Obama administration should offer incentives for homeowner-owned fiber over the last mile

The incoming administration of U.S. President-Elect Barack Obama has tagged rebuilding America's aging infrastructure as a key policy objective. That includes its badly outdated last mile telecommunications infrastructure in order to make broadband accessible to more Americans.

Since the primary inadequacy of the telecommunications infrastructure when it comes to supporting broadband-enabled IP services isn't with the long haul and mid-mile portion of the network but rather the so-called "last mile" local access network, the administration should concentrate its efforts on developing incentives to hasten the change out of copper cable to fiber optic cable over this segment.

The administration should pay particular note of a recently issued working paper by the New America Foundation authored by Derek Slater and Tim Wu. The paper, Homes with Tails What If You Could Own Your Internet Connection, recommends state and federal tax credits to create incentives for homeowners to spend a $2,500 to $4,000 to connect their homes to last mile fiber built by existing carriers, neighborhood cooperatives, developers, local governments and private fiber optic vendors.

The authors seem to acknowledge that while there's near universal agreement that fiber over the last mile is essential to the future of America's telecommunications system and the critical role it plays in the nation's economy, there also is a substantial amount of inertia on both the supply and demand sides of the equation that keeps the U.S. stuck behind a technologically obsolete "copper wall" built decades before the Internet was created. The limitations of telcos' circa 1970s and earlier copper cable plants have become painfully obvious to all too many Americans who have vainly attempted for years to subscribe to their telco's DSL (or VDSL)-based services, only to be told it can't reach their homes or the copper cable is too old and degraded to support it or find it can't reliably deliver the throughput they'd like.

Telcos that have to produce quarterly profits are inherently conservative and won't make a long term capital investment in deploying fiber over their entire networks. They argue there's not enough evidence that homeowners will subscribe to fiber-based services at a sufficient "take rate" to justify such a major expenditure unless homes are densely packed cheek to jowl, thus reducing their investment risk. The problem is a lot of Americans don't live in such neighborhoods nor have any desire to do so. And since telcos operate in a duopolistic and often monopolistic market environment, telcos eschew meaningful market research and don't get hard data that might indicate that if they built fiber, customers will sign up for advanced services.

Hence, Slater and Wu posit -- correctly in this blogger's opinion-- that it falls to consumers themselves to break down the copper wall in favor of fiber over the last mile since risk averse telcos will continue to default to the safe status quo whenever possible.

The authors aptly acknowledge that many homeowners might balk at dropping a few thousand bucks to connect their homes to locally owned fiber and that there needs to be a compelling financial argument in addition to bringing their dwellings into the modern telecommunications age. In this regard, they point to a study by RVA & Associates, a market research firm that focuses on fiber networks, estimating that fiber connection increases the value of a home by about $4000. If the Obama administration combined that with a tax break, the proposition becomes even more appealing, particularly along with incentives for mortgage companies and other lenders to extend low interest fiber loans to homeowners. The tax breaks could be partially offset by stimulating economic activity that would bring in additional tax revenues.

Slater and Wu are to be commended for advancing the discussion beyond the true but tired themes of how much the nation is falling behind other developed countries when it comes to broadband and needs a national broadband policy to outlining a strategy to make it happen. It's no longer useful to call for a vague "national broadband policy." Since the U.S. is already years behind where it should be when it comes to broadband telecommunications infrastructure, what's sorely needed an action plan and rapid implementation. The solutions don't have to be perfect when the dreary U.S. broadband status quo is unacceptable and grows increasingly so as time goes on. As business gurus Tom Peters and Robert H. Waterman Jr. advised in their 1982 book In Search of Excellence: Ready, Fire, Aim.

Broadband squared: state leverging fiber for roadway information and local telecommunications service

Here's an interesting item out of Massachusetts courtesy of The Berkshire Eagle that illustrates how fiber infrastructure can be leveraged for multiple uses. In this case, providing traffic data while also providing backhaul capacity to help serve the western part of the state where broadband access has been severely constrained.

Broadband's potential to drive small town economic boom

"If you don't have broadband, it's as bad as not having electricity, running water or sewer utilities in your town." So says Jack Schultz, author of Boomtown USA: The 7 ½ Keys to Big Success in Small Towns.

