Administration favors fiber advanced telecom infrastructure for IIJA funding. Law could advantage governments and utility cooperatives.

Bipartisan Infrastructure Law-funded networks should be built to stand the test of time and be fast enough to accommodate current and future needs. Given current demand and evolving technologies, Bipartisan Infrastructure Law programs should prioritize the fastest speeds possible and require a minimum of at least 100/20 Mbps. Relatedly, Bipartisan Infrastructure Law funding should prioritize fiber-to-the-home wherever practical to future-proof the infrastructure. At the same time, respondents expressed the need for states to have flexibility to utilize both fixed and wireless technologies to fully reach all Americans and called for the ability to substitute fixed wireless and satellite options where fiber is not cost-effective or where no provider is willing to offer fiber. (Emphasis added)

The administration today clearly affirmed its preference for fiber optics for advanced telecom delivery infrastructure funded by the Infrastructure Investment of Jobs Act of 2021 (IIJA), shifting away from the technology neutral policy of the 1996 Telecom Act.

The IIJA prioritizes grant funding for up to 75 percent of capital costs of deploying advanced telecommunications infrastructure for projects where at least 80 percent of the premises to be served are not advertised landline or wireless connectivity of at least 25 Mbps for downloads and 3 Mbps for uploads.

But capital project construction is only part of the overall cost. The fiber infrastructure must also be maintained and repaired. Field electronic equipment must be updated and replaced every several years. These additional costs may deter a commercial entity that must earn a profit for its investors from building fiber in the sparsely populated areas deemed "unserved" under the IIJA and prioritized for funding. That would favor governmental operators and consumer utility cooperatives that operate without the burden of generating profits and paying income taxes, particularly if the federal government deems that grants awarded under the IIJA are taxable income.

Pandemic an inflection point for U.S. telecom policy

We Need Our Internet Access Networks to Be Something They Are Not: As the Covid-19 medical crisis is contained and Congress does what it can to recharge the economy, an important economic recovery question will be whether our political leaders will push huge stimulus dollars to Big Cable and Big Telecom companies under the premise that we need better networks and they are the logical choice for solving that problem. Giving big checks to the seven companies that control most of our internet infrastructure will mean we are doubling down on a system that should be overhauled. The Boards at the large incumbent ISP’s have their fingers crossed that Covid-19 doesn’t lead to a re-thinking of the current arrangement. To make sure the $500 Billion annual ISP annuity continues, an army of lobbyists is likely tasked with making sure the pandemic is not an inflection point for internet access and infrastructure.

If Congress wants to stimulate the deployment of very reliable, low-cost networks that are designed to favor consumers, it should provide low-interest loans that allow municipalities, electric co-ops, and entrepreneurs to create non-profit, open access, fiber optic networks where the subscribers to the network own the infrastructure. If Congress made inexpensive capital available to build this infrastructure, the entire country would get reliable and robust networks over the next ten years and the next time we’re all forced to live life at a distance, we won’t have to worry if our networks will have the capacity and flexibility to meet the demands we place on them.

The incumbents have a real credibility issue now having built up a track record over the past two decades of taking billions of dollars in federal subsidies yet leaving lots of Americans with substandard advanced telecom infrastructure.

Policymakers have been punked by the incumbents into believing the issue is one of addressing a "broadband" bandwidth gap inherent in their scarcity, unit pricing based business models. When in fact as the author of the Medium post points out, the real issue is insufficient fiber to the premise #FTTP infrastructure. American consumer culture makes it easy for the incumbents to frame bandwidth as a "good, better, best" consumer commodity and price tiered accordingly. As long as policymakers see this as a consumer commodity, they'll continue to fly blind, chasing "broadband speeds" and have a difficult time properly seeing #FTTP as essential infrastructure.

Google Fiber doesn't have a wireless alternative because it would require huge technological breakthrough

Google Fiber Broadband Hype Replaced By Delays And Frustration | Techdirt: To be fair, Google's PR folks can't offer answers of what comes next because Google itself doesn't know what the wireless technology that will supplant fiber will look like. But even Google's wireless promises have been decidedly shaky. After acquiring urban wireless provider Webpass two years ago, some of that company's coverage markets have actually shrunk, with the provider simply pulling out of cities like Boston without much explanation. And many of the executives that were part of that acquisition have "suddenly" departed for unspecified reasons. At this point it's certainly possible that once Google Fiber is done with its multi-year, numerous wireless tests it settles on a cheaper (but still expensive and time consuming) alternative to fiber.

