Friday, November 17, 2017

The Kafkaesque consequences of America's piecemeal approach to telecom infrastructure

City of Orr: Not enough fiber? | The Timberjay: The problem at this point really isn’t lack of fiber. There are multiple fiber conduits already in the ground, notes Long, but it’s getting the service out to customers that’s been the hurdle. He notes that Bois Forte tribal offices have exceptional broadband capacity, thanks to the middle-mile fiber project initiated by the Northeast Service Cooperative. But the private partners on that project, who were supposed to utilize that backbone to extend faster connections to residential and commercial customers, have been slow to deliver. “We have more capacity here at the government center than we know what to do with,” said Long. “But no one else can jump on board.”

This is the sad consequence of adopting a piecemeal, segmented view of telecommunications infrastructure: building part of it thinking someone else will come along to construct the rest to connect the end users. Of course, it doesn't always work out that way in America's Keystone Cops method of planning and deploying telecom infrastructure that produces Kafkaesque outcomes such as this suffered by the good folks of Orr, Minnesota.

Uwe Reinhardt on U.S. health care -- he might have said the same about telecom infrastructure

So if you ask me, "Are we ever succumbing to some notions of solidarity as a nation? I would say, "Not at all." I would describe us as a group of people who share a geography. That's a better description of Americans than that we're a real nation with a sense of solidarity.

Uwe Reinhardt, the German born Princeton University economics professor who died earlier this week at age 80, made that comment in the context of the American system of providing and paying for medical care. Americans, he observed, view medical care as a consumer commodity rather than a social service available to all citizens and hence tend to resist policies that would recast health and medical care as a common good. As a commodity, access to its purchase depends on one's income and financial assets. The result is very uneven access to care based on socio-economic status.

If Reinhardt had studied the U.S. telecommunications system as well as health care economics that was his area of expertise, he might have reached a similar assessment. When it comes to access to advanced telecommunications infrastructure, there is no sense of commonweal despite a common national geography. There is a sense that the telecommunications infrastructure one is served by is driven by individual choices on vocation and housing. If you choose to live in a neighborhood that has robust landline infrastructure rather than another that might only be a mile or two away or you earn too little to pay increasing and unregulated rates for commodity "broadband" service, that's your problem.

Rather than implement a federal policy that views telecommunications infrastructure as an interstate asset that benefits all Americans no matter where they live, we leave it to underfunded localities to try to cobble together their own disparate infrastructures with "wildly uneven" prospects, according to a recent compilation. Consequently rather than a coordinated national effort to modernize yesterday's metallic infrastructure designed for voice telephone and cable TV to modern fiber optic infrastructure capable of serving the advanced telecommunications of today and years to come, the United States is attempting to do so on the cheap in a piecemeal and highly incremental manner.

Sunday, November 12, 2017

Google Fiber enters building by building urban battle for MDU connectivity

Google Fiber picks MDU cherries in Orange County: Google Fiber is figuring out how to play small ball and still get thousands of fiber to the home subscribers. In its latest blog post, Google tells how it’s expanding its fiber footprint – actually, making lots of tiny paw prints – in the southern California multi-dwelling unit market…
The subscription-based business model employed by incumbent telcos like AT&T as well as newer entrants like Google Fiber clearly favors density because it generates decent ROI on fiber to the premise (FTTP) capital investment. The higher the density the better as these players engage in a form of business urban warfare, fighting for market share building by building.

The problem is not everyone lives in or prefers to live in multi dwelling unit (MDU) properties. In MDUs, the vertically integrated model in which the providers own both the fiber infrastructure as well as proprietary telecommunications services delivered over it works well enough to make a strong business case. But when the density drops, it becomes iffy.

Ironically, that can leave even relatively affluent, low density neighborhoods of single family detached homes without fiber connections as the large investor-owned providers chase after dwelling density. Alternative business models are urgently needed. Without them, these higher value properties could end up becoming devalued due to their lack of fiber connectivity.

Friday, November 10, 2017

Fiber telecom infrastructure key, not "broadband speed"

Beyond Speed: FCC Should Focus on Broadband Experience: The market has evolved to where all-fiber connectivity is everyone’s goal, and it is time that the FCC got on board as well. In our comments to the FCC, the Fiber Broadband Association encourages the FCC to use an “all-fiber” metric — examining whether customers have access to all-fiber networks — to assess our country’s advanced telecommunications. “Robust fiber networks aren’t just capable of meeting community and enterprise needs throughout the United States; they’re essential to doing so,” says FBA President and CEO Heather Burnett Gold. “Fiber broadband has what it takes to take our country’s digital potential to the next level, and access to fiber is the critical first step.” If we want to accurately measure Americans’ access to sufficient broadband technology, looking just at speed won’t do. We must be looking at the technology that can actually provide high-performance, future-proof broadband service: fiber.

This organization is right on the money. As readers of this blog as well as my eBook Service Unavailable: America's Telecommunications Infrastructure Crisis know, I've emphasized the same point. The United States should focus like a laser (pun intended) on rapidly bringing fiber connections to every home, business and public institution. It's all about modernizing the nation's vital telecommunications infrastructure to fiber, not "broadband speed."

Thursday, November 09, 2017

Fearing state imposed universal service obligations and rate regulation, legacy incumbent telcos, cablecos seek federal cover

A decade ago as Internet-based telecommunications grew and began transporting video content, telephone and cable companies feared local governments would using their video franchising authority established in the cable TV era require them to build out their infrastructures to ensure all residents had connections. The pre-Internet cable television franchise had evolved. It was no longer just about entertainment. In the Internet era, it was now the full panoply of advanced telecommunications services: voice and data as well as video. That in turn would stoke demand for better infrastructure that could reliably deliver them.

However, the legacy incumbent telephone and cable companies didn’t want to be forced to upgrade and build out their cable plants to serve all customer premises in order to do business in numerous localities. Their business models are based on serving selected neighborhoods within arbitrary “footprints” of “serviceable” premises and not entire local government jurisdictions.

They initially sought relief in Washington from Congress and the U.S. Federal Communications Commission to preempt state – and by extension local -- video franchise regulation. That would take care of a multiplicity of potentially troublesome local governments imposing universal service conditions under their video franchising authority. But the National Governors Association and the National Conference of State Legislatures pushed back, wanting to keep video franchising within state jurisdiction.

Incumbents were able to easily pivot from that objection to their Plan B to kill local government video franchising authority: lobby state governments to take it over from local governments. That effort was quite successful, with state video franchising laws put on the books in state after state in the mid-2000s. Those laws such as California’s Digital Infrastructure and Video Competition Act of 2006 did not mandate video franchisees provide universal service by some future date in areas where they were awarded state franchises, thus sanctioning neighborhood redlining. Consequently, local governments that often receive complaints from constituents denied landline connections to advanced telecommunications service by the big incumbents are powerless to do anything about it since those connections fall under state video franchising authority. Calling one’s state representative isn’t helpful either since the incumbents have captured legislatures and state telecommunications regulatory agencies by buying political influence with campaign contributions.

