Look Out Google Fiber, $35-A-Month Gigabit Internet Comes to Vermont - Digits - WSJ

Look Out Google Fiber, $35-A-Month Gigabit Internet Comes to Vermont - Digits - WSJ: VTel’s Chief Executive Michel Guite says he’s made it a personal mission to upgrade the company’s legacy phone network, which dates back to 1890, with fiber for the broadband age. The company was able to afford the upgrades largely by winning federal stimulus awards set aside for broadband. Using $94 million in stimulus money, VTel has invested in stringing 1,200 miles of fiber across a number of rural Vermont counties over the past year. Mr. Guite says the gigabit service should be available across VTel’s footprint in coming months.

VTel joins an increasing number of rural telephone companies who, having lost DSL share to cable Internet over the years, are reinvesting in fiber-to-the-home networks.

As Google targets large metro areas of the United States for fiber rollouts, small incumbent local exchange carriers (ILECs) like this one are upgrading their outmoded copper cable infrastructure with fiber to the premise (FTTP). Nevertheless, significant gaps will remain, particularly in areas of the U.S. served by top tier telcos like AT&T and Verizon that have essentially put their copper networks into runoff mode with no plans to upgrade them with fiber plant as they concentrate their CAPex on mobile wireless services.  Due to their smaller populations, these areas are also unlikely to attract Google fiber and will have to build their own community-based FTTP networks.

AT&T likely to upgrade only small portion of residential wireline plant, analyst predicts

AT&T is likely to upgrade only a fraction of its residential wireline plant to deliver premises Internet to residences that it doesn't currently provide Internet service, according to an analysis by George Notter of Jefferies & Company discussed in this Telecompetitor article.  The telco's strategy is stated to be unveiled next month.

Notter's analysis predicts AT&T will upgrade only about 15 percent of its wireline plant to support its hybrid fiber/copper U-Verse triple play offering.  Some of the remaining premises may be offered AT&T's version of Verizon's LTE-based HomeFusion product, according to Notter. 

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

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

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

Public utility district Internet as alternative to Google fiber

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


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


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


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

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

Verizon, AT&T Decline Broadband Connect America Funding

Verizon, AT&T Decline Broadband Connect America Funding: Two of those carriers – AT&T and Verizon – yesterday declined all of the funding they had been offered. In a letter to the FCC shared with Telecompetitor, AT&T — which was offered $47.8 million — said it is “optimistic” about its ability to get more broadband into rural areas, “particularly as the technology continues to advance.” But the company said it could not commit to participate in the program until it finalizes that strategy.

One year ago, the big incumbent telcos urged the FCC to reform the Universal Service Fund with standards that would effectively subsidize deployment of first generation DSL service introduced more than a decade ago.  Now that the USF has been reformed into the Connect America Fund along the lines of what they wanted, they're saying thanks but no thanks to the subsidies.  Most likely because the legacy DSL standards the telcos proposed last year were already outdated by a decade or more -- and now look even more obsolete and unable to keep up with burgeoning bandwidth needs.

Verizon's residential LTE "HomeFusion" likely to serve only fringes of small number of metro areas

Verizon's announcement today of its HomeFusion wireless residential Internet service offering based on its nascent 4G cellular LTE service appears aimed at picking up marginal residential market share in suburban and exurban fringes of U.S metro areas where wireline connectivity from incumbent telcos and cable providers is sketchy. These are also areas where Verizon might otherwise deploy its FiOS fiber to the premise residential wireline product but will not because the company has called a halt to further FiOS expansion.

It's not likely HomeFusion will be broadly deployed in predominantly rural and quasi-rural areas. Like Verizon's mobile wireless offerings, it's bandwidth metered and can't offer the ample headroom for bandwidth demand growth -- much of it driven by video -- that fiber does. In order to improve Internet deployment and access in these areas, these communities will have to build their own fiber to the premises networks constructed by local governments or telecom cooperatives.

AT&T has effectively thrown in the towel in serving these areas. HomeFusion represents Verizon's last ditch effort to pick up some limited revenues in these underserved markets.

Why "wireless broadband" will remain in mobile market segment

This article in CED magazine explains why 4G cell service can't substitute for premises wireline Internet service:

Even if you’re a light user or a millionaire, you might still think twice about going entirely wireless. Allen Nogee, principal analyst for In-Stat, says he actually tried an LTE modem as his sole Internet connection for about four months. He was pleased with the service; however, he did eventually go back to a fixed line for a number of reasons.