There's a simple answer here. It's because Google doesn't have (not yet, as least) an unconventional wireless technology that can replace fiber. That would require breakthrough technology that can get around the physics of radio spectrum that makes it difficult to reliably deliver bidirectional IP data streams to multiple users while penetrating objects and precipitation without interference. In other words, to get fiber's throughput, nothing tops fiber.

Milo Medin, Google's then vice president of access services, said as much at the 2013 Broadband Communities Summit, disabusing the notion that wireless can replace fiber and thus eliminating the cost of building the necessary infrastructure to support it:

Some argue that fiber networks are not really needed because of wireless network growth. As an engineer, quite honestly, this kind of talk makes my brain hurt. Wireless network growth is driven by fiber. All those base stations that smartphones connect to are increasingly connected by fiber because, as speeds go up, fiber is required to carry that kind of traffic.

In other words, wireless needs a lot of what some hope it can more cheaply substitute: fiber.

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.

Until America musters will to fund crash program to build modern, government owned fiber telecommunications infrastructure to every doorstep

Until America musters the national will to fund a crash program to build modern, government owned fiber optic telecommunications infrastructure to every doorstep, it will continue to experience:

• Neighborhood infrastructure redlining and unregulated pricing by legacy incumbent telephone and cable companies exploiting the natural monopoly that is telecom infrastructure; 

• Poor connectivity and customer service;  

• Underfunded, incremental efforts by states and localities to build fiber to the premise telecom infrastructure.

Misunderstanding of market economics underlies U.S. telecom infrastructure deficiencies

Fiber-Optic Network Construction Highlights Widespread Lack of Broadband in Salinas Valley, Calif.: Joel Staker of the Central Coast Broadband Consortium estimated the project would cost between $20 million and $30 million, half of which the group was hoping the USDA would be capable of funding.

After quietly listening throughout the entire discussion, Mensah thanked the stakeholders for their time and commitment. She also said that the USDA no longer had grant money available for such projects, but a long-term loan was not out of the question.

“I can see that the scale of need and gaps in service are severe in your region,” Mensah said. “However, I am concerned that if government steps in to accomplish this we would be displacing private industry, which is something we are very careful not to do.”

This story illustrates the circular thinking and poor grasp of market economics impeding the construction of badly needed telecommunications infrastructure in the United States. Areas such as this one near California's Silicon Valley suffer from last mile infrastructure gaps due to a lack of investment by the private sector. Consequently, those adversely affected look to the public sector for help.

Public officials however are reluctant to provide funding, concerned as the USDA official quoted that doing so would deter private sector investment. However, if private sector interest in building last mile infrastructure was there, the "last mile problem" wouldn't exist in the first place and the locals wouldn't be looking to the federal government for assistance.

This story also points up the misguided thinking that once middle mile fiber is in place and anchor institutions such as government offices and schools are connected, the private sector will step in to build fiber to the premise to serve the rest of the community. That typically doesn't happen because the ROI doesn't pencil out quickly enough. That economic reality goes to the heart of the problem. Many people including public officials have difficulty understanding that market failure can and most often does occur for telecommunications infrastructure due to its high costs and lengthy wait for ROI.

America’s winter of telecom discontent calls for strong, unified federal intervention to bring the spring

The United States faces a long, dark winter of telecommunications discontent if it continues to rely upon the tender monopolistic mercies of the legacy telephone and cable companies. If the light of spring is to come and comprehensive construction undertaken to address the nation’s accumulated telecom infrastructure deficits and build fiber optic connections serving all American homes, schools and businesses, the federal government must take a predominant role relative to its funding and construction. So argues Susan Crawford, who urges a dual pronged strategy utilizing federally subsidized bonds paired with a program to fund and oversee regional infrastructure builds.

Crawford and I are on the same general page here. In my recent eBook, Service Unavailable: America’s Telecommunications Infrastructure Crisis, I call for a federal telecommunications infrastructure initiative to fund universal fiber optic infrastructure as a fully federally funded public works project, not unlike the federal highway construction initiative of the 1950s. Crawford proposes something similar, but also harnessing private investment capital via a regionally administered federal telecom infrastructure development and finance agency, funded by federally subsidized bond proceeds.

