Fed up with circular debate over telecom market failure, British village acts to get broadband

While the UK government (just like America's) engages in a ridiculous circular debate over whether market failure has hampered the deployment of modern telecommunications infrastructure, the residents of Lyddington, Rutland have cried "bullocks!"and taken matters into their own hands.

No debate over market failure there, where according to this Telegraph article their petitions to the incumbent providers to bring them broadband got them nothing. So several local businesses are investing fiber optic cable that will bring the townspeople connectivity of 40 Mbs for £30 a month.

A key excerpt:

Dr Charles Trotman, head of rural business development at the Country Land and Business Association welcomed the project.

But he warned that not all local communities will be able to do it themselves and the next Government must put in place measures to ensure the whole country has superfast broadband.

"You cannot rely on the markets to do it because we know for a fact that large telecommunication companies will not invest in rural areas because there is no market return. If they are not willing to do it then someone has to do it and you have to have a central strategy set by Government"

FCC National Broadband Plan lacks sense of urgency

Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va.) today gave voice to my own concern that the Federal Communications Commission's National Broadband Plan mandated by the American Recovery and Reinvestment Act of 2009 is more of a wish list than an action plan.

Particularly considering that according to an FCC estimate released when the plan was unveiled last month, 7 million U.S. homes are offline because they are located outside cable company footprints or unable to subscribe to DSL due to distance limitations. Last October, the Yankee Group estimated about 12 percent of U.S. households, including those in some major metropolitan areas, have no access to broadband service.

That's a big infrastructure problem reflecting the fact that the United States is easily a decade behind where it should be considering the rapid growth of the Internet and next generation, Internet-protocol based telecommunications.

Rockefeller's message to the FCC is a problem of this magnitude requires a sense of urgency to bridge the digital divide. I agree with him. As a representative of a state with sizable rural areas, Rockefeller wants the FCC to focus its plan on rural America where IP-based telecom infrastructure is the weakest and least developed.

I would include many metro areas as well, particularly neighborhoods where housing density and topography don't allow legacy wireline cable and telcos to profitably build out their systems. As I have stated repeatedly, the FCC's plan should help alternative entities such as nonprofit coops start up to rapidly construct this critical infrastructure where the legacy providers cannot afford to do so.

FCC's National Broadband Plan needs bottom up incentives to bridge last mile

America's telecommunications infrastructure is least complete along the so-called last mile (referred to by some as the "first mile") that bridges middle mile distribution backhaul to homes and businesses. The U.S. Federal Communications recognized this in a footnote in a chapter addressing broadband availability in its recently released National Broadband Plan, noting 7 million housing units lie outside cable company networks or more than approximately 11,000-12,000 feet from telco distribution equipment providing DSL service. Six million housing units lack access to terrestrial broadband capable of providing downloads at speeds the FCC minimally defines as broadband because they are situated more than 16,000 feet from the nearest DSLAM.

The FCC's plan sets a goal of providing at least 100 million homes access with download speeds of at least 100 Mbs per second and upload speeds of at least 50 Mbs per second by 2020. In an interim report released in September, the FCC estimated reaching the "100/100" goal would cost as much as $350 billion.

The "100/100" goal is laudable. But a more pressing infrastructure shortfall now mires millions in the early 1990s with dialup access or subpar satellite Internet access that's a national embarrassment that should only be offered in Alaska or the north woods of Maine. The FCC report estimates bridging that gap would require existing providers to spend $24 billion on upgraded and expanded infrastructure. Investor-owned legacy providers aren't going to spend that kind of money. So the FCC proposes remaking the Universal Service Fund and other programs designed to subsidize legacy voice telephone service in high cost areas into the Connect America Fund (CAF). Recognizing this would yield just $15.5 billion over the next decade, the FCC's plan also calls on Congress to appropriate additional subsidies of a "few billion dollars" annually over the next 2-3 years to accelerate construction of advanced telecommunications infrastructure.

The weakness of the FCC's plan is that it relies too much on investor-owned telco and cable providers already burdened with outdated, legacy wire plant and the inherent limitations of their for-profit business models. These providers must naturally place their proprietary business interests ahead of any national goal for transitioning the nation's currently outmoded telecommunications infrastructure to one that delivers a range of Internet-protocol based services via fiber over the last mile. Consider, for example, that neither of the nation's largest telcos are currently expanding their own plants to bring fiber to customer premises. AT&T has except for some greenfield developments chosen to build out fiber only to neighborhood nodes, relying on legacy copper wire connections to reach customers. Verizon recently called a halt to further expansion of its FiOS fiber to the premises plant.