Nogee says that while price is certainly an issue, depending on usage, spectrum is the truly prohibitive element that will prevent LTE from becoming an in-home solution. Nogee says that eventually the cell towers currently pumping out LTE will get crowded, and that’s when things get complicated.

“It’s a shared resource, with a set amount of spectrum, and operators only have so much spectrum,” Nogee says. “If we had no wired Internet in the United States and everyone attempted to use LTE, it just wouldn’t work. There’s just not enough capacity there.”

Another analyst, Strategy Analytics, predicts fixed wireline will remain the primary premises Internet connection and will not be displaced by 4G wireless connections where wireline infrastructure exists and serve as an alternative means of access where it does not.

“We see two parallel markets for 'Mobile Only' in the US: users in remote or underserved areas where dependable fixed broadband is unavailable, and cost-conscious casual users, who are unlikely to exceed imposed data caps, and for whom mobile data rates are ‘good enough,’” said Ben Piper, Director of the Service Provider Strategies program at Strategy Analytics.

What about tablets? Might tablet users cut the cord to these devices and instead rely exclusively on mobile wireless connections, especially since tablets are so portable? Not likely. Nearly all tablet data traffic will be transported via fixed premises Internet service, Sandvine says in its broadband predictions for 2012.

Verizon misses on price points for higher tier FiOS service

There are four key elements to a successful business offering: product, price, promotion and distribution channel. When it comes to the high end of its FiOS fiber to the premises (FTTP) Internet service, Verizon has most but not all of those elements.

The missing element? Price. At $200 a month for service providing downstream connectivity of 150 Mbit/s and 35 Mbit/s on the upside, "nobody's buying," reports Kathy Brown, Verizon's senior vice president for public policy according to this Light Reading story. Even in university towns, where Aspen Institute fellow and former government broadband policy guru Blair Levin wants to explore bringing gigabit service through his Gig.U project. Consumers, Brown notes, instead opt for cheaper service tiers providing connectivity at lower speeds.

Of course few are interested in buying Verizon's higher end service at $200 a month. That's an unacceptable price for most consumers. It's also an expected consequence of telco marketing strategy that rations bandwidth, creating an economic disincentive for customers to use more. Products and services cannot be successful when price points are set unrealistically high. It is also pointless to blame consumers for not buying when they are.

Telcos propose reforming USF to subsidize legacy DSL

A half dozen first and second tier telcos including America's largest, AT&T and Verizon, are proposing to replace the existing Universal Service Fund that subsidizes switched voice service with two new subsidy programs to provide Internet connectivity in high cost areas. The proposal was made in a July 29 filing with the U.S. Federal Communications Commission.

One program would support wireline service, the Connect America Fund (CAF). The other, the Advanced Mobility/Satellite Fund, would subsidize wireless and satellite service in the least populated, highest cost areas of the nation. The CAF subsidy would be highly granular -- down to the census block level served by an existing telco central office.

The CAF is aimed at subsidizing buildout of the telcos' legacy Digital Subscriber Line (DSL) service using fiber to feed remote DSLAMs that serve premises using the existing copper cable plant. The CAF plan proposes approximating the FCC's current asynchronous minimum definition of broadband, 4 Mbs for the download side of the connection and 1 Mbs for uploads. (The CAF proposal calls for an upload speed of 768 Kbs)

The filing comes just one week after AT&T CEO Randall Stephenson declared DSL obsolete technology. Apparently it's not for those parts of AT&T's service area where the company has opted not to invest in building out its VDSL-based U-Verse service. For those areas, legacy ADSL that offered throughput at the current FCC minimum that was state of the art technology a decade ago will have to suffice.

If these telcos had been smart and exercised even a slight degree of foresight, they would have made this proposal in the late 1990s when they first began to roll out DSL service. Or by 2000 at the latest. At that time, they clearly knew a business case couldn't be made to deploy DSL in large swaths of their service territories without some form of subsidization.

This proposal is not only tardy by a decade or more. It sets the throughput bar too low by fixing it on today's current minimum definition of broadband. With Internet bandwidth demand growing at a rapid pace to support increasingly bandwidth hungry applications -- most notably video -- today's 4 Mbs down and 1 Mbs up standard is by definition the edge of tomorrow's obsolescence. Some would argue it's already obsolete.

