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Rather, the proposal calls for a service standard couched in outdated terminology, calling for “universal high speed Internet.”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.
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