, March 31, 2016

Affordability only part of the solution to #homeworkgap; lifeline goes hand in hand with universal service

Boost the homework connection - Times Union: But more can be done. For starters, on Thursday, the FCC is expected to vote on a proposal to modernize a program called Lifeline. Lifeline began more than three decades ago, when President Ronald Reagan was in the White House and rotary phones were still in style. Then and now, this program provides a discount for basic phone service. But broadband is the essential technology of our time. So it's time for the FCC to take steps to make this program broadband-capable and use it to help close the homework gap.

It should be recalled that when lifeline was implemented in 1985, the United States had achieved universal or near universal access for telephone service. Unlike today when according to the FCC's figures released earlier this year, 34 million Americans are unable to obtain telecommunications service capable of delivering high-quality voice, data, graphics and video.

Universal service is an essential component and not separate and distinct from lifeline subsidies for low income households. Another difference from 1985 is telephone service rates were tightly regulated in order to keep them affordable, unlike Internet service today. Notwithstanding the fact the FCC classified Internet service as a common carrier telecommunications utility in 2015 with its Open Internet rulemaking. Prices will naturally tend to be unaffordable for low income households in a price unregulated natural monopoly market.

Tuesday, March 29, 2016

Why the privatized, vertically integrated business model of telecom produces market failure and disparate access

Australian telecom strategist Malcolm Moore posted in a LinkedIn discussion forum one of the best and most succinct explanations I've read of why market failure and disparate access results from regarding telecommunications infrastructure as privately held, vertically integrated and highly localized service. According to Moore, this is a "diametrically incorrect business model for infrastructure (that) focuses on every wrong economic aspect." Moore adds its widespread adoption explains why fiber to the premise technology "was developed about 20 years ago but never rolled out."

Moore elaborates on the economics and makes a case for policymakers to regard telecommunications as essential public infrastructure and to stop thinking of it as a private "broadband" service offering:
The primary focus of (privately held telecom infrastructure) is very short term maximised ROI (minimised service delivery, maximised end user cost) - perfect for retail reselling / product bundling.

For Infrastructure Business: e.g. Telecomms / FTTP / Mobiles, Electricity Power Stations / Distribution, Transport / Roads / Rail / Ports, etc., the primary focus is long-term, minimum cost, maximised service delivery.

Monday, March 28, 2016

Why states fall short, kick the can on telecom infrastructure modernization

Minnesota to Expand Its Broadband Grant Program: Broadband Internet access has been one of the main policy discussions in Minnesota for the past few years. Governor Dayton’s Broadband Task Force has recommended the state use public dollars to jumpstart broadband infrastructure investment. For FY2016-2017, Governor Dayton and Lt. Governor Smith propose a $100 million in their supplemental budget for this issue, while the Minnesota House’s bill proposes $35 million.

Back in 2010, Minnesota set its broadband development goal: that every resident and business have access to high-speed broadband with minimum download speeds of ten to 20 megabits per second and minimum upload speeds of five to ten megabits per second by 2015 at the latest. As we recently reported, the state failed to achieve its goal, but recently updated its goal to match the FCC’s latest definition of broadband Internet with minimum download speed of 25 megabits per second and minimum upload speed of three megabits per second.

This item points up the futility of state "broadband" initiatives. Instead of setting an infrastructure-based goal of universal service, they use throughput speeds as a benchmark. In doing so, they fall into the speed trap set by the incumbents who've framed the issue of modern telecommunications service as being all about "broadband speeds." That promotes a "how many angels can dance on the head of a pin" and "what's fast enough?" debate that by cynical design shifts the focus away from infrastructure. Then when the "broadband speed" goal isn't met, states kick the can and set a new "broadband speed" goal.

Why do states end up kicking the can? Because they are endeavoring to build the 21st century's information highways that cost billions with mere millions -- and without the federal funding that was available for the blacktops and interstates of the 20th century. “This is not a million-dollar problem," Fletcher Kittredge, CEO of Maine's Great Works Internet astutely observed in 2015. "It is far larger.”

Local government Internet infrastructure efforts spurred by FCC's non-enforcement of Title II, encourgement of "competition"

EPB Lays Out Plans To Provide All Of Bradley County With High-Speed Internet, TV Service; Cost Is Up To $60 Million - State Rep. Dan Howell, the former executive assistant to the county mayor of Bradley County, was in attendance and called broadband a “necessity” as he offered his full support to helping EPB, as did Tennessee State Senator Todd Gardenhire. “We can finally get something done,” Senator Gardenhire said. “The major carriers, Charter, Comcast and AT&T, have an exclusive right to the area and they haven’t done anything about it.”