The fight over universal service has now shifted from video franchising to a new regulatory front. But this time around, the incumbents ironically want protection from the states. They’re concerned that if the federal government continues avoid enforcement of universal service policy expressed in the Communications Act as amended in 1996 or the FCC’s 2015 Open Internet rulemaking -- or scraps the Open Internet rulemaking altogether -- the states might opt impose their own universal service obligations.

The big legacy incumbents are also worried over the prospect of states regulating service rates as authorized in the federal Open Internet rulemaking. In the two years the Open Internet rulemaking has been the law of the land, the FCC hasn’t enforced that provision either.

Given widespread complaints voiced by state and local elected officials over both spotty access to service due to neighborhood redlining and affordability challenges for low income households, the incumbents have reason for concern. Two of the nation’s largest telephone and cable companies, Verizon and Comcast, respectfully, are urging the FCC to enact a “clear, affirmative” rule preempting states, declaring federal primacy over state regulatory jurisdiction. However, such a rulemaking could fail to hold up in court against a statute enacted by a state legislature given a 2016 decision by the United States Court of Appeal Sixth District in State of Tennessee et al. v FCC & USA finding the FCC could not preempt state law without express federal statutory authority to do so. That could set up a grueling battle in Congress between the big telcos and cablecos and the states over the regulation of advanced telecommunications services.

With the level of dissatisfaction in the states over access and affordability to landline delivered advanced telecommunications services, it’s not a fight the incumbents would automatically win despite the massive lobbying and campaign cash they can bring to bear in Washington. Many if not most candidates for state and local offices have made access to and affordability of advanced telecommunications services a campaign issue, terming it infrastructure vital to commerce, education and telehealth services. In addition, the level of need and public interest is much higher now than it was a decade ago when the incumbents were lobbying state governments to enact statewide video franchise laws.

Tuesday, November 07, 2017

Why legacy incumbent telephone and cable companies want FCC re-reclassification as information service providers. Hint: It’s not “net neutrality.”

If the U.S. Federal Communications Commission revokes its 2015 Open Internet rulemaking classifying Internet as a telecommunications common carrier utility under Title II of the Communications Act and restores the previous rule classifying it as information service under Title I of the law as expected this month, it will set the stage for another round of litigation just as that which followed after the 2015 rule was adopted.

This time however it will be public and consumer interests that will be challenging the FCC rather than legacy incumbent telephone and cable companies. And the governing statute, the Communications Act, might well be on their side. Section 3(a)(1)(41) of the Act as amended in 1996 defines an information service as follows:

INFORMATION SERVICE- The term `information service' means the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications, and includes electronic publishing, but does not include any use of any such capability for the management, control, or operation of a telecommunications system or the management of a telecommunications service.

The legacy incumbent telephone and cable companies want the FCC to define their Internet protocol delivered services using that definition, essentially equating them with services like LexisNexis or Intelius. Their problem however is these companies market Internet protocol-based telecommunications services such as data, voice and video delivered over their connections to customer premises. If they were merely information services like LexisNexis or Intelius, they wouldn’t market physical premise connections sold in throughput speed tiers for a monthly recurring fee. In so doing, they are arguably offering telecommunications service, which the statute defines as “the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available directly to the public, regardless of the facilities used.”

So what is the incumbents’ main motive in not wanting to be classified as telecommunications providers under Title II of the Act? Hint: It’s not “net neutrality” – the requirement they treat the bits and bytes of Internet protocol moving over their networks equally regardless of origin.

The primary reason to avoid being classified as telecommunications providers is to escape the requirement in the Communications Act as amended in 1996 that they provide advanced telecommunications capability to all areas of the nation consistent with the public interest, convenience and necessity. It must enable users to originate and receive high-quality voice, data, graphics, and video telecommunications using any technology per Section 706(c)(1) of the statute. Elected policymakers at all levels of government generally agree advanced telecommunications capability is even more in the public interest and vital to the constituents they represent than it was when the 1996 Act was enacted two decades ago.

Incumbents also chafe at the prospect of price regulation as advanced telecommunications providers as authorized at Section 706(a) of the Act.

Bottom line, if they are regulated solely as providing an information service and not as telecommunications common carriers, then they would be able to continue to redline neighborhoods they don’t wish to serve and charge customers in those they do whatever they wish – just as they have since the statute was enacted without meaningful regulatory enforcement. That might serve the interests of their shareholders, but clearly doesn’t comport with the public interest specified in the statute.

Friday, November 03, 2017

Legacy metallic telcos, cablecos fight rear guard actions against local FTTP initiatives

Municipal broadband advocates cry foul amid Seattle mayoral race: An ongoing debate over making broadband internet a public utility in Seattle is surfacing in the city's mayoral election, and advocates for the cause are crying foul over contributions large telecommunications companies have made in the race. Comcast and CenturyLink, two internet service providers in Seattle, collectively donated about $50,000 to a political action committee supporting Jenny Durkan, a candidate who opposes municipal broadband. Municipal broadband advocates say that the telecom companies’ donations represent efforts to maintain the duopoly they have in the region. The PAC is the Civic Alliance for a Sound Economy (CASE), which is sponsored by the Seattle Metropolitan Chamber of Commerce. “If I was running one of the most powerful monopolies of the modern era, I’d be donating as much as I could to take over local politics also,” said Christopher Mitchell, director of the Community Broadband Networks Initiative at the Institute for Local Self-Reliance.

Mitchell is correct. Due to high cost barriers to competitor entry, telecommunications infrastructure functions as a natural monopoly, a fact recognized in the previous regulatory regime governing analog voice telephone service. Title II of the U.S. Communications Act requires telephone companies to provide service to anyone requesting it and authorized state public utility commissions to regulate their rates since market forces cannot in a monopoly market. 

In its 2015 Open Internet rulemaking, the U.S. Federal Communications Commission made it clear Title II also applies to digital telecommunications delivered using Internet protocol technology. But the United States hasn’t found the regulatory fortitude to enforce that requirement, allowing landline advanced telecommunications providers to redline neighborhoods they don’t want to serve and charge whatever they want. Most pundits expect the FCC to repeal that rulemaking later this month and turn the clock back to the start of the new century when Internet was still a relatively novel “information” service where people “went online” with “broadband” (versus narrowband dialup) connections.

Meanwhile, telephone and cable companies find themselves fighting rear guard actions by localities all over the nation that like Seattle prefer fiber optic infrastructure over metallic cable that isn’t bundled with proprietary services -- known as an open access network. They're tired of waiting and understandably have lost confidence after years of incumbent promises of fiber upgrades that never materialized because their business models can't absorb the needed capital expenditures.