While the FCC's plan urges Congress to boost funding of the Rural Utilities Service's Community Connect program intended to provide funding for broadband to communities that are otherwise unserved, it doesn't go far enough. Instead of largely relying legacy providers to build out advanced telecom infrastructure from the top down to reach the last mile, it really needs to provide incentives that work from the bottom up.

One that holds promise is giving home and small business owners tax breaks to build their own last mile fiber much like current tax law provides incentives for solar power generation equipment. Tax breaks for properties with fiber "tails" as they were described in a November 2008 paper issued by the New America Foundation would help local governments and telecom cooperatives build fiber infrastructure since the tax savings would make it easier for property owners to pay fees for connection costs or fund coop memberships. Building out broadband infrastructure is primarily a business model problem. Providing tax credits for fiber "tails" would provide impetus to urgently needed alternative business models for modernizing America's telecom infrastructure.

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.

Study points to demise of burbs as bedroom communities

A study by the Chicago-based Center for Neighborhood Technology found that long commutes to jobs in the Los Angeles basin from California's Inland Empire area (San Bernardino/Riverside) aren't really worth it when the cost of commuting is factored in. For decades, housing that costs less than comparable real estate closer to jobs in L.A. was the draw that fueled the region's growth. But when the costs of hours spent in cars and gasoline and maintenance are taken into account, it comes out a wash. (And arguably, potentially a net loss when the adverse work/life balance and health effects are included).

This story reported in the Inland Empire's Press Enterprise is a harbinger of socio-economist Jack Lessinger's predicted end of the surburbs. If their main attraction -- more spacious housing and bigger lot sizes for the buck -- begins to disappear, then the demise of the burbs as bedroom communities is at hand.

Local and regional planners want to revamp the region to bring in more employment to reduce out-commuting. But that can't be the only approach as it's likely not enough local jobs can be created to achieve a rough jobs/housing balance. Lots of creative and information-based work will continue to be connected to L.A.-based institutions. Those who work for them need robust telecommunications infrastructure to interact with and deliver their work product from their homes and local communities. This infrastructure is as critical to the survival of these suburban regions as the freeways that created them.

Virgin trials aerial FTTP in UK countryside

Conventional wisdom holds that fiber to the premises telecom plant isn't cost feasible in less populated regions because it requires costly trenching and won't generate sufficient revenues. Some U.S. telecom experts including Tim Nulty have challenged that notion. Now Virgin Media is going to attempt to prove the conventional wisdom wrong with a FTTP aerial deployment in the rural UK village of Woolhampton, according to this TechWorld item.

If Virgin can show aerial fiber to the premise is doable even within a for-profit business context, it could spur both for profit and nonprofit aerial fiber build outs in the U.S. and elsewhere.

Alternative telecom business models urgently needed

Fundamentally, America's outmoded and incomplete telecommunications infrastructure isn't solely an infrastructure issue. Rather, it's a business model challenge caused by market failure that discourages the build out of this vital infrastructure to allow all homes and businesses access to the Internet protocol based telecommunications technology that is today's standard for Internet access, video and voice communications. 

As such, the market failure that has brought about the current travesty of the world's most advanced economy dotted with broadband black holes demands alternative business models to fill in the gaps. It also requires a paradigm shift in thinking away from the proprietary, investor owned telco and cable infrastructure that's based on a business model suited to the 20th century and not the 21st. Bob Frankston and Andrew Cohill of Design Nine note the 20th Century telecommunications business model provides services similar to other utilities such as water and electricity. The more you use, the more you pay. As Cohill puts it, it's about selling "bandwidth by the bucket." 

As Internet era dawned with dial up access in the early 1990s, telcos simply sold and billed Internet access like an additional voice calling feature. They have continued to do so with DSL and ISDN before it. In Cohill's view, this business model to use a military acronym is FUBAR. "This business model is fundamentally broken," Cohill declared in a recently issued white paper. "There is no way to fix it." Why? Because building advanced telecommunications infrastructure cannot pencil out for telcos and cable companies based on a business model of selling an incremental, usage-based menu of services over their proprietary cable plant. It simply doesn't generate enough revenue to be profitable. That's why they have adopted an ultra conservative posture when it comes to expanding their infrastructures, leaving millions of would be customers in their so-called "service areas" unable to access services they could otherwise sell to them. So conservative, in fact, that telcos and cable companies will parse a single road or street providing some residents and businesses with broadband access while their neighbors go without, making lack of broadband access a problem that occurs in non-rural as well as rural areas. 