The "exclusive right" mentioned here isn't generally a government-granted or regulated license or franchise to offer Internet service. It's actually a de facto duopoly market of legacy telephone and cable companies. Title II of the federal Communications Act recognizes that telecommunications infrastructure due to its high cost of construction and operation tends to function as a natural monopoly. In accordance with this, the Federal Communications Commission classified Internet as a telecommunications utility under Title II by adopting its Open Internet rules in 2015. But the FCC is currently not enforcing the universal service and anti-redlining provisions of Title II.

It's therefore unsurprising that barring such enforcement, local governments will attempt to fill in the gaps in unserved or poorly served areas in response to their citizens' complaints. When those living and operating businesses in landline unserved areas attempt to order Internet service, without FCC enforcement of Title II the incumbent telephone and cable companies can summarily turn them down without consequence. That leaves them little recourse other than to demand their local elected officials do something to help. The FCC's non-enforcement of these Title II provisions correlates with its current policy position advocating local government "competition" with incumbent telcos and cablecos -- in conflict with its Open Internet rules predicated on a monopolistic and non-competitive market.

Tuesday, March 22, 2016

Another year, another U.S. "broadband" conference & same conclusion: Great need for fiber infrastructure -- but no funding

Mayor Murray: Municipal broadband too costly; public-private deal is way to go | The Seattle Times: The best way to expand Internet access in Seattle is through public-private partnerships, (Seattle) Mayor Ed Murray said at a regional broadband conference Monday. The mayor reiterated the position he formed after a city-commissioned study released last summer showed it would cost between $480 million and $665 million to build out a municipal-broadband network across the city. That price tag is less than previously estimated, but the mayor said it was still too much to be feasible.
“When I came into office, I was very excited about the possibility of municipal broadband until the study came back and indicated it would be literally the largest tax increase in Seattle,” Murray said Monday at the conference, co-hosted by the nonprofit Next Century Cities and the National Telecommunications and Information Administration, an agency of the U.S. Department of Commerce.

Image result for seinfeld

And so it goes across the United States as it has at these "broadband" confabs for the past decade like a never ending season of Seinfeld reruns. Municipalities can't ante up their own dollars to build telecommunications infrastructure, particularly with so many other needs such as transportation infrastructure, public buildings and skyrocketing employee pension obligations all competing for big bucks. Don't look to the states either. They're dealing with similar financial challenges on a larger scale in the slow economic recovery in the years since the 2008 recession. Billions of dollars are needed to fund America's long overdue replacement of its legacy metallic telecom infrastructure with fiber -- now a generation late. Only the federal government can step up with that level of funding. But don't expect much from the current federal government as the Seattle Times story reports:

The federal government did finance about 230 broadband projects nationwide through the 2009 American Recovery and Reinvestment Act. Those funds are now spent, but municipalities can apply for smaller grants through other federal agencies, said Lawrence E. Strickling,assistant secretary of commerce for communications and information.
Strickling said Monday the federal government helps municipalities by providing guides to funding and other technical expertise.

Friday, March 18, 2016

Vermont lawmaker: "No adequate ongoing resource" to fund telecom infrastructure

Deerfield Valley News - VTel House at odds over Internet access info: Guite also said that some Vermonters may have been misled into believing covering every person in the state was possible. “That could require a billion dollars,” he said. He also said that he has been making this comment publicly for at least five years. “I made that statement at a meeting that Bernie Sanders organized in 2010.” H. 870 also calls for an increase of 0.5% in the universal service charge. Sibilia said that this was to help create a vitally needed program. “There is no adequate ongoing resource for expanding Internet or cell,” she said. Her hope, she said was this increase would help create that resource. She also said it would be an inadequate amount.
Image result for everett dirksen
Bernie Sanders should paraphrase the late Illinois Senator Everett Dirksen: "A billion here, a billion there, and pretty soon you're talking about real access."

