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.

White spaces broadband faces uncertain future

Expectations should be tempered contemplating the implications of this week's action by the Federal Communications Commission approving the unlicensed use of television broadcast "white spaces" spectrum being freed up by the February 2009 transition to all digital TV broadcasting to deliver wireless broadband.

There are many unknowns as to whether white spaces will ultimately deliver broadband over the airwaves in the real world or whether it will remain an impractical concept that goes the way of Broadband over Power Lines (BPL).

They include a probable years long legal challenge by broadcasters worried over potential interference despite FCC field testing showing otherwise. It should be borne in mind the purpose of the FCC testing was to assess potential interference with broadcast and short range microphone signals. How white spaces broadband will perform and the kind of throughput it can reliably deliver remain major unknowns until it's actually deployed.

White spaces broadband could well end up being too little to late once the legal challenges have run their course given that Clearwire is already rolling out 2.5 Ghz WiMAX in some areas and deployment of 4G wireless broadband by telcos is expected by 2010.

Potential key advantages of white spaces broadband over these other wireless technologies is superior range and greater ability to penetrate trees and buildings since it operates in the 700 Mhz TV spectrum.

An additional challenge could come from telcos who may resist providing the necessary "fat pipe" backhaul for white spaces broadband if they see it as a competitive threat to their own wireline and wireless broadband franchises. That could generate more lengthy litigation such that between Internet Service Providers (ISPs) and telcos over access and pricing of line access under the Telecommuncations Act of 1996.

Finally, all wireless broadband technologies at this point don't appear likely to be able to match the fiber gold standard of 100 Mbs and greater throughputs that will increasingly be in demand for fixed broadband services. For the foreseeable, that relegates wireless broadband -- likely including white spaces broadband if it comes to market -- to a transitional broadband technology for fixed locations in areas unserved and underserved by wireline broadband providers and for general mobile use.

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.

Netflix Tivo deal still not ready for prime time

SAN FRANCISCO - Home entertainment trendsetters Netflix Inc. and TiVo Inc. are finally joining forces to deliver more movies and old TV episodes to their mutual subscribers, consummating a relationship that was supposed to come together four years ago.

This deal is still four years too early and not yet ready for prime time given the pathetic state of America's broadband telecommunications infrastructure. The throughput speeds for downloading movies simply don't hack it in much of the nation and many homes are still unable to get even basic broadband connections.

Fairpoint chooses WiMAX where DSL fails

Fairpoint Communications, the successor to Verizon in much of New England, has opted to deploy fixed terrestrial broadband to make up the shortcomings of underpowered DSL. Fairpoint has selected WiMAX technology based on equipment provided by Nortel Networks Corp. and Airspan Networks that will provide throughput of 1 to 3 Mbs.

Telcos cynically cite demographic data to justify failure to invest in broadband infrastructure

Here's some typical telco funded propaganda on broadband. It's designed to shift and downplay the focus away from the lack of broadband availability due to inadequate telco infrastructure to broadband adoption rates. Once that's accomplished, it's time to play the socioeconomic card and decry low computer literacy among certain demographic groups.

Bottom line, the telcos are looking to justify their failure to upgrade their plants over the last mile to support broadband by blaming poor, older and less educated people who say they don't use computers and don't need broadband. In other words, we don't need to deploy broadband because you're simply too ignorant to use it even if we did.

California PUC considering expanding eligibility for broadband build out subsidies

The California Public Utilities Commission is soliciting comment on potentially expanding eligibility for 40 percent grant funding from its California Advanced Services Fund (CASF) to build out broadband infrastructure in unserved and underserved areas of the Golden State. The commission has set aside $100 million for qualifying projects to be funded over a two-year period, paid for by a 0.25 percent surcharge on end-users’ intrastate telephone bills.

Proposals to serve unserved areas were due July 24 and underserved areas by Aug. 25. Only entities with a certificate of public convenience and necessity to offer telecommunications services or those registered with the CPUC provider of wireless telecommunications services were eligible to submit project proposals by those dates. The CPUC is now considering accepting proposals from municipalities, community-based cooperatives, Native American tribes as well as funding economic development corporations to issue loans to finance projects.