Had the nation engaged in sound public policymaking and prudent planning a generation ago when it became apparent telecommunications was transitioning from analog to digital Internet protocol, the legacy incumbents wouldn’t find themselves fighting these battles. But since they themselves heavily influenced public policy on telecommunications over the past few decades, they hoisted themselves on their own petard and became among the most hated companies in America.

Thursday, November 02, 2017

Both legacy incumbents and consumers are wrong about competition in landline delivered advanced telecom service

Legacy incumbent telephone and cable companies and consumer and public interest advocates describe advanced telecommunications landline infrastructure as a competitive market. The former argue that it’s robustly competitive, affording consumers plenty of choices particularly in dense, urban areas. The latter complain there’s little or no competition in most areas where it’s a market duopoly at best. The choice is between either a legacy telephone company or a cable company. Oftentimes there is no choice at all, with only one of the two -- or neither -- offering service.

They’re both off base. Telecommunications infrastructure like that of other utilities delivering electric power, natural gas, water and sewer service to homes and businesses is a natural monopoly. Its inherent microeconomics don’t allow for a competitive market, one that by definition has many sellers and buyers.

Telecommunications service is like other utilities because it provides essential, necessary services for modern life. Thus it will always have many buyers but not a lot of sellers. That’s because the costs of installing and maintaining its delivery infrastructure are so high they deter other providers from entering the space. Would be providers are also deterred because it's inherently difficult to lure away customers from a well established incumbent since consumers don’t frequently go shopping for a new utility provider like they might for furniture, clothing or personal electronics. Hence, for most utilities there is only one provider or as noted earlier, perhaps two for advanced landline telecommunications service.

Both sides nevertheless continue to delude themselves and attempt to convince others they are right. The legacy incumbent phone and cable companies do so because they want to keep policymakers and regulators off their backs. They contend landline delivered advanced telecommunications is a competitive industry and thus requires only “light touch” regulation to protect consumers since market forces will adequately do the job.

Consumers believe the legacy providers have them over a barrel. They redline their neighborhoods and refuse to offer service on a par with that sold to nearby neighbors. Or they offer service, but with poor quality and reliability and exorbitantly priced. As they do with other services, the first inclination of consumers is to call for more competition. If telecommunications were a competitive retail market, they believe, then they could choose among a variety of providers clamoring for their business. The reality of course is far from that and complaints of shoddy customer service are rampant.

Both sides also mischaracterize public sector initiatives to build fiber optic infrastructure as market competition. Public sector entities aren’t out to compete for market share with incumbent legacy telephone and cable companies with the hope of driving them out of business as is the case with true market competition. They build advanced telecom infrastructure to facilitate economic development and achieve community goals.
Consumers want a competitive market for advanced telecommunications infrastructure, viewing it as a tonic for better quality service and value. It cannot and never will be a competitive market. The incumbent providers argue it's already a competitive market. It isn’t.  It’s time to end the nonsense from both camps and their delusions of market competition in advanced landline telecommunications infrastructure and put ownership of it firmly in the public sector since it cannot function as a truly competitive market.

Wednesday, November 01, 2017

California like rest of nation suffers from poor advanced telecom service

The Social Cost of Weak Broadband Competition in California: Over the last 8 years, California has spent more than $200M funding projects and subsidizing service to close the broadband digital divide. While the intent is good, the results are limited given that home broadband subscriptions are unchanged today from 2010. It is clear that California cannot subsidize its way out of the digital divide. Despite the claims of Sosa and the Big 5, California’s uncompetitive fixed broadband service hurts everyone. The answer is to either promote retail competition or regulate the Big 5’s monopolies like we do in the energy sector.

California like the rest of the nation has the worst of all worlds: a naturally monopolistic advanced telecommunications market but no monopoly regulation as is done for electric power and natural gas utilities. The U.S. Federal Communications Commission nominally recognized advanced telecommunications as a natural monopoly utility in 2015, placing it under Title II of the Communications Act that regulated basic telephone service before it with rate regulation and a universal service requirement. "Nominally" because this regulatory scheme was put in place on paper only and not enforced.

The author is correct in noting we cannot extricate ourselves from this unfortunate circumstance with subsidies because they don't fundamentally alter it.

Why Title II regulation is anathema to legacy telephone and cable companies

POTs and PANs | Pretty Advanced New Stuff from CCG Consulting: Until recently I always wondered why the ISPs are fighting so hard against Title II regulation. All of the big companies like Comcast, AT&T and Verizon have told stockholders that their initial concerns about Title II regulation did not materialize. And it’s obvious that Title II hasn’t changed the way they invest in their own companies.

That's because the Federal Communications Commission's Open Internet rulemaking is not being enforced since it took effect in June 2015. No enforcement = no material impact.

But recently I saw an article and wrote a blog about an analyst who thinks that the ISPs are going to drastically increases broadband prices once Title II regulation is gone. Title II is the only tool that the government can use to investigate and possibly act against the ISP for rate increases and for other practices like data caps. If true, and his arguments for this are good ones, then there is a huge motivation for the big ISPs to shed the only existing regulation of broadband.

That's exactly the issue -- and NOT "net neutrality" as the Open Internet rulemaking has been unfortunately dubbed as if the rulemaking only prohibits telecom providers from blocking and throttling content. The main reason the legacy telephone and cable companies dislike Title II regulation is that it is predicated on a natural monopoly market. That requires prices to be regulated because market forces won't act to control them as well as universal service obligations. Both are anathema to these entities because they naturally prefer an unregulated monopoly market that affords them full freedom to cherry pick and redline and charge whatever they choose, placing end users at a distinct advantage to their shareholders.

Tuesday, October 31, 2017

U.S. at crisis point on telecom infrastructure modernization – and the path forward

The United States is facing a crisis when it comes to modernizing its legacy metallic telecommunications infrastructure originally constructed in the previous century for analog telephone and cable TV services. In order to deliver digital advanced telecommunications service based on Internet protocol in the present and with capacity for future services as bandwidth demand grows exponentially, that legacy infrastructure needs replacement with fiber optic connections to customer premises.

However, that’s unlikely to happen for the foreseeable future under current federal policy. Customer premise fiber connections are likely to continue to at a glacial place, putting the nation ever further behind where it should be. Had the correct policy and planning choices been made in the late 1980s and early 1990s when it became apparent video, data and voice telecommunications would go from analog to digital and be transported using Internet technology, fiber connections should have been available to every American home, business and institution by 2010 at the latest. Consequently, the United States is facing telecommunications infrastructure crisis in the 21st century at a time when it’s urgently needed to support a transition from the Industrial Age economy to the information and knowledge economy of the 20th.

Given that telecommunications infrastructure functions as a natural monopoly, market forces cannot provide sufficient incentive to speed deployment of fiber. Legacy telephone and cable companies will only construct fiber where they can earn a relatively rapid return on that high dollar capital investment. New investor owned providers will be reluctant to enter a market already dominated by the incumbent providers given they too face the same high capital investment costs and uncertain investment returns.