Thursday, March 17, 2016

San Francisco eyes municipal telecom infrastructure project to bring fiber to every doorstep

San Francisco Municipal Broadband Targets $26 Monthly Base Price - Telecompetitor: City officials have recommended construction of a San Francisco municipal broadband network based on a public-private partnership. The recommendations came in a 103-page report issued by the office of Supervisor Mark Farrell on March 15.
According to the San Francisco Municipal Fiber Advisory Panel’s report – Financial Analysis of Options for a Municipal Fiber Optic Network for Citywide Internet Access – a publicly funded broadband utility network would cost the city an estimated $867.3 million in construction costs plus $231.7 million a year in maintenance costs. Projected subscriber revenue would result in an annual deficit of $145 million. Given this, as well as the desire to build in some market competition, the authors recommended the city launch a public-private partnership model that calls for all San Francisco homes and businesses to pay an average $26 per month utility fee for baseline Internet access. Introducing tiered pricing models based on type of service or bandwidth use could offset operating costs and lower baseline fees.
The Utah Telecommunication Open Infrastructure Agency (UTOPIA) had planned to expand its services using a similar financing mechanism with a private finance partner, Macquarie Capital Group. It pulled the plug on the partnership last month amid resistance to the utility fee. However, the model could fare better in the city by the bay due to multiple factors including its relative affluence, more liberal political leanings and its well established place in the information technology industry. Unlike UTOPIA, a regional network involving several municipalities, San Francisco is also a much more compact service area of just 14 square miles with pre-existing municipal infrastructure that would facilitate construction. That likely made it easier for San Francisco to reject the model used by legacy telephone and cable companies and Google Fiber that builds infrastructure serving some but not all neighborhoods.

Wednesday, March 16, 2016

Why the “more competition” argument for better Internet service is misguided

Hardly a day goes by without calls for “more competition” as the elixir to make modern Internet-based telecommunications services more widely available and offering better value than those offered by the legacy incumbent telephone and cable companies. U.S. Federal Communications Commission Chairman Tom Wheeler has curiously joined the chorus calling for more competition -- even though his agency and its 2015 Open Internet rules are predicated on regulating Internet service as a natural monopoly common carrier utility.

The problem is telecom infrastructure by nature isn’t a competitive market defined as having many sellers and buyers. There are many buyers but there cannot be many sellers because it’s too costly and economically inefficient to have multiple providers building and owning infrastructure connecting homes and businesses. More competition isn’t a solution here. 

In the states, the legacy incumbents reinforce the notion of competition by blocking projects that would threaten their service territory monopolies. From their perspective, these projects represent competition because they would potentially steal away customers. Therefore, proponents reason, competition must be a good thing if the incumbents oppose it. This however illustrates the faulty reasoning of the “more competition” argument. 

The problem is the pro-competition proponents are buying into the incumbents’ concept of competition -- and not a consumer perspective. For the incumbents, any project that would build infrastructure in their service territories is competition. However, for consumers, having a choice among many sellers is competition. That’s not possible with telecommunications infrastructure. But it is possible if the infrastructure is publicly owned like roads and highways. That would open up Internet service to competition since multiple Internet service providers could offer their services over that infrastructure.

Time to punch the reset button on U.S. telecom infrastructure

AT&T, Comcast Kill Local Gigabit Expansion Plans in Tennessee | DSLReports, ISP Information: For some time now municipal broadband operator EPB Broadband (see our user reviews) has been saying that a state law written by AT&T and Comcast lobbyists have prevented the organization from expanding its gigabit broadband offerings (and ten gigabit broadband offerings) throughout Tennessee. These state laws currently exist in more than twenty states, and prohibit towns from deploying their own broadband -- or often even striking public/private partnerships -- even in cases of obvious market failure. A proposal that would have recently lifted this statewide restriction in Tennessee was recently shot down thanks to AT&T and Comcast lobbying. Even a new compromise proposal (which would have simply let EPB expand slightly in the same county where it is headquartered as well as one adjoining county) was shot down, after 27 broadband industry lobbyists -- most of whom belonging to AT&T and Comcast -- fought in unison to kill the proposal.
It's understandable the legacy telephone and cable companies want to keep out interlopers who might threaten their de facto monopolies for Internet service. The incumbent protectionism on display in Tennessee plays out in multiple states in the form of laws barring public sector involvement in telecom infrastructure projects or as this month in California and Kentucky, efforts to block fiber to the premise (FTTP) projects from gaining access to utility poles. This obstructionism isn't going to go away and requires a major reset in order for it to come to an end.