Crawford and I agree fiber is the only option for ensuring the nation has the telecom infrastructure it needs now and for the future. We can’t get there trying to subsidize yesterday’s “broadband” speeds or hoping that somehow the laws of physics can be overcome and wireless and satellite will magically offer a cheap workaround. We also agree a unified, federal strategy is needed that also takes a regional approach. 

“[T]o avoid waste and inefficiency, we need to get it right from the beginning — and not just hope we’ll get there with our current patchwork quilt of federal, state, and local government agencies and private utility planners, each with different goals and motivated by different incentives,” Crawford writes. She couldn’t be more correct on that point.

A crisis in telecommunications infrastructure as Moore's Law turns 50

Silicon Valley marks 50 years of Moore's Law - ContraCostaTimes.com: Thanks to Moore's Law, people carry smartphones in their pocket or purse that are more powerful than the biggest computers made in 1965 -- or 1995, for that matter. Without it, there would be no slender laptops, no computers powerful enough to chart a genome or design modern medicine's lifesaving drugs. Streaming video, social media, search, the cloud -- none of that would be possible on today's scale.

"It fueled the information age," said Craig Hampel, chief scientist at Rambus, a Sunnyvale semiconductor company. "As you drive around Silicon Valley, 99 percent of the companies you see wouldn't be here" without cheap computer memory due to Moore's Law.

As I've blogged in this space before, Moore's Law is directly affecting and redefining Internet telecommunications where bandwidth demand is growing at a pace comparable to microprocessor capacity.

That's creating a crisis because the fiber optic telecommunications infrastructure serving homes, businesses and institutions that's needed to accommodate this growth isn't in place in most areas or plans drawn up for its construction and financing.

Why legacy telcos, cablecos are incorrect in arguing government-built fiber telecom infrastructure is "unfair competition"

The primary public policy argument advanced by the legacy incumbent telephone and cable companies in support of state laws proscribing or prohibiting the public sector from building or subsidizing community owned fiber to the premise (FTTP) Internet telecommunications infrastructure is that doing so represents unfair competition against them.

It’s a fallacious argument because the incumbents and communities aren’t in the same business – a basic prerequisite for market competition.

The incumbents are in the business of packaging and selling discrete bits of Internet bandwidth. They sell it by throughput speed with speed tiered pricing for wired premise service and by volume – the gigabit -- for mobile (and inappropriately for premise) wireless services. The faster the connection and the more bandwidth consumed, the higher the price. Naturally, the incumbents segment their service territories and product offerings to generate the highest possible profit for that bandwidth. After all, they owe it to their shareholders.

State and local governments on the other hand aren’t in the bandwidth business or selling it to generate maximum profit. They are in the infrastructure business – planning, constructing and financing it to support public objectives such as economic development and enhancing the delivery of public services. In the 20th century, they did that by building roads and highways. In the 21st, they do it by building FTTP infrastructure.

Tiered rates for Internet service cannot be justified and demand attention from utility regulators

Homeowners and business operators are familiar with tiered rates in which a premise pays more for using higher amounts of water, electricity or natural gas. These are consumptive utilities that impose greater costs on utilities to provide them in larger quantities, thus justifying higher rates. At the same time, tiered rates encourage conservation of these finite resources by tapping into the economic principle of price elasticity. The principle holds that as price increases, demand declines and vice versa.

Encouraging conservation by making consumers pay more to use more – and hence reducing demand via price elasticity – makes sense in the case of water, for example, in the severe drought being experienced in California and other parts of the western United States. But it doesn’t make sense for America’s latest utility as recently declared by the U.S. Federal Communications Commission: Internet telecommunications service.

Internet service providers inappropriately price the utility as if it were a consumptive, resource-based one like water, electricity or natural gas. For example, this week Frontier Communications announced it is offering fiber-delivered Internet service with speed tiers of 30/30, 50/50, 75/75, 100/100 and 150/150 Mbps in Beaverton, Oregon. The higher the speed, the higher the monthly price.

It makes no sense to slice and dice Internet bandwidth like this on a fiber circuit with huge carrying capacity. Nor can it be rationally argued that providing higher speed tiers to a customer premise imposes higher marginal costs to deliver them and they therefore should be priced above lower speed tiers. This market practice cannot be economically justified. Moreover, it is exploitative of and unfair to consumers and demands attention by telecommunications regulators.