"We further anticipate significant unserved and underserved areas will remain after grant of the current pending applications," CPUC's Oct. 15 ruling states. "During our first round of applications we received significant interest from serious potential applicants who were uncertificated internet service providers in areas geographically close to unserved or underserved areas."

Survey suggests telcos should channel CAPEX to wireline -- and not wireless -- broadband

While mobile broadband has been much ballyhooed over the past few years, the vast majority of those with mobile devices don't utilize their Internet capabilities to watch videos, play games or even send email. That's according to a Accenture Research survey out this week picked up here by Telephony Online.

This survey strongly implies people want broadband at home much more than they do outside the home. For telcos, that means investing more in wireline -- and particularly fiber optic infrastructure -- and less in wireless broadband. The demand for home-based wireline broadband services is also likely to grow as people spend less time and money outside of the home and cocoon during the economic downturn.

Telco market segmentation has shrunk U.S. residential wireline service area map, setting stage for locals to take over last mile

The widespread prevalence of broadband black holes throughout the United States — which can be found in urban, suburban, semi-rural and rural areas — has brought to light a major change in the landscape of residential telecommunications service. In modern times, residential telecommunications has meant near universal service to all but the most remote areas.

With the advent of high speed Internet, the residential wireline market is no longer a single one but has been segmented by the telcos who maintain monopolistic control over their markets. Over the past 2-3 years, the boundaries of broadband black holes have hardened and delineate the two segments.

The more accurate description is the residential market hasn’t been so much segmented but rather shrunk. One only need compare the telcos’ maps of where they provide Plain Old Telephone Service (POTS) and areas where advanced Internet protocol-based services are offered to graphically see the shrinkage.

This is a permanent alteration of America’s telecommunications map. Despite telcos’ promises to “turn up” advanced services to these areas over the past decade, it’s now apparent that these statements are a time buying PR ploy to keep regulators and politicians at bay. Now the residential wireline telecommunications map is posed to shrink even further with the limited rollout of fiber to the home service by Verizon and AT&T’s technologically constrained deployment of its fiber to the node Project Lightspeed as both companies migrate from DSL.

This redrawing of America’s telecommunications map has major implications for so-called “last mile” residential wireline. Where they don’t provide last mile IP-based access, the telcos will instead serve as first and middle mile telecom providers. Small local telcos and the residents themselves will become the default last mile providers. Where it makes business sense, smaller telcos that specialize in serving communities will deploy fiber to the node and fiber to the home. Where the numbers don’t pencil out for the small telcos, the residents will deploy their own fiber and fund it though voluntary cooperatives and special taxing districts.

Over the next several years, fiber will come to be viewed as a utility not unlike electric power and water and will appear on residential MLS real estate listings. Properties that lack fiber optic access will be at a distinct disadvantage to those that have fiber, creating a strong incentive for property owners to work together to bring fiber to their neighborhoods to better capitalize on recovering real estate values following the current market downturn.

Green movement could spur public sector investment in fiber to the home

When the 1996 Telecommunications Reform Act was enacted, it was anticipated it would drive competition giving most Americans fiber optic service by 2006. Didn't happen. Plenty of mid-mile fiber got laid but much of it was never lit up following the dot com bust of 2000. Then in the years following the dot com downturn, telcos opted to avoid the CAPEX of fiber over the last mile and instead retain and depreciate their aging legacy copper cable plants and deploy underpowered DSL service over them that left millions without broadband access.

Now the Fiber to the Home Council (FTTH) expects increased interest in reducing carbon emissions will drive fiber over the last mile. Updating the last mile to fiber will deliver substantial environmental benefits in the short term outweighing the environmental costs of deployment in as little as six years, the FTTH says, citing a study by the consulting firm PricewaterhouseCoopers (PwC).

The study found that by 2010 and later, an estimated 10 percent of the working population with FTTH service would telecommute an average of three days a week because bandwidth improvements will make working from home more feasible. That's a lot less driving and reduced gasoline consumption and savings on road maintenance and construction.