The incumbent telcos' proposal also comes as community broadband projects are taking off and building out in many parts of the nation that provide far faster, future proof Internet connectivity using fiber to the premise connections.

The Economist: Why LTE can't substitute for fiber

Some believe the Internet will become untethered over the last mile and point to cutting edge wireless transmission technology known as LTE or 4G. The two biggest telcos in the U.S., Verizon and AT&T, are rolling it out (or are about to in the case of AT&T.)

But it won't be able to replace the nation's aging copper cable infrastructure that has grown increasingly difficult and costly to operate reliably. Nor is it likely to provide sufficient capacity for future growth in bandwidth demand -- something that Verizon and AT&T are acutely aware having faced growth pains and capacity constraints with their current generation of 3G wireless.

The Economist explains why:

Already LTE has shown itself good for at least 5Mbps—impressive for a mobile technology still in its infancy (see “Generational change”, December 3rd, 2010). But with peak speeds of 1Gbps theoretically possible, LTE’s next iteration should make downloads of 100Mbps over the airwaves a matter of routine. Developments beyond that could lead to near-gigabit speeds.

Of the two, though, a fixed link like fibre remains the better bet. Sooner or later, even a 4G wireless protocol such as LTE or its country-cousin WiMAX will become overwhelmed by the exponential growth of mobile traffic. By contrast, an optical link to the home could use a multitude of different wavelengths to boost throughput almost indefinitely.

Network World also weighs in:

So the next question about wireless broadband as a substitute. Recall that according to the U.S. Government Centers for Disease Control and Prevention (CDC), 1 in 4 homes has cut the legacy wireline phone cord in favor of wireless-only voice. Could we see wireless substitution rates that high for broadband access? We think not because radio spectrum is a limited resource, and unlike wireless voice networks that have plenty of spectrum to manage voice calls, if 25% of broadband users shifted from wireline access, the demand for wireless broadband would likely exceed available spectrum given today's technology.

DSL reaches end of line as interim pre-fiber to the premises technology

Digital Subscriber Line (DSL) was deployed by telcos starting in the late 1990s as an interim technology to bring Internet Protocol-based telecommunications services to customer premises before fiber optic connections could be brought to them.

Now DSL faces a crisis that dramatically shortens the days it can play this role. While DSL allows telcos to use existing copper plant designed for Plain Old Telephone Service (POTS), that copper plant is aged and deteriorating quickly. DSL tends to work best over newer, more pristine copper. But there's not much of that (if any) being deployed these days. Meanwhile, DSL customers complain about connections that run slower than advertised or are prone to outages as DSL signals struggle across ancient pairs of twisted copper.

And since about 2008 and amid the current economic downturn, telcos have pared back their DSL rollouts. Verizon concentrated on fiber to the premises via its FiOS product offering, prompting customer complaints it was neglecting its copper plant and repairing it with bubble gum and duct tape.

Here's the crisis: Now that DSL has served its role as an interim IP solution on the road to fiber to the premises, the United States is not prepared to make the transition to fiber. Stunningly, this gap in the technology transition isn't addressed in the Federal Communications Commission's National Broadband Plan issued this past spring. Nor is there any indication the nation's two largest telcos are seriously addressing it. Verizon recently halted build out of its FiOS fiber plant. AT&T opted for a hybrid model of fiber to the node and copper to the premise for its U-Verse product. But the VDSL transmission technology that powers U-Verse suffers from far greater distance limitations than previous generations of DSL and greatly limits U-Verse's service footprint.

It will fall to smaller, locally owned and operated telcos, local governments and telecom cooperatives to pick up where DSL left off (or in many cases, left out for those not serviceable by DSL). The National Broadband Plan should recognize that DSL over copper is dead or dying and support efforts by these entities to deploy fiber to the premises with technical assistance grants and infrastructure construction grants and low cost loans.

Dark fiber owners seek buyers -- but last mile will determine value

Today's Wall Street Journal reports dark fiber left dormant since the dot com bust of a decade ago is on the block, its owners hopeful that the transition to Internet protocol-based telecommunications that stalled around the same time will finally take off.