Disparate Internet access likely to continue in US without comprehensive policy, strategies

Want Fiber? Do more to get it, Google exec tells cities | Gigaom: The upshot for the foreseeable future is a patchwork of different broadband speeds across the country as competitors flock to easy-access markets, while leaving many millions of others (including me in Brooklyn) stuck with monopoly service.

According to Cogent CEO Dave Schaeffer, who also spoke on the panel, this situation will require a future wave of policy inducements to produce more broadband offerings.

Lacking comprehensive policy inducements and strategy to further the construction of fiber optic telecommunications infrastructure to reach all homes and businesses and updating outmoded metal wire infrastructure operated by incumbent telephone and cable companies, the United States does indeed face a less than bright future of disparate Internet access in both metro and rural areas.

Today's adoption of rules by the U.S. Federal Communications Commission only partially implementing Title II of the Communications Act subjecting the Internet to common carrier utility regulation will serve to reinforce the disparity without a solid universal service obligation. More in depth analysis of the FCC's action will follow here once the final rulemaking is published in the Federal Register.

AEI overlooks lack of investment in aging telecom infrastructure

Don't make the Internet a public utility AEI: The result is that public utilities are among our least innovative, worst-performing industries. Search the phrase “America’s aging infrastructure” and you will find dozens of articles and studies detailing lack of adequate investment in our bridges, gas pipelines, electricity transmission systems and other utilities. Sixty-two percent of the gas mains in Washington, for example, are more than 50 years old.

Similarly, one can do a search and find plenty of references to America's aging metal wire telecommunications infrastructure where market forces alone fail to provide sufficient incentive for investment to replace it with fiber.



 

U.S. needs complete telecom infrastructure construction strategy, not minimalist incrementalism

The United States needs a comprehensive, holistic approach to ensure the construction of fiber optic infrastructure to provide robust Internet enabled telecommunications services in the 21^st century on a par with universal telephone service in the 20^th. The nation won’t achieve that standard in a timely manner by relying on incremental, one off builds.

While it’s laudable that some local governments have built or are planning fiber infrastructure in response to private sector market failure on the supply side (as spotlighted this week in Cedar Falls, Iowa by President Obama), these builds without significant and sustainable funding support cannot cumulatively provide the telecommunications infrastructure the nation needs and should have been planning at least two decades ago. As Steven S. Ross notes in his article in the November-December, 2014 issue of Broadband Communities, Bandwidth: Good for Rural Residents, Good for the Country, these localities that have or are putting in place modern telecommunications infrastructure participate in the same economy as do others lacking it.

New York State’s initiative announced this week it would dedicate $500 million of a $4.5 billion windfall arising from the settlement last year of prosecutions of alleged misconduct by banks and insurance companies to subsidize fiber construction. That’s one time, opportunistic funding that will help construct fiber in areas where it doesn’t exist. But it addresses only a small fraction of the state’s significant need as shown by the accompanying map. The money will quickly be exhausted with no plan fiber up the rest of the Empire State, reinforcing existing disparities. Similar underfunded initiatives exist in other states. Incrementalism allows policymakers to claim small, short term victories but leaves incomplete networks in its wake over the longer term.

Other examples of incrementalism are the continuing circa 2002 debate over “broadband speeds” -- which grows increasingly irrelevant in an age of fiber optic-based telecommunications technology -- and “net neutrality.” Net neutrality – the principle that all Internet traffic be given equal priority – is meaningless without robust network service in the first place. A more important principle than net neutrality is Metcalfe’s Law. It holds that the value of a communications network increases as the number of connections to the network grows. With so many Americans not offered fiber Internet service, the U.S. has a long way to go to recognize the full value of Metcalfe’s Law. It won’t get there with piecemeal incrementalism.

The number of Americans lacking broadband could soon go up. That’s a good thing. - The Washington Post

The number of Americans lacking broadband could soon go up. That’s a good thing. - The Washington Post: Virtually overnight, nearly 1 in 5 Americans would no longer be served by what the government considers adequate Internet, according to the FCC. That's 55 million Americans, up from an estimated 13.8 million that lack access under the current definition of broadband, according to a forthcoming FCC report.

But that may be a good thing — a recognition of the way technology has improved over time and a sign the government is finally catching up.