As I wrote in my recently issued eBook Service Unavailable: America's Telecommunications Infrastructure Crisis, the nation is already two decades behind where it should be relative to replacing its legacy metal wire telecom infrastructure with FTTP. The book proposes the federal government construct universal FTTP as public works. As roads and highway were to the 20th century, it's vital infrastructure for the 20th that's too important to be left in control of the legacy incumbents. It's time to punch the reset button so the United States can move forward to the future.

Monday, March 14, 2016

Vermont regional telecom district accesses institutional bond funding for expansion

ECFiber's growth plans could double service area | Vermont Business Magazine: ECFiber, based in Royalton and now officially known as the East Central Vermont Telecommunications District, announced plans to activate 110 miles of network in 2016 and build an additional 250 miles in 2017. “Working with bond underwriters, we believe ECFiber has reached the point in its financial development that allows us to access institutional capital markets for the first time in 2016,” says Irv Thomae, District Chairman. “Since 2011, we have relied on 450 local investors, some state-provided dark fiber, and VTA and Connectivity Fund grants to build the first 340 miles of network. By the end of 2016 we will be in parts of 21 of our 24 member towns, but many neighborhoods that desperately need ECFiber service cannot afford to raise the $30,000 per mile to complete a build. Outside financing would finally allow us to build to those towns that need us the most, not just those where we can raise capital.”

Regional telecom fiber modernization projects such as the Utah Telecommunication Open Infrastructure Agency and WiredWest in western Massachusetts have hit obstacles obtaining sufficient capitalization to expand. Due to the high cost of infrastructure projects, access to capital finance markets is critical given limited funding available from local governments and property owners.

According to this story by Vermont Business Magazine, the East Central Vermont Telecommunications District is accessing the institutional bond market for the first time for needed expansion capital, a development that bears watching since it demonstrates the bond markets' receptiveness to working with projects sponsored by utility districts.

Friday, March 11, 2016

Google fights AT&T, Comcast over Bay Area Google Fiber service - San Jose Mercury News

Google fights AT&T, Comcast over Bay Area Google Fiber service - San Jose Mercury News: MOUNTAIN VIEW -- Google's plan to bring ultrahigh-speed Internet service to the Bay Area has run into a decidedly nontech hurdle: utility poles. To roll out Google Fiber in five Silicon Valley cities, the tech giant needs access to the poles for stringing up fiber cable. But in several cities a who's who of Google competitors are standing in the way. The outcome of the pole fight is likely to have a profound effect on which communities get Google Fiber and which don't. "The infrastructure needs to be mostly above ground," said MoffettNathanson Research analyst Craig Moffett. "You can't proceed ... if you don't have pole access." Similar battles have played out in other cities across the nation, slowing Google's multibillion-dollar program while competitors push forward with their own gigabit-speed offerings.

This illustrates the death by thousand cuts delaying strategy of the legacy incumbent telephone and cable companies to protect their service territory monopolies from interlopers offering telecommunications infrastructure far superior to their own. Those legacy dinosaurs have armies of attorneys prepped to spend years if not decades in the courts erecting legal speed bumps to slow the progress of new entrants like Google Fiber.

Some observers believe the U.S. Federal Communications Commission's promulgation of its Open Internet rules in 2015 deeming Internet service providers common carrier utilities would make pole access easier. But so did others when Congress amended the Communications Act in 1996 to allow competitive local exchange carriers (CLECs) the right to use incumbent telephone central offices and cable plant to offer competing telephone and DSL services that was just emerging in the late 1990s. The incumbent telcos took a decidedly uncooperative and litigious stance to hamstring those providers as well.

These incumbent delaying tactics deepen America's telecommunications infrastructure crisis because they push a nation that's already a generation behind where it should be in terms of replacing its legacy metal cable system with fiber to the premise (FTTP) even more behind the curve. The situation calls for aggressive federal intervention in the form of a crash program to modernize and build out this vital telecom infrastructure to serve the nation's needs in the 21st century.

Wednesday, March 09, 2016

Obama administration, FCC use incumbent "broadband adoption" talking point designed to shift attention from nation's telecom infrastructure deficiencies

Obama Seeks Broadband for 20 Million More Low-Income Subscribers - The New York Times: The White House also released a report outlining the economic effects of broadband adoption, focused on how families without broadband at home are at a disadvantage in finding jobs.