But now as then, the so-called last mile (or first mile as some refer to it) remains key since the dark fiber was put in place for long haul and in some cases middle mile infrastructure. Long haul and middle mile fiber standing alone do not a network make. It takes last mile fiber infrastructure to reach customer premises.

Potential purchasers of that dark fiber must assess the odds whether there will be sufficient last mile fiber to connect to. Reliance on legacy incumbent telcos and cable companies lowers the odds. They have largely upgraded and built out their networks to the extent their business models allow. Verizon, the sole legacy telco that was building fiber to the premises, recently pulled back to concentrate on wireless service in metro areas. But if local governments and telecom cooperatives crank up construction of fiber to the premises infrastructure to fill the gap left by legacy providers, the value of these dormant dark fiber assets will likely increase.

Telco layoffs spotlight difficult transition from POTS to IP services

The telecommunications industry is undergoing great upheaval during the transition from POTS (Plain Old Telephone Service) to wireless and next generation Internet Protocol-based telecommunications technology, producing mixed and seemingly paradoxical company news.

Case in point: Roseville, Calif.-based SureWest Communications. The fiber to the premises telco announced this week it would lay off seven percent of its work force due to weakness in the POTS side of its business at the same time the IP side of its shop is growing.

An obvious question is why not retrain or shift the downsized POTS workers to accommodate the growth in IP-based services? The answer: while demand for IP-based services is stiff and will only grow stronger, growth prospects in that segment are constrained by the inability of investor-owned telcos like SureWest to build out their IP infrastructures to reach more customer premises. Doing so requires more CAPEX than their business models can accommodate.

SureWest's big counterparts, AT&T and Verizon, have slowed their IP infrastructure buildouts. AT&T began hitting the brakes on its mixed fiber/copper Project Lightspeed/U-Verse buildout as general economic conditions deteriorated in 2008. Just before last Christmas, AT&T went as far as pronouncing its POTS business in a "death spiral." Verizon recently stopped expanding the footprint of its fiber optic FiOS plant and repositioned itself as an urban wireless provider.

The demand for IP services is strong, providing a potential growth industry at a time when jobs and economic activity are greatly needed. (Consider that most residential customers have retained their IP services during the current recession). But the legacy POTS carriers can't ramp up to meet it. That situation requires alternative providers such as local governments and consumer telecom cooperatives step up to meet the need.

The view from the UK: America's "lame" "costly" "third-world" telecom infrastructure

The Economist offers this critical perspective on America's "lame" "costly" "third-world" telecommunications infrastructure that combines the worst of all worlds with poor quality service at high cost compared to other advanced nations. But the dreary state of affairs isn't much better across the pond in the magazine's UK home base either. Just a few months ago, Prince Charles warned much of the British countryside is in danger of becoming a "broadband desert," hamstrung by an aging, latency copper wire infrastructure that can't deliver sufficient throughput to enough of the populace.

As Exhibit A of the U.S. broadband gap, the magazine pointed to the outpouring of supplications to Google urging the company to roll out its experimental 1 Gigabit fiber to the premises telecom infrastructure in their communities.

Much of the article goes on to repeat the same points made elsewhere about the flaws of the U.S. telecom paradigm and the sturm und drang industrialized nations are undergoing as they transition from legacy wireline single purpose systems designed to deliver voice and television signals to fiber optic infrastructures capable of providing multimedia and interactive applications using Internet protocol.

The article closes with a bit of wireless vaporware by suggesting Verizon is abandoning its FiOS fiber to the premises service in favor of Long Term Evolution (LTE) wireless service that could deliver 150Mbs. Perhaps over Starfleet Command's quantum sub-space channel. But not in today's world where people are literally jumping into freezing lakes in hopes of getting Google to deploy real state of the art fiber technology to their homes and businesses.

Legacy telco regulatory concerns overblown as Internet replaces PSTN

The United States is moving from an era of the highly regulated, proprietary publicly switched telephone network (PSTN) to a new telecommunications paradigm in which the Internet is replacing the PSTN and the "plain old telephone service" (POTS) it delivered.