Sorry Mr. Fung of The Washington Post. It's not a good thing. It's an embarrassment. The United States should have had plans and processes in place in the early 1990s to build fiber optic telecommunications infrastructure to serve all Americans regardless of where they make their homes, work or receive education and healthcare services. It was clear by then that telecommunications were going digital and that fiber would be the necessary delivery infrastructure.

Now in 2015 the U.S. and regulators are still using 1990s terms like "broadband" and engaged in a losing game of catch up, chasing after Internet bandwidth demand that's increasing so quickly that by the time regulators issue their latest definition of "broadband," it's already fast headed toward obsolescence.

The view from South Korea: Incumbent protectionism hobbles U.S. Internet infrastructure

Now that the Internet is maturing to the point that it's the de facto global telecommunications system, the view of the United States -- the nation that innovated the Internet -- from the outside can be quite unflattering. Other developed nations watch as Americans struggle with high cost, low value service. Or no service at all as is the unfortunate circumstance for some 19 million U.S. homes, according to the U.S. Federal Communications Commission.

Why didn't the U.S. put in place policies and plans decades ago to ensure all American homes and businesses have fiber optic connections to the Internet? How did it lose its way? Sometimes when one is lost, they don't know it until someone else points out to them they're off course or wandering about.

A spokesman for South Korea's SK Broadband, which is preparing to introduce 10Gbps fiber service, provides an answer: protectionism of legacy telephone and cable companies that failed to put in place plans to transition to fiber infrastructure.

“In my travels to the United States, it is very plain they have lost their way in advancing broadband technology,” said Pyon Seo-Ju. “Internet access is terribly slow and expensive because American politicians have sacrificed Americas’s technology leadership to protect conglomerates and allow them to flourish. Although unfortunate for America, this has given Korea a chance to promote our own industry and enhance the success of companies like Samsung that are well-known in the United States today."

First indication of AT&T withdrawal from residential wireline market

Sensing AT&T's lukewarm commitment to its residential wireline business segment, in 2008 I predicted that AT&T would abandon the segment in the first half of 2010. The telco is still in the residential wireline business as 2013 draws to a close. But a slow withdrawal could now be underway, one state at a time starting with Connecticut.

Bloomberg reports today that AT&T will spin off its Connecticut residential landline unit, including Internet and TV services to Frontier Communications for $2 billion.

AT&T relies on copper cable plant to deliver premises Internet service, scotching plans dating back to the late 1980s developed by regional bell operating companies AT&T absorbed in the 1990s to replace the last mile copper network with fiber optic cable. That reliance has technologically limited the reach of AT&T's Internet-based service offerings since copper was designed to carry analog voice service and not digital Internet signals that can be reliably delivered over only short distances using copper.

AT&T's relationship with Connecticut hasn't been a copacetic one. In 2007, then-Attorney General Richard Blumenthal pressured the telco to make its U-Verse product offering available to all residences in the state. Blumenthal, now a U.S. senator, said this week the deal should be reviewed to ensure it is in the interest of consumers.

The 2 key inaction risks facing community fiber projects

Creative risk taking is essential to success in any goal where the stakes are high. Thoughtless risks are destructive, of course, but perhaps even more wasteful is thoughtless caution which prompts inaction and promotes failure to seize opportunity.

  -- Gary Ryan Blair 

Communities contemplating fiber Internet infrastructure projects should keep in mind that there are risks -- negative impacts -- associated both with taking action as well as not taking action.  The latter risk -- termed inaction risk -- is perhaps one of the most threatening and pervasive risks.  For some regions and communities, that risk is being left permanently off the modern Internet grid and unable to realize the benefits it offers for government, public safety, health and education, economic development and transportation demand mitigation. 

Milo Medin, Google's vice president of access services, laid out two major underlying rationales explaining why communities needlessly run the risk of inaction in his address to the 2013 Broadband Communities Summit. 

1.  The unswerving belief despite more than a decade of market failure that incumbent legacy telephone and cable companies will upgrade and build out their infrastructures to serve all premises.  Here's what Medin had to say on that point:

Part of the reason the U.S. is falling behind is that most cities haven’t been intentional about their broadband infrastructure. Cities know they have to make sure the water system works and scales to support growth, the roads are maintained and built, garbage is collected properly. But often, they think broadband is something that the phone company or the cable company will take care of for them and they can ignore it, or that the FCC will make sure the appropriate incentives are put into place to drive competition and upgrades. Depending on those processes is how we got into the situation we’re in today.