The leaves the vast majority of the country with substandard and often obsolete infrastructure with little prospect of meaningful progress. Federal and state subsidy programs are grossly underfunded relative to the estimated $200 billion minimum needed to bring fiber connections to every American doorstep. Leaving telecommunications infrastructure in the hands of the private sector will prolong the dismal situation.

Only the federal government has the economic resources to do the job and the freedom to do so without the need to produce a quick return for investors. That’s not to say spending federal tax dollars on this vital infrastructure isn’t an investment. It most certainly is an investment in the nation’s future that will pay multiplier effect dividends by boosting jobs and economic activity, in turn generating tax revenues to repay the initial investment.

A federal telecommunications infrastructure modernization initiative must not just be sufficiently funded. It must also include a clearly defined role for current and newcomer private sector players to construct and operate – but not own due to its monopolistic nature that disadvantages end users -- the new fiber networks. Like the roads and highways the connect metro areas to states and states to other states, the new federally owned fiber infrastructure should be operated on an open access basis, enabling various telecommunications services to be delivered over them by private sector firms. This avoids the tyranny of the monthly subscription take rate that deters infrastructure investment under legacy business models in which the owners of network assets also provide proprietary services over them.

Owners of existing fiber to the premise networks should be offered the opportunity to continue to operate them as privately held assets or to sell them to the federal government with favorable tax incentives.

Monday, October 30, 2017

Misconceptualizing advanced landline telecommunications: not a competitive local market

America’s advanced telecommunications infrastructure gaps are not an inherently local problem. They occur all over the United States – in urban, suburban, exurban and rural areas. It is a nationwide issue requiring a national solution. A major impediment to addressing this issue from a national or regional perspective is telecommunications is typically conceived of as a local service offering rather than infrastructure that links localities to other localities, regions and states and nations – the way long distance telephone service did for decades. The root of this conceptualization has both old and new origins.

The older one is cable TV service. It got its start in the 1950s as definitively local service, serving localities that for reasons of distance and terrain could not reliably receive over the air television signals. Cable providers erected large community antennae to pick up and amplify the signals, delivering them over cables to customer premises. Hence its designation as CATV service -- Community Antenna Television. Local governments saw CATV – later fed with satellite delivered TV programming – as a local service and issued franchises to cable operators. Cable thus became to be thought of as a local service that varied from locality to locality.

The newer conceptualization of telecommunications as a local service comes courtesy of legacy telephone companies that delivered voice phone service over twisted pair copper for many decades starting early in the last century. Around 2000, telephone companies began providing Internet connections via Digital Subscriber Line (DSL) service. This technology is hyper local because of its limited range, able to serve customer premises only within about two and a half miles of phone company central office facilities. Consequently, localities ended up with some neighborhoods able to get DSL service while others too far from the central offices could not. That further reinforced the conception of advanced telecommunications as a highly localized service.

Then around 2005, cable providers began offering Internet protocol-based voice and data services. They realized local governments could require them to upgrade and build out their infrastructures to offer these advanced telecommunications services to all customer premises in a given local jurisdiction. Wanting to avoid the capital expenditures entailed with that, the cable companies championed legislation that took franchising authority away from the locals and transferred it to state public utility commissions. Consequently as with phone company DSL service, some neighborhoods are served while others not in cable companies’ desired service area “footprint” remain unserved.

Viewing advanced telecommunications as a local service offering – priced, advertised and sold in service bundles – naturally leads to an unrealistic expectation that it should be a competitive market like other widely advertised services. If Company X won’t serve my neighborhood, then I should be able to go to Company Y or Company Z. If Provider A doesn’t offer the service bundle at the price I can afford, then I should be able to shop Providers B, C and D for an alternative offer.

Problem is these service offers aren’t available because the other providers aren’t necessarily in the market, their advertising notwithstanding. The fine print in the ads from the legacy telephone and cable providers notes that service “may not be available in all areas.” That’s because in much of their nominal service areas, it costs too much and is too economically risky to support those other options under the dominant business model where the provider owns the infrastructure connecting customer premises that pay using recurring monthly subscriptions. The risk is not enough premises will subscribe or too many that do will close their accounts to justify the investment in high cost infrastructure. Any new providers who might compete with the incumbent providers face that risk and more since they would have to woo away customers from the incumbents as well as get their own.

That business case risk is unlikely to change if advanced landline telecommunications remains largely unregulated on a de facto basis and left to large, investor-owned legacy telephone and cable companies. They’re not promoting their ability to connect more and more customer premises and there is no enforced national regulatory policy that compels them to do so. Lately, their ads promote sports and entertainment content -- for the premises they choose to serve with landline infrastructure -- and mobile devices.

Tuesday, October 24, 2017

Where's the case Title II regulation of ISPs deters telecom infrastructure investment?

Improved broadband access is one of the most important benefits of reversing Title II overreach. The internet brought us what seems like endless opportunities. The corollary to this, however, is that Americans without access to the internet are left behind. Internet access and computer skills are key to being connected, well-informed and competitive — not only in today’s job market, but ultimately in today’s digital era. By returning to commonsense regulation that incentivizes broadband investment and expansion, we can build out more robust networks that keep the American dream alive for those striving to succeed in today’s technology-driven world. At least ten percent of Americans (35 million people) lack adequate broadband access, according to the FCC’s 2016 Broadband Progress Report. This includes 23 million Americans in rural communities. Faced with these troubling statistics, priority should be heightened to champion the urgency of broadband deployment.

Source: Rolling back 'net neutrality' is essential to the free internet's future.

Problem with this argument is it fails to state a clear case as to why subjecting Internet service providers offering Internet protocol-based telecommunications service under Title II of the Communications Act will deter deployment of telecommunications infrastructure. In fact, the Title II regulatory scheme mandates universal service to all Americans who reasonably request service. Many if not most of those millions of Americans the author points to as lacking adequate Internet access have repeatedly requested service and been denied service in violation of this requirement and its bar on neighborhood redlining. That's because providers have not adequately invested in their infrastructure to make service available to them. Those provisions of Title II were put in force in 2015 by the U.S. Federal Communications Commission's Open Internet rulemaking. (Click here for more background.)

Thursday, October 19, 2017

U.S. should avoid "broadband speed" standard, set infrastructure-based telecom modernization goal

On a conference call with reporters, U.S. Senate Minority Leader Charles E. Schumer today called on the Federal Communications Commission (FCC) to immediately reverse course and reject any proposal to downgrade the minimum benchmark definition of internet service, which would create the mirage of more widespread broadband service without actually improving quality or accessibility for high-speed home internet. Schumer emphasized that pushing this standard would undermine access to genuine high-speed broadband for Upstate New Yorkers, which should be the FCC’s focus, according to Schumer.  Schumer called on the FCC to end all attempts to “define access down. ”

*  *  *

Schumer said that each year the FCC evaluates national broadband deployment standards to ensure internet service providers (ISPs) are equally distributing quality broadband. In 2015, the FCC established a new definition of broadband, increasing the access requirement from 4Mbps minimum download speed, 1Mbps upload speed, to 25Mbps/3Mbps in order to serve the 55 million Americans without high-speed internet at those speeds. This decision was an attempt to raise the bar for the quality of internet being deployed and set goals aimed at increasing reliable broadband access for millions of Americans.
Press release from Schumer's office here.