As previously noted on this blog, the search term that brings the largest volume of visits is "my neighbor can get broadband but I can't." As U.S. policymakers are about to consider a framework for a national broadband plan to be issued this month by the Federal Communications Commission, Cohill has proposed an alternative business model that probably won't be in the FCC's plan but deserves to be. It calls for a public private partnership between regional and local governments and private sector Internet Service providers (ISPs). Local governments sell bonds to finance the construction of fiber optic-based infrastructure and then service the bond debt by selling access to ISPs. Federal and state government can help defray construction costs with grants and loans. Telecommunications infrastructure under Cohill's "Third Way" isn't owned by a telco or cable company but instead is public infrastructure like roads and highways.

In effect, Cohill and others who support this alternative business model propose the deprivatization of telecommunications infrastructure while retaining a private market of competitors who wish to sell various communication and entertainment services. It's called an "open access" network. Cohill"s "Third Way" provides a solution to those who believe more competition is needed for telecommunications services. Since telecommunications infrastructure is itself a natural monopoly due to the high cost of constructing it, an open access network puts in place the framework for a competitive market for telecommunications services sold to homes and businesses. Cohill argues that the United States can no longer wait for telcos and cable companies to build out their infrastructures -- and he's right. Moreover, he asserts, in a weak economy where business and job creation are desperately needed, retaining a failed business model of telco and cable owned infrastructure in areas that lack adequate broadband access is "disastrous" from an economic development perspective. 

Critics will likely argue that the open access model is too radical and hasn't been sufficiently tested in the real world to ensure it pencils out where a proprietary, investor owned closed network cannot. Cohill would point to three open access networks his company orchestrated in Virginia and Florida to show that it can. Given studies linking expanded broadband access with economic growth, the open access business model, regional and local governments should not look to solely the feds for solutions. Since they stand to benefit from increased per capita incomes (and by extension, higher tax revenues), they should take their telecommunications -- and their economic destinies -- into their own hands and explore this much needed alternative business model to the dysfunctional, failed market of the status quo. The current privately-owned telecommunications "ecosystem" as some in the FCC have termed it isn't sustainable and cannot be expected to accommodate the burgeoning growth of digital telecommunications services and the concomitant demand for bandwidth. New business models such as proposed by Cohill and others are urgently needed now.

Reports of broadband stimulus awards warrant closer reading

There have been a number of stories lately reporting on awards of U.S. broadband infrastructure subsidies under the American Recovery and Reinvestment Act of 2009. They warrant reading with a closer eye when it comes to the end users that will actually benefit from the subsidies. For example, this AP story on the award of an $80 million grant for advanced telecommunications infrastructure in Louisiana that reports 100,000 households, 15,000 businesses and 150 institutions such as schools, universities and medical centers will benefit from the award.

The last paragraph is key:

Private Internet service providers will use the cable to bring service to homes and businesses.

More accurately, IF there is sufficient last mile infrastructure over which these ISPs can provide service. Most likely, this award is for middle mile infrastructure that feeds the last mile -- the segment that is most often missing and in greatest need of subsidization. Middle mile infrastructure subsidies have been favored thus far among awards announced by the federal agencies administering the stimulus dollars. But both middle and last mile infrastructure are necessary to create a complete telecommunications infrastructure that will meet the public policy intent contained in the stimulus legislation of making advanced telecommunications services available to all Americans.

Network experts like Andrew Cohill of Design Nine understand this fundamental aspect of networking. Networks that don't adequately connect end users aren't truly networks. Cohill describes the last mile as the "first mile" in recognition of this fact.

Preliminary FCC broadband policy report ducks issue of incomplete telecom infrastructure

For the millions of Americans who live and work in broadband black holes, a preview released this week of a forthcoming Federal Communications Commission policy recommendation to Congress offers practically no hope their situations will improve over the foreseeable.

The FCC's National Broadband Plan: National Purposes Update released Feb. 18 contains 56 pages of bullet points, charts and graphs that cover just about every topic related to broadband except for the nation's most pressing broadband problem: incomplete and inadequate advanced telecommunications infrastructure that's necessary to deliver broadband to all Americans.

The final report is due to Congress by March 17. If the report doesn't address this critical issue in a substantive manner and instead dances all around it as this week's preview suggests, it will be seen as a whitewash of platitudes that will quickly be shelved and forgotten.

Google's fiber foray: Likely goal is to test alternative business model

Google's demonstration of concept fiber to the premises "experiment" announced last week could represent the start of a major transformation of how consumers receive information in an age where information is increasingly delivered via Internet protocol.