2. The misguided belief that wireless services have obsoleted fiber networks. Medin explains:

Some argue that fiber networks are not really needed because of wireless network growth. As an engineer, quite honestly, this kind of talk makes my brain hurt. Wireless network growth is driven by fiber. All those base stations that smartphones connect to are increasingly connected by fiber because, as speeds go up, fiber is required to carry that kind of traffic. Copper just won’t do for modern wireless networks.

Cisco and others expect wireless data to grow by a factor of 50 in the next few years, and you’re not going to be able to solve that kind of growth by throwing more spectrum at it. You’re going to have to reduce the size of the cells, shrinking them, reducing the number of users that are being served by a given base station. And that means a lot more cell sites and a lot more fiber to feed those cell sites. In the limit, the future of mobile is going to look a lot like Wi-Fi: tons of small cell sites connected by a wireline network, connected by fiber – and that’s just physics, folks.

The full Broadband Communities article excerpting Medin's speech can be viewed here and here (pdf). 

France undertakes public private partnership to build out fiber telecom infrastructure

France launches 20 bln euro fibre broadband rollout | Reuters: Feb 20

Three tranches of more than 6 billion euros each will fund the planned network rollout, Hollande said. One will come from network operators, one from a mix of operators and local government and the last from state and local-government money.

Local governments' outlay will be funded using tax-free, regulated deposits gathered by state bank Caisse des Depots.

By 2017, the end of President Hollande's first term, 50 percent of the country will be covered under the plan.

This clear implication here is telecom infrastructure build needs cannot be adequately funded purely by an investor-owned telecom market.

Outdated telephone regulation matches dominant obsolete telco infrastructure

Coalition says broadband means new jobs: SPRINGFIELD — Investments in broadband technology created more than 13,000 jobs in Illinois in 2010 and 2011, according to a study funded by AT&T.

The study also reported that in 2012, Illinois had almost 20,000 jobs related to mobile applications.

The study was released Thursday by a new coalition of 12 Illinois groups representing business and job creation proponents, taxpayer advocates and communications companies.

The new coalition — the Illinois Partnership for the New Economy & Jobs — formed to urge Illinois to modernize its telecommunications law.

“Illinois’ law mandates investment in the 100-year-old technology of wired telephones to your home,” said coalition chair David Vite, who is also president of the Illinois Retail Merchants Association. “Those dollars would be better used for private investment in broadband networks that are currently creating new jobs.”

The stated implication of this study is fallacious.  It assumes but for government regulations requiring telcos to maintain obsolete copper cable wireline infrastructure to provide required telephone services, incumbent telcos would be able to replace it with fiber optic plant delivering Internet Protocol (IP)-based services.  The outdated laws and regulations appropriately remain on the books because the outdated publicly switched copper POTS infrastructure remains the dominant infrastructure in most of the nation, much of it incapable of delivering any IP-based services.

Google's Kansas City fiber build doesn't change underlying infrastructure economics

This Kansas City Star article discusses the implications of Google's rollout of fiber to the premise (FTTP) infrastructure in Kansas City.

The newspaper interviewed Josh Olson, a technology industry analyst for Edward Jones & Co.  Olson sees the Google fiber deployment as a template to boost user demand for higher bandwidth and speeds.  If new applications that can run on this gigabit speed capable infrastructure emerge, it would increase pressure for incumbent cable and telephone companies in other markets to upgrade their networks. However, Olson goes on to dismiss that notion, noting incumbent telcos and cablecos can make money off their existing services.  Of course they can when these are the only wireline services available to most U.S. homes and small businesses unless their communities build their own fiber networks operated by local governments or consumer cooperatives.

And as industry analyst Dave Burstein points out, Google's fiber deployment in a single U.S. city cannot change the underlying economics for incumbent providers that must earn a rapid return on investment to keep their shareholders happy -- a business model that directly conflicts with the long term ROI associated with high cost infrastructure projects.  Plus telecommunications company shareholders are accustomed to receiving high dividends -- money that can't be directed toward CAPex.

“The problem is it costs a lot of money to climb all those poles and dig all those trenches to make it happen,” Burstein told the Star. “You don’t make money in three years, but you make money in 10 years."

Read more here: http://www.kansascity.com/2012/09/24/3832330/google-fibers-gigabit-gamble-has.html#storylink=cpy