Schultz has got that right. Broadband enabled telecommunications services make location and distance irrelevant and allow entrepreneurial activity to occur where it might not otherwise, which Schulz says is increasingly important to the economy at a time when the number of big companies that are expanding is decreasing.

Access to broadband could also fuel a population shift along the lines predicted by author Jack Lessinger in his prescient 1991 book Penturbia: Where Real Estate will Boom After the Crash of Suburbia. (Perhaps aided by the current real estate bust that began in 2006?)

A big roadblock however is America's spotty and incomplete last mile telecommunications infrastructure that leaves far too many home-based entrepreneurs struggling with dial up or substandard satellite Internet connections. Schulz correctly notes they cannot wait for the telco/cable duopoly to provide them the broadband they need to grow their businesses. "People must try to research and find alternate ways to get broadband in their communities," he says.

Schulz's position here coincides with my view that the last mile telecommunications infrastructure will become increasingly locally owned and operated as we are seeing with the proliferation of small mom and pop fixed terrestrial wireless Internet Service Providers (WISPs) and in initiatives by local governments and cooperatives to install fiber optic connections to homes and neighborhoods.

Location, location, location: Broadband access now a factor in residential real estate

Associated Press writer Peter Svensson reports on what I've predicted will be a growing factor affecting the residential real estate market: whether a home has broadband access. Broadband has become a basic telecommunications utility. Homes that lack it are becoming about as desirable as those without electricity or water hookups. Svensson quotes Edward Redpath, a real estate broker in Hanover, N.H., as saying he's seen deals fall through once the buyer realizes a home can't get broadband.

I disagree with Svensson's theory that over time the lack of universal broadband in the United States along with higher gasoline prices could pull people from the countryside toward cities and suburbs.

Small local Wireless Internet Service Providers (WISPs) are springing up throughout the U.S. to provide wireless broadband where the telco/cable duopoly does not. Residents and businesses will also take matters into their own hands and form and invest in cooperatives to build their own local fiber optic telecommunications infrastructures just as they did several decades ago to bring electricity and telephone service to their communities.

As Svensson's story suggests, they will be motivated by economic considerations to boost the market appeal and value of their homes -- particularly as they work to crawl out of the current real estate market downturn -- and to support their ability to start businesses and telecommute to their jobs.

Cable company capitalizes on AT&T's failure to deploy DSL, inability of telco's aged copper cable plant to support bundled services

Two years ago, South Lake Tahoe was one of El Dorado County, California's most puzzling and persistent broadband black holes. Neither incumbent telco AT&T nor the incumbent cable provider, Charter Communications, offered broadband to many of the area's neighborhoods, leaving residents with the dreary Hobson's choice of antiquated mid-1990s era dialup technology or costly, substandard satellite Internet connections.

Patti Handal was fed up with the situation and went door to door with some of her neighbors, collecting signatures of nearly 700 residents of the affected neighborhoods petitioning AT&T to deploy DSL and do so ASAP. Then several months later in June 2007, the Angora Fire incinerated some of these neighborhoods along with portions of AT&T's aerial copper cable serving them. AT&T's replacement of the fire damaged infrastructure enabled the telco roll out DSL to Handal's and some -- but not all -- of the Tahoe neighborhoods stranded on the dark side of the digital divide.

In retrospect, Handal believes the petition campaign to show AT&T demand was there for DSL had no meaningful impact despite the encouragement of the effort by AT&T and local elected officials. Instead, it was the Angora Fire's destruction of AT&T infrastructure that altered the dial up status quo.

Now Handal reports Charter is about to roll out service to much of Montgomery Estates, all of Echo View Estates, all of Angora Highlands, and all of Mountain View Estates with Christmas Valley and all of Montgomery Estates in the near future.

Charter officials were likely motivated by a report in the Tahoe Tribune that AT&T decided in January 2008 not to expand DSL service in the area in the foreseeable future, seizing an opportunity to take and hold market share since in a duopolistic market, whichever provider deploys first enjoys initial customer appreciation and loyalty for bringing them out of dial up purgatory and into the modern era of telecommunications.

