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.