Both of America's biggest investor-owned telcos, AT&T and Verizon, have heralded the death of PSTN/POTS. Verizon is adopting Internet protocol-based next generation technology in its place. AT&T went so far as to declare its legacy, copper-based wireline infrastructure in a "death spiral" in a filing with the U.S. Federal Communications Commission just before last Christmas. That business, AT&T wrote, cannot be sustained as more and more residential customers drop their land line phone service for wireless PCS devices or use their Internet connections to make voice calls.

As the nation adopts this new Internet-based telecom infrastructure, the legacy carriers are worried that the FCC will attempt to overregulate it. Those concerns are overblown. There will be no need for increased regulation at a time when the telecom infrastructure is changing and alternative business models -- most notably locally owned open access fiber infrastructure -- are emerging.

Strict regulatory oversight is only needed in a monopolistic market. New business models such as municipal and cooperative-owned open access fiber networks dilute the monopolistic market power of the legacy carriers and thus the need for enhanced regulation. If enhanced regulation does come about, it will likely be aimed at penalizing legacy telcos that stand in the way of federal policy to expand advanced telecommunications infrastructure and Internet access with uncompetitive market practices.

IP-based service convergence rendering broadband debate irrelevant

Comcast's move into digital voice in 2006, AT&T's disclosure to Investor's Business Daily two years ago that it ultimately plans to shut down its existing voice network and replace it with a VOIP (Voice Over Internet Protocol) system in the limited areas where its U-Verse offering is being deployed and Verizon CEO Ivan Seidenberg's assertion at a Goldman Sachs investor conference last week that his company is migrating from the publicly switched telephone network (PSTN) and central offices designed to handle plain old telephone service (POTS) delivered over twisted pair copper wire to fiber to the premises (FTTP) all signal that wireline telecommunications is undergoing a paradigm shift.

The transition is away from the single purpose voice telephone and cable TV systems of the past to Internet-protocol based telecommunications infrastructure capable of delivering various media including high speed Internet connectivity, voice and video.

This paradigm shift is rendering the debate at the U.S. Federal Communications Commission and elsewhere over what constitutes broadband Internet increasingly irrelevant. What's gaining importance isn't the download and upload speeds that have dominated the debate over defining broadband but rather how to ensure these various IP-based services can be reliably and economically delivered to end users.

That takes a new and improved telecommunications infrastructure. This emerging IP-based infrastructure and the business models that can most rapidly deploy and support it is what truly deserve attention going forward. The pointless back and forth over how to define broadband keeps the conversation oriented retrospectively to the 1990s instead of where it needs to be: forward into the 21st century.

Verizon abandons PSTN, commits to next generation IP-based services

Verizon has become the first big telco to fully commit to next generation Internet Protocol-based service delivered over fiber in which the Internet replaces the publicly switched telephone network (PSTN) designed for plain old telephone service (POTS) delivered over twisted pair copper wire.

“We don’t look any different than Google,” Verizon CEO Ivan Seidenberg told a Goldman Sachs investor conference last week. “We can begin to look at eliminating central offices, call centers and garages.” Seidenberg's remarks were reported in Saul Hansell's Bits column in The New York Times.

That means a much smaller, shrinking wireline footprint for Verizon as the company sells off its old copper plant and deploys its FiOS fiber to the premises plant. In effect, Verizon is starting almost from scratch to build a new wireline plant. And just as with the early copper cable plant, urban areas will see it many years before those living outside them will. That sets the stage for history to repeat the cycle of the early copper POTS deployments of a century ago in which less densely populated areas established telecom cooperatives in the meantime. Only this time the coops will be putting up fiber instead of metal.

In contrast to Verizon, the dominant American telco, AT&T, is trying to keep one foot in its PSTN past by attempting to pound the square peg of ever increasing IP-based bandwidth demand -- particularly for video -- into the round hole of copper POTS with its Project Lightspeed/U-Verse FTTN architecture. This gambit leaves AT&T far less strategic headroom and could ultimately lead to the company getting out of residential wireline altogether in the first part of 2010.

Why the incumbents prefer a sub 1 MBs broadband standard

Some are scratching their heads at recent comments submitted by large telcos and cable companies to the Federal Communications Commission recommending that broadband be defined at speeds of under 1 Mbs in the national broadband plan the FCC is due to present to Congress by February.

Why would they set the bar so low, observers rightfully wonder, particularly since such a low standard is already becoming obsolete given the explosive growth in bandwidth demand and video content.