The potential transformation: from the telco/cable business model that brings the bulk of Americans Internet access that due to CAPEX constraints cannot reach about 12 percent of U.S households to the advertising-based business model used for decades by mass broadcasters. Investors provide much of the funding needed for costly transmitters and other broadcast equipment. But advertisers provide another deep and ongoing source of cash to invest in the necessary broadcast equipment to reach consumers.

Google's experiment isn't likely about testing fiber to the premises technology. Fiber is a well demonstrated means of getting lots of bits and bytes to the doorstep with plenty of capacity to spare. Rather, I suspect it's to explore an alternative business model to bring Internet protocol-based services to homes that is to a large degree based on the network broadcasting business model.

Notably, Google's announcement comes as the U.S. government struggles with the inherent conflict of implementing policies to expand advanced telecommunications infrastructure to all Americans while paying homage to the privately owned telco/cable dominated Internet "ecosystem" that makes doing so impossible without substantial subsidies in a time of economic penury.

In the 1960's, mass communications theorist Marshall McLuhan predicted an electronic global village linked together by a broadcast television -- a medium so powerful that the medium itself would be as important as its content. "The medium is the message,” he famously declared. While McLuhan's observation was about TV, in retrospect it applies even more so to the Internet. Google's foray into fiber may well have been undertaken with McLuhan firmly in mind.

Google's fiber to the premise "experiment" a would be broadband game changer

Nearly three years ago, I predicted Internet-protocol content providers and aggregators fed up with trying to pump their product over legacy telecommunications infrastructure dominated by telcos and cable companies would acquire or build their own infrastructure to reach consumers. It's an expected outcome of a conflict between the content providers' needs for ever increasing bandwidth and the telco/cable companies' need to conserve capital expenditures and place incremental limits on bandwidth consistent with their service offerings in which consumers pay increasingly higher rates for more bandwidth. The content providers want unlimited bandwidth delivered over big pipes. But the business model of the telco/cable duopoly is based on making bandwidth a restricted scarce commodity delivered over little pipes.

So it was no surprise when Google -- which has reportedly been quietly buying up fiber left dark after the dot com bust of a decade ago -- announced this week it would build an experimental alternative business model that would bring advanced telecommunications to consumers over a really big pipe: fiber optic infrastructure to the premises capable of throughput of 1 gigabyte per second.

Google is also clearly holding itself as an alternative to the Obama administration's program to build out open access broadband infrastructure subsidized by more than $4 billion set aside in the American Recovery and Reinvestment Act (ARRA) President Obama signed into law nearly one year ago.

The timing of Google's announcement of its fiber infrastructure test program is also worth noting and shows the company is looking to make a statement. The window for applications for the second round of ARRA broadband infrastructure subsidies opens less than a week after Google's announcement. The deadline set by Google for local governments and communities to nominate themselves for Google's experimental fiber build closes the week after the ARRA funding round application window closes as well the deadline for the Federal Communications Commission to submit a plan to Congress to achieve universal U.S. broadband access as required by the ARRA.

While the federal agencies that will hand out the ARRA infrastructure subsidies have made assurances the money will soon begin flowing in earnest, doubts have emerged due to numerous challenges filed against proposed projects by the same incumbent providers Google wants to go around. Google likely figured amid that uncertainty, the timing was right to make its announcement.

With its self described "experimental" fiber to the premises model, Google may also be trying to debunk skeptics who believe fiber to the premises simply costs too much to deploy. That high cost has been cited as the main impediment standing in the way of investment in the fiber to the premises infrastructure that was to have been at the doorstep of every American home by 2006. If Google can show the cost assumptions upon which the business models of the incumbent legacy providers are based are wrong, then the entire game is changed overnight. That potentially puts America on course to catch up to where it should have been four years ago and where it needs to be for the future.

Public policy collides with business interests of telco/cable duopoly

According to Oakland, Calif.-based consultant Craig Settles, the Obama administration's stated policy goal of broadband access for all Americans is colliding with the narrower economic interest of the legacy telephone and cable companies. That conflict is playing out within the context of the administration's economic stimulus legislation that was signed into law almost one year ago.

Settles points to an estimated 9,000 challenges and protests the incumbents brought against proposed projects seeking more than $4 billion in infrastructure subsidies set aside in the American Recovery and Reinvestment Act of 2009. The challenges are being raised under a broadband black hole preservation clause in rules two federal agencies wrote to govern allocation of the subsidies that allows incumbents to protest proposed projects on the grounds they already provide advanced telecommunications services in the area proposed to be served.