This is well intended on Schumer’s part given that Upstate New York like much of America suffers from deficient advanced telecom infrastructure. But the fundamental problem isn’t the U.S. Federal Communications Commission potentially setting the bar too low. Rather, the wrong metric is being utilized.

Instead of throughput speed, the United States should establish an infrastructure-based goal of bringing modern fiber optic telecommunications connections to every home, business and institution. And do so as a crash program given the critical role of telecommunications in today’s digital information economy and the widespread infrastructure deficiencies. In setting this goal, the nation must also create a plan to achieve it since it’s meaningless without one.

Tuesday, October 17, 2017

Wildfires pose potential crisis -- and opportunity -- for PG&E

Wildfires create worst crisis for PG&E since San Bruno gas disaster | The Sacramento Bee: California’s wildfires have left Pacific Gas and Electric Co. confronting its most serious financial crisis since the 2010 San Bruno gas explosion, a disaster that threatened the company with bankruptcy and ultimately cost the utility $1.6 billion in fines and other costs. Two state agencies, Cal Fire and the California Public Utilities Commission, have launched investigations into whether Northern California’s largest utility could be at least partly responsible for the fires that ignited Oct. 8, killing at least 41 people and destroying roughly 5,700 homes and businesses. So far, neither Cal Fire nor the CPUC has cited evidence that PG&E contributed to any the ignitions. But the stock price of parent company PG&E Corp. has plunged over the last week amid investor jitters that the utility could be held responsible. PG&E shares closed Monday at $53.43, a drop of $4.34. Since Friday the company’s stock market value has fallen by more than $5 billion.

The threat of wildfires sparked by electric power transmission lines in PG&E's Northern California service territory will continue into the future after the recent deadly wildfires that ravaged California’s wine country, killing more than 40 people and destroying several thousand homes and businesses. Some predict the hazard will worsen due to climate change and continued residential development near fire prone wildland areas.

Out of crisis, goes the adage, opportunity often follows. For PG&E, that opportunity is to vastly reduce the chance of its power lines starting destructive wildfires and subjecting the company and its shareholders to significant legal liability. How so? By placing its last mile distribution lines serving customer premises in buried underground conduit instead of suspended overhead on wooden poles close to combustible flora and other materials. 

There’s an additional bonus on top of the reduced maintenance and storm outage costs associated with above ground transmission poles and infrastructure. PG&E recently filed an application with California utility regulators to serve as a wholesale telecommunications provider using its fiber optic infrastructure. Conduit for underground electrical power cables could also house fiber for telecommunications and bring it close to residential, business and institutional PG&E customers. PG&E could lease that fiber to internet service providers, providing an additional revenue stream to help offset the cost of undergrounding its premise electrical service lines.

And that's not all. In placing electric power lines in underground conduit, electric utilities can apply shielding to protect the grid from damaging electromagnetic flux from X-class solar flares or EMP weapons detonating at high altitude. 

Thursday, October 05, 2017

Stop the Cap! The End of Google Fiber Expansion: Where Did It All Go Wrong?

Stop the Cap! The End of Google Fiber Expansion: Where Did It All Go Wrong? : The bean counters also arrived at Google Access — the division responsible for Google Fiber — and by October 2016, Google simultaneously announced it was putting a hold on further expansion of Google Fiber and its CEO, Craig Barratt, was leaving the company. About 10% of employees in the division involuntarily left with him. Insufficiently satisfied with those cutbacks, additional measures were announced in April 2017 including the departure of Milo Medin, a vice president at Google Access and Dennis Kish, a wireless infrastructure veteran who was president of Google Fiber. Nearly 600 Google Access employees were also reassigned to other divisions. Medin was a Google Fiber evangelist in Washington, and often spoke about the impact Google’s fiber project would have on broadband competition and the digital economy. Porat’s philosophy had a sweeping impact on Alphabet and its various divisions. The most visionary/experimental projects that were originally green-lit with no expectation of making money for a decade or more now required a plan to prove profitability in five years or less. (Emphasis added).

In adopting that five year ROI cutoff, Google Fiber effectively placed itself under the same financial constraints governing slow moving legacy telephone and cable companies it hoped to overbuild with fiber to the premise (FTTP). Having ventured into FTTP nearly a decade ago with no overwhelming technological or marketing advantage and using the same recurring monthly subscription business model -- including TV programming -- as the incumbents, it should surprise no one it's retreating.

As a former advisor to Google co-founder Larry Page was quoted as saying in Phil Dampier's post mortem excerpted above, "There’s no flying-saucer shit in laying fiber." Indeed. So unless Google Fiber figures out how to teleport fiber conduit into the ground or develops fiber cables that hang in mid air defying gravity -- thus avoiding the need for pole access -- it's pointless for Google Fiber to remain in FTTP.

Google Fiber's parent company, Alphabet, has a unit simply dubbed "X" to develop "moonshot" inventions profiled in the November 2017 issue of The Atlantic. Perhaps X will be able to obsolete FTTP and the Internet itself by coming up with a way to store quantum bits of information in the substrate of space time and encrypted by a form of blockchain technology to ensure data integrity.

Saturday, September 30, 2017

A Better Deal falls short of urgent need to fully modernize America’s telecommunications infrastructure

Democrats this week unveiled a plank of the party’s A Better Deal platform declaring Internet protocol-based advanced telecommunications an essential modern utility equivalent to electric power service. It proposes a $40 billion Universal Grant Program to subsidize for profits, cooperatives and local governments to ensure it is available to every U.S. home, school and small business.

The proposal falls short relative to the urgent need to modernize America’s legacy metallic telecommunications infrastructure designed for analog telephone and cable TV of decades past to fiber optic infrastructure. Its main flaw is it isn’t framed an infrastructure initiative.

Rather, the proposal calls for a service standard couched in outdated terminology, calling for “universal high speed Internet.” That term describes a level of service and not infrastructure. It and “broadband” distinguish from narrowband, low speed dialup connections over phone lines commonly used in the 1990s (and unfortunately still the case in 2017 for too many American homes). In so doing, the Democratic proposal falls into the trap of the current debate over what constitutes “high speed Internet.” That can only add further delay to solving the deepening crisis of deficient telecommunications infrastructure in much of the United States that now requires an expedited effort.