It's clearly incongruous that Comcast, for example, would urge the FCC define broadband at circa 1998 levels of 256 Kbs at the same time it rolls out its DOCSIS 3.0 software upgrade providing downloads of 50 Mbs and potentially higher. Or for Verizon to suggest broadband be deemed 768 Kbs down and 200 Kbs up (the current FCC definition of "basic" broadband service) when its own fiber to the premises offering, FiOS, offers throughput on a par with that of Comcast.

Here's the explanation: These sub 1 Mbs standards are based not on what the providers are technologically capable of delivering today but instead on their business models. They have built out their proprietary infrastructures to the extent these models allow while providing a reasonable return and dividends for their shareholders.

By advising the FCC to define broadband on such obsolete and arguably bogus terms, the providers are essentially telling the feds they aren't serious about the issue. It's a frivolous, throwaway position that summed up says "forget about any national broadband plan and leave us the hell alone." It's reminiscent of the scene in the 1980s film Tin Men where a car salesman asks a tin man played by Danny DeVito what he's willing to pay for a Cadillac and DeVito answers "Five dollars."

That stance is likely to lead to more complaints from top FCC brass that the FCC's call for input on a national broadband plan is producing self serving and unconstructive comment that doesn't provide any illumination or guidance.

Municipalities, telco coops essential players in fiber to premises deployment

Verizon issued a news release Monday pointing to a study commissioned by the Fiber to the Home Council suggesting that once the U.S. housing market begins to thaw, homebuyers will be hot for fiber. Or as another study issued last November by Google described them, "Homes with Tails."

As the only telco committed to a full fiber to the premises strategy for both brownfields and greenfields with its FiOS product, Verizon clearly has an interest in promoting the concept. The problem is Verizon like other big telcos as well as cable companies have segmented their markets such that locales where fiber would be most the desirable real estate amenity -- such as those that are home to exurban and semi-rural telecommuters and small businesses -- are least likely to see it. The only way these places can expect to get fiber to the premises in the foreseeable future is to start municipal fiber projects and fiber telecommunications cooperatives.

Both types of entities are also good candidates for some of the $7.2 billion in broadband infrastructure subsidies contained in the American Recovery and Reinvestment Act signed into law in February as well as likely follow on funding promised by the Obama administration.

Irony abounds in comments by U.S. representative, telco and cable reps on broadband stimulus funding

A highly interesting item appears in today's PC World. It reports on a telephone town hall conversation yesterday between a Tennessee resident and her Congressional representative, Representative Marsha Blackburn (R). It's an encounter to which many U.S. residents will readily relate.

The hapless constituent is stuck on dialup just one mile inside a broadband black hole event horizon. Repeated pleas to an unidentified broadband provider to roll out broadband service produced nothing and the constituent's patience has worn thin.

Blackburn responded by asserting the market would deliver if only more folks in the displeased constituent's neighborhood demanded broadband. Thus, Blackburn reportedly said, the $7.2 billion in subsidies and loan guarantees in the recently enacted federal economic stimulus legislation for broadband deployment to rural and other underserved areas are unnecessary since the market will solve the problem. That's patently incorrect as petitions by residents and small businesses to providers -- so called demand aggregation -- don't convince providers to deploy broadband infrastructure that their proprietary algorithms reject as economically unfeasible.

Ironically enough, Blackburn was disabused of her misapprehension that a competitive market exists in the natural monopoly -- and a duopoly at best -- that is wireline telecommunications service by representatives of two prominent members of the telco/cable duopoly at a panel discussion hosted by the Free State Foundation.

Thomas Tauke, executive vice president for policy at Verizon, pointed to market failure where the costs of providing service go beyond what providers like Verizon are willing to pay. Many of the areas without broadband are "very expensive to reach," PC World quoted Tauke as saying. Accordingly, Tauke added, broadband infrastructure subsidies such as provided in the stimulus legislation are entirely appropriate. The broadband funding in the stimulus measure also drew positive comment from Joseph Waz, senior vice president for external affairs at Comcast, who told the panel its inclusion is "very heartening."

That adds another layer of irony insofar as the big telcos and cablcos have gone on record elsewhere complaining the broadband funding provides little incentive for them to build out their infrastructures, arguing tax breaks would get infrastructure build out faster than grants or loan guarantees. They also object to the open access provisions attached to the stimulus funding.