Since government is in business of building and maintaining roads, it indirectly benefits by investing in last mile fiber such as selling bonds to finance its build out as Monticello, Minnesota and other local governments have done. At this point, it appears to be far easier to make the business case for fiber to the home in the public sector -- which can raise more patient capital -- than the private sector where telcos and other providers require rapid returns on their capital investments that has discouraged them from deploying fiber to the home.

Private, public sectors clash on broadband deployment

As fiber optic guru Tim Nulty accurately observed, wireline telecommunications infrastructure is a natural monopoly. That fact has spawned conflict between the private and public sectors over which will build out infrastructure to provide modern IP-based services. At issue in this confrontation that has played out throughout much of the United States over the past decade is who will get first rights to build since whoever deploys infrastructure first dominates the market given its monopolistic nature.

But there's more to it than that. Both sides have conflicting agendas. The private sector telcos and MSOs (cable companies) want to maintain an open ended option to build whereas public sector entities like muncipalities motivated by constituent pressure to rapidly deploy, pressure that naturally increases over time as demand for broadband-based services from consumers and businesses grows. In that regard, time is on the side of the public sector. That reality has spurred private sector players to employ litigation to buy time to preserve the option to serve a given area.

Case in point: this week, a Minnesota judge ruled this week that Minnesota cities have the authority to issue bonds to finance community fiber-optic networks. Monticello, a town of 12,000, has been locked in a legal battle with its incumbent phone company, TDS Telecom, which filed a complaint to prevent the city from building a network its citizens overwhelmingly approved in a referendum last year, according to Christopher Mitchell, Director of the Telecommunications as Commons Initiative for the Institute for Local Self Reliance (ILSR). “All along, we have said that this lawsuit is frivolous and was merely a delaying tactic,” Mitchell said in a news release. Mitchell adds that TDS "was merely trying to protect its monopolistic interests, much to the detriment of the citizens of Monticello who clearly want a local, accountable alternative to existing services.”

More delay could be in store. ILSR reports Monticello had to put the project on hold until the case was decided and escrowed funding until the case is fully resolved and all appeals are exhausted.

At present, the rules allow private sector providers to game the system to buy time. Even if they lose on the merits of muni fiber project legal challenges as in this case, they still win because they've achieved their goal of buying time to exercise their option to build. The problem is that option is currently open ended at a time when the nation is falling farther and farther behind on broadband and time is of the essence.

It needs to be tightened up with legislation that would give either public or private sector providers the option to build broadband infrastructure and subject the party exercising the option to deploy it to stringent oversight including incremental progress deadlines, late penalties and completion bonds.

Limited DSL range disappoints in Western Massachusetts, divides towns into digital haves and have nots

As reported earlier this year, Verizon is rolling out DSL in 24 Western Massachusetts towns. But state Rep. Denis Guyer, D-Dalton, is hearing from irate constituents who understandably believed that if their town is getting the service, that's just what it means and are flummoxed that they're still stuck with dialup or forced to suck a satellite.

The problem is Verizon is using underpowered DSL technology -- which should be dubbed "Doesn't Serve Lots"-- that can only serve parts of the towns. This puts pols like Guyer who are pushing to bring their districts into the modern age of telecommunications in a tough spot since voting districts don't necessarily coincide with DSL availability limits. For those covered by Verizon's DSL deployment, pols like Guyer look like a hero. But from the perspective of his constituents outside Verizon's DSL service limit, he looks like a ineffective bum. As this blog notes, like politics all broadband is local.

The item published in the North Adams Transcript is aptly headlined Guyer says Verizon's Broadband not so broad. So true for not only Western Massachusetts but sadly anywhere in the U.S. served by feeble telco DSL.

Pols pay lip service to vague "national broadband policy," support time wasting availabilty studies

In this election season, politicians are paying lip service to the idea of universal broadband access in the United States. The problem is just that: lip service in a support of a "national broadband policy" to spur broadband infrastructure rollout and studies to obtain "better data" on where broadband is and isn't.

Re the former, exactly would that policy be? They (and unfortunately too many advocates) are not saying. And in the unfortunate absence of specifics, they make it seem as if they would prefer the telco/cable duopoly be nationalized in order to speed broadband deployment. If that's what they're advocating, they ought to have the guts to say so directly instead of chanting repeatedly that the U.S. needs a "national broadband policy."