Notably, AT&T isn't matching Charter's bundled services including video. According to Handal, an AT&T representative told a South Lake Tahoe Chamber of Commerce meeting two months ago that it would not be offering its bundled U-Verse service. Instead, AT&T has chosen to deploy DSL in some but not all of the areas served by Charter in a limited response to Charter's deployment initiative.

The likely explanation for AT&T's decision to select a partial DSL deployment strategy is going head to head with Charter for bundled services would require AT&T to replace most of its aged copper cable plant that can support only slower DSL speeds but cannot carry the higher bandwidth VDSL signal used by U-Verse.

Despite the expectation that AT&T introduced U-Verse in order to compete with cable companies, the scenario playing out in some South Lake Tahoe communities is likely to be mirrored throughout much of the United States where telcos' aged copper cable plant precludes them from offering bundled services and higher speeds to effectively compete with cable providers.

Dialuggers have company in high places

If you're stuck with mid-1990s era dial up Internet access, you have company in high places. For example, Congresswoman Donna Edwards, who represents a district just outside Washington, D.C., and can't get broadband service at her Fort Washington, Maryland, home. (Keep in mind this is a major metro area and hardly the kind of rural area where many erroneously believe is the only place where broadband black holes can be found in the U.S.)

According to this item in PC World, Edwards said at a a OneWebDay event in Washington that she hasn't used her home dial-up connection for months. "It's too much of a pain," PC World quoted Edwards as saying. "It's too cumbersome. All of the data, all of the information that really I most want, you can't just handle on dial-up." Very true as many frustrated dialuggers well know.

PC World reports Edwards and Federal Communications Commissioner Jonathan Adelstein called on Congress to develop a far-reaching broadband policy that would accelerate the rollout of faster broadband across the U.S. But what specifically? How about greater financial assistance for communities and local governments to build open access fiber optic last mile infrastructure for starters since the existing telco/cable duopoly apparently can't absorb the required capital expenditures. After all, if the government can come to the aid to the U.S. financial services industry with hundreds of billions of dollars, it seems to me it could also help in the development of the infrastructure over which finance and commerce is increasingly transacted. A bonus would be increased economic activity as indicated by this California study issued last November that concluded the state stands to gain 1.8 million jobs and $132 billion of new payroll over the next 10 years with a 3.8 percent increase in the utilization of broadband technology.

"Behold America's broadband backwater"

Behold America's broadband backwater. For the nation that pioneered the Internet, extending fast connections to small towns and rural areas has proved a daunting challenge. Carriers are loath to build networks where they can't sell service at a profit, and since 2003 more than $1.2 billion in federal loans aimed at helping private carriers serve remote areas has addressed only the most extreme cases. According to a study by the Pew Internet & American Life Project, released in July, only 38% of rural American households have access to high-speed Internet connections. That's an improvement from 15% in 2005, but it pales in comparison with 57% and 60% for city and suburb dwellers, respectively.

The lack of fast Web access is helping create a country of broadband haves and have-nots -- a division that not only makes it harder for businesses to get work done, but also impedes workers' efforts to find jobs, puts students at a disadvantage, and generally leaves a wide swath of the country less connected to the growing storehouse of information on the Web -- from health sites to news magazines to up-to-date information on Presidential candidates. "Broadband is a distance killer, which can especially help rural Americans," says John Horrigan, a Pew researcher. "Broadband is not just an information source for news and civic matters, but it's also a pathway to participation."

Senate Commerce Committee Sets Broadband Hearing

Broadcasting & Cable reports today that the Senate Commerce Committee scheduled a full committee hearing Sept. 16 on the benefits of broadband.

Extending broadband to underserved areas is one of the priorities of a Democratic administration, according to the recently approved Democratic platform, which pledged that the Democrats will "implement a national broadband strategy … that enables every American household, school, library and hospital to connect to a world-class communications infrastructure."

The hearing, "Why Broadband Matters," will examine various areas, including access to government information, education, jobs and telemedicine.

Misgivings in Maryland over Verizon FiOS reach

Charles County, Maryland commissioners are concerned a franchise deal the county is finalizing with Verizon to install Verizon's proprietary FiOS fiber optic cable in county rights of way won't serve the county's telecommunications needs.

SouthMdNews.com reports:

‘‘I want to know how we’re improving what we [have] now,” said commissioners’ President F. Wayne Cooper (D). He compared the pending Verizon deal to that of a builder making big promises in order to secure approval for a small project.