In addition to its origins in the past, “high speed Internet” is also too present focused since that term means what’s sufficient to support today’s needs relative to high quality voice, video and data. It doesn’t take into account tomorrow’s needs which will undoubtedly require more bandwidth -- and the growth capacity only fiber optic premise connections can efficiently provide. That’s why instead of “high speed Internet,” the federal government should instead launch a cleanly defined telecom infrastructure modernization initiative to bring fiber connections to every American doorstep. And provide sufficient funding to achieve it. That will take at least five times the $40 billion the Democrats propose.

Thursday, September 28, 2017

Google Fiber's Kansas City experiment demonstrates need for publicly owned advanced telecom infrastructure

Google Fiber made Kansas City better but didn't transform it | The Kansas City Star: There may be a lesson here. Digital technology has undoubtedly transformed our world, disrupting media, entertainment, politics, retail, money management and more. But the miracle is at the end of the pipeline — the miracle isn’t the pipeline itself. Most Americans now see internet service as a utility, and price remains an important consideration. That could explain why Google Fiber is rethinking its role in getting digital service to the home.

Internet protocol-based advanced telecommunications is indeed a modern utility for residential, commercial and institutional premises just as electricity and telephone service before it. However, what remains unclear is the appropriate business and pricing model. Electricity is correctly billed on a consumption basis. Use more megawatts, pay more. That makes sense because the generation of those megawatts incurs costs directly attributable to their production. But the same cannot be said for the gigabits and terabits that power advanced telecommunications carrying voice, video and data.

The Kansas City Star correctly observes price of this most new utility is a consideration. It's because ISPs bill using a monthly recurring charge as do other utilities. Every household budgets based on its monthly recurring costs such as mortgage or rent payments and utilities. But is that the right pricing model for advanced telecommunications, particularly when the monthly recurring charge is based on bandwidth? While large businesses and data and call centers might be in the market to buy  bandwidth, most consumers are not. They merely want reliable telecommunications service that doesn’t distort, slow down or stall and don’t care about the bandwidth that ensures that level of service.
The only way to ensure that service standard going forward as the bandwidth requirements of advanced telecommunications services evolve and grow is fiber to the premise telecom infrastructure. It’s the only technology that provides sufficient headroom for whatever services may be coming in the foreseeable future as well as adequately supporting today’s. In that regard, Google Fiber got the technology side of the equation right. But as the Star suggests, the business model essentially copied that used by legacy telephone and cable companies needs rethinking.

A better model would be to treat most telecommunications infrastructure as a public asset like roads and highways, funded by taxpayers at all levels of government – federal, state and local. Google Fiber and other ISPs would have a role to build and maintain those fiber thoroughfares and sell
services over them on an open access basis. But they shouldn’t own them. Since they would be selling services, it would be in the economic interests of the ISPs to ensure the reliability of the network.

The current private ownership model of advanced telecommunications service is clearly broken and crippled by market failure in much of the United States lacking infrastructure capable of reliably delivering high quality voice, video and data. As the Google Fiber experiment shows, simply adding another investor-owned ISP isn’t going to solve that national problem. A new path forward is needed.

Saturday, September 23, 2017

Insanity defined: The continuing call for more competition in telecom infrastructure

FCC doesn't know enough about competition, or lack thereof, says GAO: The Federal Communications Commission needs better information about broadband competition, according to a report by the federal government accountability office. Existing data shows that 51% of U.S. residents only have access to one provider that offers at least a minimum level of broadband service, which the GAO defines using the FCC’s own advanced services standard of 25 Mbps download and 3 Mbps upload speeds.

That the majority of Americans have only a single advanced telecom services landline provider shouldn’t surprise anyone. If the Government Accountability Office conducted a similar study of other utilities – which is how the Federal Communications Commission classifies this service – it would find most Americans have only one water, electric power or natural gas utility serving them.

What makes advanced telecom service any different? Is it reasonable to expect multiple advanced telecom providers to make connections to customer premises when the economics of the dominant investor-owned business model leave many consumers with no options whatsoever let alone multiple choices? For inexplicable reasons, analysts ignore the microeconomics of telecom infrastructure where high cost barriers to entry make market competition – defined as many sellers competing for many buyers-- impossible. 

Americans hold the large investor owned telephone and cable companies that dominate a market that tends toward monopoly or duopoly in low regard. The misguided belief is more competition will up their game and force them to provide better value and customer service. Problem is that solution is only viable in a competitive market. Telecom infrastructure isn’t one and calling for more competition won’t make it so.

Wednesday, September 20, 2017

Riverside County, California: A microcosm of telecom infrastructure modernization challenge facing nation

$4 billion gigabit-for-all project in California makes its case with data: As one of the nation's largest counties plans a gigabit fiber network that could cost as much as $4 billion, project organizers are publishing data-rich stories they hope will catch the attention of companies that can build it. Riverside County, California, the 10th-most-populous county in the nation, recently extended its deadline for companies to submit proposals for its RivCoConnect initiative, a plan to bring gigabit internet to all of its 2.4 million residents. Now open to responses until Sept. 28, the county published three new web pages last week to showcase its vision and illustrate the character and demographic makeup of the people whom the new connectivity would serve.

This county is a microcosm of the challenge facing the entire nation when it comes to modernizing its legacy metallic telecommunications infrastructure built for the 20th century to fiber to the premise for the 21st. Extrapolate that single digit billion dollar project cost for Riverside County to the more than 3,000 counties in the county and it's easy to see why the United States needs a major federal initiative to fiber the nation, funded to the tune of $200 billion or more.

Investor owned players like legacy telephone and cable companies as well as new entrants like Google Fiber aren't going to take on this monumental task for the foreseeable because the numbers don't pencil out for their shareholders. State and local governments don't have money to bring to the table, already strapped with other aging infrastructure obligations as well as enormous and growing costs for health services and public pensions. Only the federal government is in a position to step up and fund this vital infrastructure.

Verizon’s FiOS Deployment In Boston Is Fiber-To-The-B.S. | HuffPost

Verizon’s FiOS Deployment In Boston Is Fiber-To-The-B.S. | HuffPost

This development shows it's far easier to talk about and even promise to deploy fiber to the premise (FTTP) telecommunications infrastructure than it is to fund and construct it. It also shows even large very well capitalized companies like Verizon, AT&T and more recently Alphabet's Google Fiber unit aren't up to the task. They lack the will (investment incentive driven by strong capital returns) and the means (patient capital than can wait many years for a return on capital investment) to do the job.

As Bruce Kushnick and other observers have shown, the talk typically falls far short of real world results. It's time to face the reality that the urgency needed large scale FTTP deployment the United States should have completed a decade ago requires a well funded federal initiative to accomplish the job. As the saying goes, money talks and bullshit walks.

Tuesday, September 12, 2017

FCC Chair Pai papers over market failure as regulatory failure, claims satellite-based advanced telecom is competitive

Can a free market solve the digital divide? | WUWM: Pai: There are two different aspects to the answer to that. No. 1 is that I have focused on digital redlining as an issue

Wood: We should define what digital redlining is.