Once again, the Obama administration and the U.S. Federal Communications Commission conflate access to advanced telecommunications service with its use. They are two different things. The unfortunate use of the term "broadband adoption" parrots a favorite talking point of the legacy telephone and cable companies to take the focus off the nation's telecommunications infrastructure deficiencies that leave some 34 million Americans without access to landline premise service according to the FCC's most recent estimate released in January. After all, the incumbent argument goes, why should we build Internet telecom infrastructure when people aren't using computers at home and therefore not adopting "broadband?"

The term "broadband" dates back to the late 1990s when people were beginning to migrate from narrowband, dial up Internet service to faster "broadband" connections. The context there was personal computer connections to the Internet. Which is also outdated given that today, Internet connections also provide voice and video services that don't require a personal computer.

As long as policymakers insist upon living in 1999, it will be difficult for America to advance into the 21st century.

Monday, March 07, 2016

DSL faces obsolescence -- with no successor in place

Two Tales of DSL | POTs and PANs: But the problem for all DSL providers is that within a few years the demand for broadband speed is going to exceed their capabilities. The statistic that I always like to quote is that household demand for broadband speeds doubles about every three years. This has happened since the earliest days of dial-up. One doesn’t have to chart out too many years in the future when the speeds that can be delivered on DSL are not going to satisfy anybody.
Telecom consultant Doug Dawson lays out the disconcerting reality that is a major manifestation of America's telecommunications infrastructure crisis. Digital subscriber line (DSL) technology was put in place as a temporary method of enabling Internet protocol service over twisted pair copper cable that delivered voice service pre-Internet. The problem is there is no succession plan to replace the copper with modern fiber to the premise (FTTP) technology as I discuss in my recent eBook Service Unavailable: America's Telecommunications Infrastructure Crisis.

Thursday, March 03, 2016

Susan Crawford's Rx for ailing U.S. telecom infrastructure

Susan Crawford has added another component to her prescription to cure America's ailing telecom infrastructure, modernizing it with fiber optic technology to replace the increasingly obsolete metallic cables the legacy telephone and cable monopolies use to connect homes and businesses.

In January, she proposed the financial element: harnessing private investment capital via a regionally administered federal telecom infrastructure development and finance agency, funded by federally subsidized bond proceeds. (See related blog post)

Google Fiber's recent move to use existing fiber infrastructure owned by local governments in those select areas it will offer services spurred Crawford to elaborate on the infrastructure component of her solution. Her proposed federal telecom infrastructure development and finance agency would help local governments build open access fiber networks and sell access to retail providers on a wholesale basis.

Crawford sees Google Fiber's willingness to sell retail services over municipal infrastructure it does not own as a game changing move because the business model of local government-owned open access networks like Utah's Utah Telecommunication Open Infrastructure Agency (UTOPIA) have historically not meshed with the vertically integrated, monopolistic business models of the legacy telephone and cable companies that shun open access infrastructure. That model is based on owning the customer and selling monthly subscriptions to one premise at a time. That makes it highly risk averse since these legacy providers target their infrastructure only where they can get the most subscriptions and redline other neighborhoods that aren't as promising, creating widespread market failure and access disparities.

Google Fiber had initially followed the same model in its proprietary infrastructure projects such as in Kansas City and Austin, Texas. Now it is saying if a local government like Huntsville, Alabama has the resources to build fiber to the premise to serve its residents, it will be happy to sell services on that network. Crawford's federal bond finance model could scale up open access networks nationwide by aiding localities that lack Huntsville's pre-existing municipal electric company infrastructure to build their own.

Wednesday, March 02, 2016

The Cord Empire Strikes Back - Bloomberg Gadfly

The Cord Empire Strikes Back - Bloomberg Gadfly: Like in the rule-making for set-top boxes, incumbents are showing they're good at putting up roadblocks. AT&T last week sued the city and county and said local officials don't have the authority to regulate attachments to its poles. The telecom company also said tinkering with its equipment might cause outages for its own customers.

As the scuffles show, breaking Big Cable won't be easy. And it is cringeworthy that Americans' best chance to end the cable-and-telecom monopoly may lie with Google, another monopolist. But if the status quo doesn't change, ambitions for more robust Internet connections and more compelling home entertainment options will be realized painfully slowly, or not at all.
Telecommunications infrastructure is a natural monopoly. As such, it warrants strong monopoly regulation such as Title II of the Communications Act (implementing regulations symbolically adopted but not being enforced by the U.S. Federal Communications Commission ) or government ownership. The United States currently has neither and is reaping the consequences in the form of widely disparate access and high prices. The legacy incumbent telephone and cable companies are only all too happy to take advantage.
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