‘‘This sounds an awful lot like ‘let me build the retail now, and I’ll build the offices later.’”

Again, staff was reluctant to discuss the details of the Verizon agreement on the record. However, Rick Elrod, the county’s consultant for the Verizon deal, admitted that the Verizon project being discussed would not be as broad as the commissioners would like.

Sounds like the commissioners need to consider alternatives such as open access fiber lest they end up with angry constituents due to the limitations of the proposed Verizon FiOS project.

Coalition calls on next U.S. administration to adopt broadband expansion strategy

Two weeks after the National Association of Telecommunications Officers & Advisors (NATOA) declared the U.S. is at a crisis point on the future of its telecommunications infrastructure, another organization is calling for the next administration to make broadband access an "early and high-level priority."

As with the NATOA, the nternet Innovation Alliance (IIA) advcocates a national broadband strategy it says should be comprised of a "coherent set of policies and goals to accelerate universal adoption of high speed Internet." The IIA calls on the next administration to provide investment incentives and encourage public-private partnerships to expand broadband infrastructure and availability.

“We are at a critical moment in our nation’s history,” said Bruce Mehlman, co-chair of the IIA, which describes itself as a broad-based coalition of business and non-profit organizations. “To compete and win in the 21^st century, we must ensure the United States capitalizes on the extraordinary economic, technological and societal opportunities presented by broadband. The benefits are undeniable and compelling.”

Ironically, one of IIA's members is AT&T, whose failure to invest in upgrading its infrastructure, particularly over the last mile to homes and businesses, is a major cause of the pathetic state of U.S. broadband access.

AT&T seeks regulatory roadblocks to wider broadband access

AT&T is notorious for incomplete wireline infrastructure in its 22-state service area. That produces sprawling broadband black holes that belie its motto of "Your World Delivered."

Now the big telco wants the Federal Communications Commission to block a joint venture between Sprint and Clearwire that would deploy WiMAX wireless broadband that could fill in many of AT&T's broadband black holes. AT&T's current strategy seems to have the perverse goal of preserving as many of its digital dark spots as possible for as long as possible. In some areas, AT&T is already under competitive pressure from Verizon Wireless Broadband, which has been harvesting customers who can't get wireline broadband from Ma Bell. Since it would likely offer faster thoughput speeds, the Sprint/Clearwire WiMAX venture would present an even greater threat to AT&T's dark territorial hegemony.

U.S. should regard broadband as information utility and ensure universal access, congressman says

This from the Pittsburgh Post-Gazette on the Federal Communications Commission's July 21 hearing held in Pittsburgh, PA:

U.S. Representative Mike Doyle, D-Forest Hills, who help to organize the event, said the hearing was intended to address two major concerns -- the so-called "digital divide" between those who have broadband access and those who don't, and "net neutrality," or the openness of the Internet.

Rep. Doyle favors a "guarantee of universal service" similar to telephone service, that views the Internet as a type of information utility. Making broadband Internet service available to all "has to be a joint effort by the federal government and the private sector," he said.

Along with universal service, he said, the United States needs "a policy that establishes basic core principles for the Internet" to ensure that service providers do not become "gatekeepers" who can restrict users access.

Vexed in Vermont over slow progress on broadband access

Considering that broadband has been likened to an information interstate highway, Vermont is settling for just a two lane blacktop, laments Lawrence Keyes in a op-ed in the Rutland, Vermont Herald.

Keyes, who chairs Vermont's Software Developer's Alliance outreach committee, says Vermont's E-State initiative "is largely an exercise to convince ourselves that 'something is being done, and 'we've got it covered' as broadband black holes remain numerous.

What worries me is that with E-State we're going to get people barely off dialup. By going with wireless Internet connections, we believe that we have a state-of-the-art high-tech infrastructure superior to other states. That is how it is being sold. But, we're really just paving the dirt roads.

Keyes suggests investment in broadband infrastructure should be given the highest priority by all candidates for governor.