Pai: Digital redlining is the notion that within a certain geographic area, a company might have a business case for building out in areas A, B and C. But in area D they simply say, "We're not going to deploy there because we don't see the return on the investment," or for whatever reason. So from a regulatory perspective, we want to make sure that there are no rules standing in the way of them doing that. 

Had regulations been obstacles to deployment of advanced telecommunications infrastructure over the past 20 years or so, they would have been well identified by now. The issue of regulatory impediments is a red herring. As Pai points out, the issue is primarily economic insofar as redlining occurs in areas where the return on investment isn't sufficiently robust to justify the capital expenditure. Market failure is not regulatory failure. 

Pai: Absolutely. I mean, we can't punish companies to the extent that they don't build out and they don't have federal obligations. But what we do try to do is encourage them as strongly as we can. If they're violating FCC rules, certainly we will go after them for doing that. And in the meantime we're going to try to keep encouraging competition as best we can. Some of these smaller providers too, they're really providing an impetus in the marketplace. A couple of months ago, we approved for the first time a satellite company's application. They want to deploy 720 satellites in low-earth orbit. And they think that would be a really substantial competitor to terrestrial.

Instead of connecting all homes and businesses with modern fiber optic infrastructure, Pai is tacitly endorsing a lower service standard provided by satellites that can't provide the carrying capacity to accommodate rapidly growing demand for bandwidth that is doubling about every three years. As many Americans who reluctantly rely upon it are painfully aware, satellite connectivity is a poor substitute and hardly competition for terrestrial landline telecom infrastructure.

Thursday, September 07, 2017

AT&T in apparent violation of FCC Open Internet rulemaking reclassifying internet as telecom service

In June of 2015, the Open Internet rulemaking adopted by the U.S. Federal Communications Commission that reclassified internet as a common carrier telecommunications service subject to the universal service and non-discrimination mandates of Title II of the Communications Act became effective. Section 201(a) of the law states that:

"It shall be the duty of every common carrier engaged in interstate or foreign communication by wire or radio to furnish such communication service upon reasonable request therefor..."

Section 254(b)(3) of the Act requires ISPs to provide access to advanced telecommunications in all regions of the nation. Section 202 of the Act contains an anti-redlining provision barring internet service providers from discriminating against localities in providing service.

But let’s take a look at what happens when at least some consumers attempt to place an online order for internet service with AT&T, the nation’s biggest telecommunications provider. After plugging in the address where service is needed on a recent service inquiry, the following screen appeared on the AT&T order page:

In other words, satellite television but ironically no telecommunications services are available for ordering. That window includes an informational link at the bottom right of the page titled “Why can’t I get these services?” Clicking on that link brought up the following:

The first and last explanations clearly do not comport with Title II’s universal service requirement for an incumbent local exchange carrier (ILEC) like AT&T. Particularly the last one referencing “an area we don’t service," noting landline services are offered only in “select areas” of AT&T’s 21 state service territory. “Select areas” is clearly not universal service. It will be interesting to see how the Federal Communications Commission addresses this apparent clear violation of its Title II rules.

Those rules also bar internet service providers from blocking and throttling content. Indeed, the Open Internet rulemaking has been wholly conflated with that provision, known as "net neutrality." However, the toughest form of blocking and throttling is when one has no internet service access whatsoever because a request for service isn't honored.

Thursday, August 31, 2017

Purpose of AT&T's 4G LTE fixed premise service to mollify pols, not modernize telecom infrastructure
Speedy internet delivery for rural DeSoto County | News | Flint said as part of this commitment across 18 states, AT&T plans to reach more than 400,000 locations throughout 18 states by the end of 2017, and over 1.1 million locations by 2020. AT&T plans to reach over 130,000 locations with this technology across Mississippi by 2020. Flint said delivering broadband internet service to rural underdeserved areas has been AT&T's challenge.

According to Flint, AT&T's Fixed Wireless Internet Service delivers a home internet connection with speeds of at least 10Mbps. The connection comes from a wireless tower to a fixed antenna on customers' homes or businesses. "This is an efficient way to deliver high-quality internet to customers in rural and underserved areas," Flint said. "This will be capable of delivering a fixed wireless signal at a speed of 10 megabits per second, more than enough to do web browsing with plenty of speed and to stream your favorite movie or TV show. The telecommunications infrastructure was made possible through the FCC Connect America Fund.

The primary purpose of this rollout is to mollify politicians continually barraged with complaints from constituents about poor advanced telecommunications service options. Bolting on fixed premise service to existing 4G LTE mobile wireless towers is not a long term investment in modernizing telecommunications infrastructure. It's simply another on the cheap substitute for replacing decades-old twisted pair copper cable designed to support voice telephone service with fiber optic cable to support advanced services.

AT&T is deploying this fixed wireless service in areas where its copper cable plant cannot support digital subscriber line (DSL) service, some of which never even got first generation ADSL deployed more than a decade ago. AT&T's fixed premise wireless service will offer throughput that does not conform to U.S. Federal Communication Commission standards for delivering high quality high-quality voice, data, graphics and video. That shortcoming will be amplified in peak use periods given multiple connected devices used in households and small businesses and the fact that wireless bandwidth is by definition limited and connectivity slows as more users access it.

Wednesday, August 30, 2017

The farce of measuring "broadband speeds" and market competition

For Broadband Connections, How Fast is Fast Enough? | WIRED

Who would have thought policymakers would be engaged in a seemingly endless debate over what constitutes "broadband" and the ridiculous, pointless exercise of assessing the level of market competition in a natural monopoly marketplace that is telecom infrastructure?

The explanation: They're being punked. It's a farce and distraction to serve the "fight the future" agenda of legacy telephone and cable companies that cannot keep up with the shift to Internet protocol-based telecommunications and the ever growing demand for more bandwidth. The controversy over "broadband speeds" is becoming a technological version of the argument over how many angels can dance on the head of a pin. Meanwhile, the United States falls further behind in the task of modernizing its legacy metallic telecom infrastructure to fiber optic to the premise.

Tuesday, August 29, 2017

Aerial fiber offers lower deployment cost, superior connectivity vs. radio-based technologies

Rural America Is Building Its Own Internet Because No One Else Will - Motherboard: The board has established a "dig once" initiative, where any time roadwork or repairs are being done in the area, county workers are obliged to lay fiber at the same time. It's also looking into innovative techniques for connecting along the highway, such as micro trenching, where the fiber optic cable is embedded a few inches into the road and blacktopped over. "It cuts down your chances of animals taking your line down, or car wrecks that take it down, or storms that take it down," Brown said.
It's true that buried fiber conduit is more protected from outages caused by environmental factors. But in some areas, it's not economically cost effective. Blacktop road surfaces particularly in rural areas may not be thick and stable enough to support microtrenching, a lower cost method of installing buried conduit.