The telcos and cable companies want to preserve what they regard as their exclusive franchises for a given "service territory" even though their business models don't allow them to construct the infrastructure necessary to bring advanced telecommunications services to all homes and businesses that need (and try to order) them.

This is the crux of the clash between the business interests of the telco/cable duopoly and public policy that will clearly have to be expeditiously resolved by the Obama administration and Congress if the subsidies are to function as intended. As Settles put it in an article appearing earlier this week in USA Today: "We're at a point where it's the general public's interest vs. the entrenched incumbents."

A broadband farce in the UK countryside

Here's an appalling story from the British countryside that has some parallels in America where folks stuck on dial up or forced to suck a satellite have been given similar stratospheric broadband price quotes (and no stock or options) from incumbent telcos and cable providers. This story also illustrates the need for the UK to ditch its outmoded, copper cable plant that relies on highly constrained "little broadband" DSL.

Looks like the village of Dufton is a representative outpost deep in the UK "broadband desert" recently lamented by Prince Charles.

Last mile fiber project lands broadband stimulus award, sparks strong interest from other rural electric coops

Telecommunications equipment manufacturer Pulse is reportedly getting deluged with inquiries from rural electric cooperatives after it successfully partnered with a rural electric cooperative in Northeast Missouri to score $19 million in last mile broadband stimulus funding from the USDA's Rural Utilities Service (RUS) Broadband Initiatives Program (BIP).

What's sparking (pun intended) interest in the Ralls County Electric Cooperative project is its fiber to the premises design that utilizes "distributed tap architecture" for easy deployment of drops that's cost effective at population densities of as few as four homes per mile, reports Light Reading's Cable Digital News.

The take away from this story isn't about the technology alone. It shows there is tremendous interest in the cooperative business model to bring advanced telecommunications services to unserved and underserved areas of the United States just as coops did a century ago when rural electric and other utility cooperatives were first formed.

U-Verse won't bail AT&T out of its residential wireline woes

Here's a notable report by Todd Spangler of Multichannel News on AT&T's revenues from its hybrid fiber/copper VDSL triple play U-Verse service that suggests while posting increases in customers and revenue, they may be too little and too late to offset a dramatic decline in AT&T's residential wireline market segment. In a Dec. 21, 2009 filing with the U.S. Federal Communications Commission, AT&T in unusually blunt language called the downward trend a "death spiral."

Spangler reports that while AT&T's U-verse revenue nearly tripled over 2009 (despite a sharp economic downturn) and is approaching an annualized rate of $3 billion, it nevertheless represents less than five percent of total wireline segment revenue. Spangler notes even that strong growth isn't sufficient to offset flagging wireline segment revenues, which fell six percent in 2009 to $65.7 billion.

Meanwhile, AT&T disclosed this week it would spend $2 billion on its wireless infrastructure -- money that won't be going into wireline CAPEX to build out the U-Verse footprint. Doing that is a costly proposition given U-Verse involves expensive field distribution equipment that can deliver service only 3,000 feet over existing copper cable plant -- plant that often requires even more money to bring it up to technical standards to reliably carry VDSL signals. That's not an issue in new neighborhoods, where U-Verse is delivered over fiber to the premises. But few such locales are being developed with new home construction at its lowest level in decades.

In sum, U-Verse isn't likely going to bail AT&T out of its troubles in residential wireline and may ultimately lead to the big telco pulling out of the market segment to concentrate on wireless in the retail market as I predicted in September 2008.

App-Rising: As U.S. copper telecom infrastructure ages, no national consensus on next step

Check out this dreary assessment of the state of U.S. telecommunications infrastructure from App-Rising:

In particular, look at Kentucky. They showed a 40% decrease in measured connection speeds just in the last quarter. Numbers like this have me worried that perhaps the century-old copper telephone wire is rapidly deteriorating and impacting DSL performance, or perhaps the cable providers' shared networks are overwhelmed with demand, or maybe wireless broadband is constrained by insufficient backhaul.

What makes Kentucky even more troubling is that they're supposed to be a leader in encouraging the deployment and adoption of broadband. What does that say about the health of the country if a state that's been seen as a leader is falling off this badly.

It makes me start to wonder if we might have a national emergency on our hands in states like Kentucky and others where broadband speeds are dropping. It leads me to think that perhaps we need a national commission to study these issues in depth and get to the bottom of what's happening as no state should be slowing down ten years into the 21st century.