Vint Cerf: Single purpose phone, cable systems and legacy regulation impede broadband expansion

Some observations from World Wide Web creator Vint Cerf. They show that we're in a transition period between yesterday's single purpose, proprietary analog-based telco and cable systems and an evolving digital Internet Protocol-based platform that can deliver the Web, voice and video. Cerf's observations suggest this transition explains why many broadband black holes persist in the U.S. since the nation's current infrastructure was not designed and built to deliver universally accessible IP-based services. Nor is the current regulatory scheme that treats the Internet as an afterthought -- an optional "information sevice" -- rather than an essential telecommunications service.

Cerf also pays homage to the notion that IP-based infrastructure is a natural monopoly like publicly owned roads and highways that by its nature does not lend itself to market competition:

You don't have multiple roads going to your house for example. Instead, it is a common resource. I said something like "maybe we should treat the Internet more like the road system."

Cerf correctly notes that competition to deliver IP-based services isn't likely to develop among the legacy telco and cable providers since the old regulatory framework isn't designed to foster competition for them. He posits that like the early telephone system, subsidies will be needed to ensure universal access.

If broadband service is essential to the national economy and to citizens, given the present means by which it is implemented, and given that it appears unlikely that the usual competitive pressures will lead to discipline among the competitors, perhaps we need new national rules to assure that the service is openly and equally accessible to any application provider and to all users. Equal does not mean that everyone pays the same amount. In particular, higher capacity might be priced at a higher rate. Provision needs to be made, however, to deal with high cost (to the provider) areas using a new form of Universal Service or some other subsidy.

Costly oil will fuel public policy push for universal broadband access

The Los Angeles Times is out with a look ahead at how Americans' lives will change with $200 a barrel oil and $7 a gallon gasoline if it reaches those price points -- which would represent an exponential increase considering oil was going for just $20 a barrel at the beginning of 2002.

I predict that if this unpleasant circumstance comes about, it will provide a big boost to telecommuting and other forms of using telecommunications technology to bridge distances rather than fuel consuming transportation. That in turn will create a major public policy push for rapidly upgrading the nation's incomplete telecommunications infrastructure to ensure every American has access to high speed Internet -- possibly on the scale of the Federal Aid Highway Act of 1956 -- only this time involving fiber optic cable instead of concrete and blacktop.

On July 16, 2008, Virginia Gov. Timothy M. Kaine citing rising fuel prices and the escalating cost of commuting to work, announced a telework initiative for gubernatorial appointees, which includes about 120 employees in the Cabinet and Governor's Office. Kaine also announced an improved State Telework Policy directing all state agencies to consider ways to improve and expand agency telework and alternate work schedule programs.

In order for telework initiatives like Kaine's to work, Virginia and other states will have to ensure that their telecommunications infrastructures provide broadband access to all state residents. That means policies and incentives to rapidly deploy infrastructure to make telework possible and not simply engaging in studies and mapping broadband black holes that don't result in wider broadband access. Rising pump prices will likely add the necessary extra incentive to show real and timely progress.

U.S. suffers from "Neanderthal" broadband policy, critic charges

Stanford University law prof Larry Lessig suggested at today's announcement of the InternetforEveryone.org universal broadband access initiative at the Personal Democracy Forum in New York that the current U.S. policy treating broadband Internet access like a competitive consumer commodity isn't working and is keeping the nation stuck in the dial up digital dark ages.

"That Neanderthal philosophy has governed for about eight years, and it has allowed us to slide from a leader in this field to an abysmal position," Lessig said in a clear attack on the Bush administration's stance.

Internetnews.com reports the coalition, which includes Google and eBay, wants Congress and the next administration to take up the issue of broadband availability.

Vint Cerf, Google's chief technology evangelist and one of the architects of the Internet, implied that one of the key reasons for the lack of universal broadband access in the U.S. is that that the Internet, which carries multiple and unlimited forms of digital communications, is delivered by telcos and cable companies interested less in providing Internet access and more in selling particular services such as video and voice telephone connections.

From Wilson, North Carolina to Washington: Broadband access a growing issue

Here's an exhausive, well written feature article by Fiona Morgan at INDYWeek.com replete with photos on the issue of broadband Internet access and how the North Carolina municipality of Wilson concluded broadband is an essential public utility and took matters into its own hands and built its own fiber optic based infratructure.