Re getting better data on broadband availability, that's a sucker's game that plays straight into the telco/cable duopoly's strategy of buying time to "study" the issue without having to spend a single dime on expanding their broadband infrastructure. Even if availability throughout the U.S. was extensively mapped down to the census tract level, we won't know much more than we already know right now: that the nation's telecommunications infrastructure is shot through with broadband black holes of all sizes, some massive encompassing entire communities and some as small as part of a single block. Politicians already know this, having heard from increasingly irate constituents tired of being forced to choose between obsolete dial up and substandard, costly satellite Internet service.

Aussies feel pull of broadband black holes

Just like their American counterparts who suffer from broadband black holes in metro areas, lots of Aussies are also relegated to dialup. Take the Adelaide metropolitan area, for example, where government statistics show 55,000 homes and businesses cannot cannot access fixed-line broadband internet services. Keep in mind this isn't the remote Outback we're talking about here.

The usual suspect: the limited range ADSL deployed by the big Australian telco, Telstra. Read the item in Adelaide Now.

AT&T will likely abandon residential wireline segment, U-Verse in early 2010

Sometime during the first two quarters of 2010, AT&T will probably become a pure play wireless company in the residential market, abandoning its Project Lightspeed/U-Verse deployment as part of a general retreat from the wireline-based residential/home office market segment.

The nation’s dominant telco — like other telcos — has been losing landlines to wireless phone service for several years now. When AT&T pulls the plug on U-Verse, which it began rolling out in selected markets in 2006 and which continues to fall behind deployment targets, it will likely cite unanticipated cost, technological and competitive market challenges.

The Achilles Heel of Project Lightspeed/U-Verse lies in the technological shortcomings of digital subscriber line (DSL). While DSL allows AT&T and other telcos to provide broadband over their existing copper cable plants, it’s hobbled by very limited range. When telcos first deployed ADSL around at the start of the decade, DSL’s limited range forced telcos including AT&T into a lose-lose proposition. Either they could spend significant sums of money installing remote DSLAM terminals to extend DSL’s notoriously feeble reach or leave money on the table in the form of lost opportunity costs, unable to serve subscriber premises not located close enough to their CO’s (central switching offices).

ADSL’s limited range also makes for unhappy customers who believe they are purchasing a particular speed tier only to find themselves involuntarily downgraded because the DSL signal isn’t sufficiently robust to support the level of service they ordered.

VDSL, the upgraded version of DSL that AT&T utilizes in its hybrid fiber/copper Project Lightspeed deployment, suffers from even greater range limitations. As such, it requires far more field equipment and fiber/copper interface cabinets (VRADs) than ADSL since VRADs can serve only premises located within 3,000 feet. While providing theoretical downside throughput of 25 Mbs, VDSL over copper also suffers from limited ability to scale up bandwidth to 100 Mbs and higher in order to remain competitive —at least when it comes to video — with MSOs (cable providers) and pure fiber triple players like Verizon and Surewest Communications.

Some market observers believe once copper has reached its throughput limit — many would maintain it already has — all AT&T has to do is change out the old copper for new fiber. That isn’t likely to happen. AT&T won’t bear that additional and substantial CAPEX burden and threaten its generous stock dividends when it is already struggling with the cost of the limited Lightspeed plant it has deployed to date and is reportedly cutting expenditures on it.

Additionally, given its existing alliance with Dish Network (to be replaced with DirecTV starting Jan. 31, 2009), it can still offer video without the associated CAPEX costs of Project Lightspeed and U-Verse just as it does with its marketing partnership with Wildblue to provide satellite “broadband” to the many residences located outside the restricted range of its DSL services.

What will happen to AT&T’s aging residential copper cable plant when it goes all wireless in this market segment? It will be put into runoff mode and minimally maintained — a plan that some would argue is already being implemented as resources have been redirected to Project Lightspeed. That will likely result in noisy and failed lines. But AT&T will probably simply pay any fines levied by regulators as a cost of unwinding its residential landline business with the expectation residential customers will migrate to its wireless service with the encouragement of limited time pricing incentives.

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."