That however should not leave substandard, shared bandwidth radio-based technologies such as those discussed in this article as the only cost justifiable alternative for delivering advanced telecommunications services to premises. Aerial fiber -- hung on existing and perhaps some new poles that currently carry electrical distribution cables and legacy twisted pair copper telephone and cable TV lines -- provides a technically superior connectivity option over radio-based technologies at far lower cost than buried fiber. Consistent with "dig once" policies mentioned above, buried fiber should in some areas be a long term objective with aerial fiber plant providing the necessary rapid deployment of advanced telecom infrastructure decades late in coming to the United States.

Tuesday, August 22, 2017

Tax incentives unlikely to improve business case for private telecom infrastructure investment

The Dream Divide: Fighting the Classism of the Digital Age - Morning Consult: Governors would have the authority to declare participating areas of their respective states as Gigabit Opportunity Zones, and this bill would enable such zones to attract broadband providers with capital gains tax deferrals on any funds directly invested in broadband expansion. Gigabit Opportunity Zones would also offer firms an option for immediately expensing broadband equipment instead of drawing out their returns on investment over the depreciation period. When local governments have support for improving their broadband policies and the tools — tax deferrals and immediate expensing — to attract meaningful investment in high-speed internet access, their communities’ doors swing open to multiple internet providers.

Georgia Congressman Doug Collins who wrote the above in an op-ed piece overlooks the fact that the biggest expense in constructing telecommunications infrastructure isn't equipment. It's labor at about 70 percent of overall costs. As such, this proposal based on tax breaks to incentivize infrastructure investment isn't likely to significantly improve the business case for private investor-owned providers to make the necessary upfront capital investment.

Federal policymakers should instead face the fact that private investment capital is not sufficiently patient for major infrastructure due to overly long waits for investment returns and create a federal telecom agency to build fiber to every American home, business and school. The United States is already decades behind where it should be on replacing its legacy metallic telephone and cable TV 20th century infrastructure with modern fiber optic cables for the modern digital age. Continuing to pursue weak, ineffective solutions such as those proposed by Collins will only prolong the digital divide of which he complains.

Saturday, August 12, 2017

FCC has few if any options to accelerate modernization of U.S. telecom infrastructure

Maybe Americans don’t need fast home Internet service, FCC suggests | Ars Technica: Americans might not need a fast home Internet connection, the Federal Communications Commission suggests in a new document. Instead, mobile Internet via a smartphone might be all people need. The suggestion comes in the FCC's annual inquiry into broadband availability. Section 706 of the Telecommunications Act requires the FCC to determine whether broadband (or more formally, "advanced telecommunications capability") is being deployed to all Americans in a reasonable and timely fashion. If the FCC finds that broadband isn't being deployed quickly enough to everyone, it is required by law to "take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market." (Emphasis added)

The problem is the FCC has few if any effective options to accelerate the modernization of American telecommunications infrastructure. That's because the biggest barrier to private investment in infrastructure to support advanced telecommunications is economic and not a regulatory matter within the FCC's jurisdiction.

Privately owned telecommunications companies must achieve a rapid return on investment to satisfy investors. That's a tall order given infrastructure construction requires copious amounts of capital be invested up front with a long wait until that investment is recouped and generates profit. Their business model is based on selling monthly service bundles and speed tier subscriptions to individual customer premises. It frequently fails to spin off sufficient predictable revenues to earn the required return on invested capital within the investors' time horizon.

That substantially degrades the business case for investing in infrastructure and raises economic risk, in turn leading to market failure and infrastructure deficiencies and disparities. There is little if anything the FCC or any other regulator can do to address that economic reality. It's fundamental to the predominant U.S. model of private ownership and operation of telecommunications infrastructure.

Thursday, August 10, 2017

In 2017 America, there is no collective “we” or “our” when it comes to telecom infrastructure

In 2017 America, being served by landline digital telecommunications infrastructure isn’t about where we live, with nearly all homes served by water, electrical power and other utilities. There is no collective we. It’s all about where you live. Especially when landline infrastructure ends just down the road, over the hill or around the bend. You and more specifically your home are in the wrong spot and that’s too bad for you.

Case in point is a direct mail satellite Internet service provider advertisement offering “AFFORDABLE, HIGH-SPEED INTERNET + DISH that’s “AVAILABLE WHERE YOU LIVE.” That’s because the target market is premises redlined for landline by legacy incumbent telephone and cable companies.

Despite widespread agreement telecommunications is a utility that should be available to all and a network we all share and use, it is far from that in a nation where landline telecom infrastructure availability is spotty, comparable to a Swiss cheese full of holes.

Sunday, August 06, 2017

U.S. policymakers continue to engage in misguided, wishful thinking on telecom infrastructure modernization

North Georgia featured in CBS report on rural broadband [VIDEO] - Now Habersham: Millions of Americans today lack access to effective broadband service and many rural Georgians are among them. It’s an issue that’s grabbed the attention of state politicians and, now, the national media. CBS This Morning on Friday reported on the economic struggles facing Northeast Georgians and others who live in communities that lack broadband infrastructure.The Federal Communications Commission (FCC) this week committed over $2B in subsidies over the next decade to help telecom companies expand rural broadband.

Congress also is considering legislation that would incentivize broadband infrastructure investment and foster market competition. Georgia’s 9th District Congressman Doug Collins recently introduced the Gigabit Opportunity Act or GO Act. It would allow companies to defer certain capital gains taxes when they convert those gains to long-term investments in broadband infrastructure within state-designated “Gigabit Opportunity Zones.” Companies also would be allowed to expense the cost of expansion on the front end in ‘GO Zones’.

American policymakers continue to engage in misguided, wishful thinking when it comes to badly needed modernization of the nation's outdated telecommunications infrastructure to fast, reliable fiber to the premise (FTTP) technology for the 21st century. Two billion dollars will barely make a dent in the estimated $300 billion needed for job.

Offering tax incentives is similarly wishful, unrealistic thinking. What's needed is an aggressive federal initiative to build FTTP and treat it like a common carrier public asset. Tax incentives are the wrong approach. They are not national infrastructure initiatives; they are limited scope economic development tools.

Small cells not seen as viable replacement for retiring copper landline telecom infrastructure

Better cell phone service could come at a cost for California cities | The Sacramento Bee: Humboldt County Supervisor Rex Bohn said he doesn’t see telecom companies rushing into rural communities that have no or low connectivity, either. The small cells need to be close together to work most efficiently, and there isn’t enough demand in such areas to attract the companies.
Various observers have pointed to legacy incumbent telephone company plans to retire aging copper cable landline infrastructure in less densely populated areas and replace it with wireless service. Their business models that demand rapid return on investment do not permit its replacement with fiber to the premise (FTTP) infrastructure. However, the same business model constraints apply to wireless infrastructure as well as this Northern California county supervisor notes. Especially since those small cells will need a lot of fiber backhaul to be constructed to support them.
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