The story explains the reasons for America's incomplete telecommunications infrastructure and how policymakers are addressing the issue from Wilson city hall to Congress. Speaking of the latter, the story notes that lack of broadband is the top constitutent complaint for North Carolina Rep. Bill Faison, a House Democrat representing Orange and Caswell counties.

"I can't go to a public meeting anywhere in Orange or Caswell without someone coming up to me and saying, 'We've got a problem with Internet and here's what it is,'" Faison is quoted as saying. "No one comes up and says, 'We've got a problem with Medicaid,' or 'We've got a problem with the wildlife commission.' No one complains about the Department of Transportation not fixing a road in front of their house. They all show up and want high-speed Internet.'"

U.S. broadband: Desperate ideas of an industry that resists change

Here's a piece that ran in TG Daily by Wolfgang Gruener lamenting the dreary state of U.S. broadband and the lack of the kind of technological and market competition seen elsewhere in the information technology industry. Some key excerpts:

Mainstream DSL speeds aren’t enough to support family broadband networks and new services such as multimedia streaming and I don’t even want to talk about the quality and reliability of the DSL service in my hometown. Broadband providers already are the most significant roadblock between consumers and new applications and now we are hearing that connections will see delays and/or extra charges when you take advantage of new high-bandwidth services.

Let’s be clear: There is zero entrepreneurial spirit and zero social responsibility left in today’s U.S. telecommunication industry. This industry is not about products and consumer trends anymore. It is about protecting a revenue base without exploring and providing new and existing services to customers at prices that avoid new divides between the rich and the poor.

Any industry naturally resists change. Change fosters uncertainty and business hates uncertainty. The broadband telecommunications industry by its very nature lacks robust competition. It is monopolistic and at best, duopolistic. The barriers to entry (the cost of overbuilding new physical plant, regulatory hurdles) are high and discourage new players from entering the market. Without these new players entering the market and creating change by offering superior products and services, there is no incentive for the incumbents to improve their offerings. This is why the broadband telecommunications industry behaves as if it doesn’t believe in its future. There isn’t really a future when its fundamental perspective is preserving the status quo.

We are increasingly likely to see government intervention in the broadband telecommunications industry in the next several years if it becomes public policy to regard modern telecommunications — which now encompass broadband Internet — as vital infrastructure and a natural monopoly as occurred with basic telephone service decades ago.

Survey results show speedy broadband a threshold advanced IP service

A survey of of executives, engineers and consultants representing the cable, telephone, satellite TV, broadcast, and technology equipment industries found that consumers are most interested in high speed Internet connectivity ahead of other advanced services such as HDTV over Internet and digital phone service.

Survey participants were asked to rank several advanced communications services on a scale of 1 to 5, with 5 being the most attractive to customers. High-speed data speeds received more rankings of 5 than any other service. Nearly 40 percent of the respondents ranked data rates as a top draw. About one-fourth of participants ranked HDTV service as a 5. Digital phone service received the fewest top rankings. Only 9.2 percent of participants ranked it at 5.

The results of the survey by Pike & Fisher Broadband Advisory Services were released today at Pike & Fisher's Broadband Policy Summit IV.

The results are hardly unexpected considering the U.S. is still playing catch up with other industrialized nations on broadband access and throughput speeds, with too many Americans still relegated to early 1990s era dialup. They show a solid broadband offering with robust bandwidth is a threshold service consumers want first and foremost ahead other advanced IP services.

Editor: Incomplete, inadequate telecom infrastructure requires state government to step into the gap

Broadband is essential as roads and like roads, it can't be left to the private sector alone, writes Charlotte Observer Associate Editor Mary C. Schulken.

Schulken cites a 2007 report by the North Carolina s e-NC Authority showing in four counties -- Jones, Greene, Warren and Gates -- less than 50 percent of the households can obtain access to high speed Internet services, while in 21 more than 30 percent are mired in broadband black holes.

"Access to high-speed Internet is as basic today as being connected by a good road -- and offers the same public benefit," Schulken writes. "Yet the private sector will not pay to put it within reach of every household and every community in North Carolina. The state needs to step up and invest in connecting the last mile."

Too bad this is AT&T territory. Up north in Massachusetts, a Verizon spokesman says the company is deploying its FiOS fiber optic plant without regard to population density and particular in areas where the old cable plant needs replacement.