The bankruptcy of Obama administration's telecom policy

Continuing the Broadband Dialogue with States: This week, broadband leaders from across the country convened at the Schools, Health and Libraries Broadband Coalition’s annual conference to discuss key broadband policy issues important to communities and community anchor institutions such as schools, hospitals and libraries. NTIA had the opportunity to participate in several sessions at the conference to discuss our continued efforts to implement Obama Administration initiatives aimed at promoting broadband access, adoption and digital inclusion. We also had the chance to meet with about two dozen officials from 15 states who work on broadband initiatives. The meeting was part of our efforts to keep an ongoing dialogue with state broadband leaders to sustain their peer network as a valuable vehicle for knowledge sharing. Many of these state officials helped run programs that received funding through NTIA’s State Broadband Initiative (SBI). The SBI grants provided funding to each state, territory and the District of Columbia to collect the broadband availability data that helped power the National Broadband Map. In addition, SBI grantees used some of the funding to identify and address obstacles to broadband deployment and adoption in their states or territories.
While the SBI grant program is finished, 41 of the 56 states and territories that received SBI funding are continuing their state broadband programs in some fashion using their own funds. Several states continue collecting data for their own broadband maps, including Minnesota, Wisconsin, Virginia and Utah.

More meetings, more talk and more busy work on useless "broadband maps" that taken as a whole, are not meaningfully deploying fiber to modernize America's rapidly aging, obsolete and spotty telecommunications infrastructure. This is an urgent national problem that grows increasingly so by the month and year. It's one that can't be addressed by shifting it to the states. Strong federal leadership and support are needed.

This National Telecommunications and Information Administration update illustrates the bankruptcy of the Obama administration's telecom policy. It's unfortunate given nearly eight years ago, the Obama administration came into office with the promise of rapid, aggressive action to move the nation forward. Instead, it settled for half hearted efforts that left undisturbed a major obstacle to progress -- incumbent legacy telephone and cable companies.

U.S. telecom infrastructure modernization an interstate and not urban issue

Great presentation by Susan Crawford on America's telecommunications infrastructure shortfalls and challenges. However, I am disappointed by what I view as Crawford's (and others' such as Next Century Cities) near exclusive focus on cities. Particularly given Crawford's observation that 20 percent of American homes are off the Internet and unable to purchase access at any price -- a situation that has existed for at least a decade. These homes are not in cities but in the exurbs, quasi-rural and rural areas where legacy telephone and cable companies have not modernized their infrastructures to reach them. They need fiber connections just as much if not more so than urban dwellings, especially so given the ability of fiber to bridge the greater distances between them and economic and educational opportunities and health care.

In the last analysis, the United States is a nation of states, not of cities. Telecommunications infrastructure is fundamentally interstate, connecting cities and states to each other and the nation to the world. It would be a mistake to view it too narrowly as an urban matter.

Selling vertically integrated "gigabit" service inefficient, reinforces disparate access

What it's like to take on Google Fiber in Nashville: One firm's take - Nashville Business Journal: For more than two years, Nashvillians have salivated over the eventual arrival of Google Fiber, super high-speed internet courtesy of one of the world's most idolized tech companies. But while Google has yet to share specifics on when that network will officially launch in Music City, other players have made their own moves. Most notably, legacy telecoms AT&T and Comcast have launched their own networks, but smaller players like Shelbyville-based Athena Broadband are also getting in on the gigabit game.

This is a disturbing pattern that reinforces America's crazy quilt, disparate access to advanced telecommunications service. Given the high cost of constructing telecommunications infrastructure, it would be far more efficient to have a single entity build it and allow various Internet service providers to offer services over it. Instead, the U.S. continues to emulate the failed monopolistic vertically integrated business model of the legacy telephone and cable companies with its neighborhood cherry picking and redlining that have led to the nation's widespread access disparities.

Consquences of flawed U.S. telecommuncations infrastructure modernization policy manifest in Minnesota

Complicated Minn. rules help create broadband haves and have-nots - StarTribune.com: The underground fiber wires that deliver high-speed broadband access have been laid in fits and starts throughout Minnesota, creating a hierarchy of haves and have-nots around a technology that’s increasingly essential to doing business in the modern economy. Thanks to complicated eligibility rules and overlapping private interests, download speeds available in one community or part of a county are often not yet available in directly adjacent areas — or only at absurdly high prices.

Many have compared America's checkerboard, crazy quilt modernization of its telecommunications infrastructure to the deployment of electrical power distribution infrastructure early in the 20th century. But it's not directly comparable because in Minnesota as throughout the nation, it's highly granular with major access disparities between areas in close geographical proximity. By contrast, electrical distribution infrastructure initially served urban areas, leaving entire rural regions -- and not just parts of neighborhoods and streets and roads -- without power. As mentioned in this story, another difference is huge variations in what people pay for modern telecommunications service from one community to another based on the services offered.

The tax dollar tap is about to start flowing more freely. If Dayton and lawmakers can agree on broadband spending this year — a big “if” given the low expectations at the Capitol for the final work product of the politically divided Legislature — then it’s likely to fall somewhere between the $40 million sought by the House GOP and the $100 million that Dayton wants. It could end up as one of the single biggest state expenditures this year.

Even so, it's nowhere near the funding needed to ensure all Minnesotans have access to modern fiber to the premise connections. The situation on the ground in Minnesota repeats in major aspects all over America. Single states simply don't have the funding to adequately address this. It's a national problem that requires serious national funding. 

But there’s not universal agreement about the best way to spend all the broadband money. At the Legislature’s direction, the Office of Broadband has put its emphasis on connecting what it has labeled “unserved” areas. That leaves home and business owners and elected officials in many areas with the official designation of “underserved” wondering how much longer they have to wait to get a piece of the action.

Policymakers have been misled by incumbent legacy telephone and cable companies to define modern telecommunications service based on throughput speed rather that what's truly important -- fiber to the premise infrastructure. Hence, policymakers have found themselves bogged down for at least the past decade playing a variation of "how many angels can dance on the head of a pin" when taking on telecommunications modernization. The incumbents love it because it creates complexity and delay that serve their goal of postponing the future.

U.S. telecom infrastructure modernization a great infrastructure investment, Mr. President

Obama articulates why Americans are so unhappy: Obama said he hopes going forward there will be a focus on additional steps that can be taken to make a difference. “Why aren't we investing in infrastructure that would put people back to work and strengthen our competitiveness over the long-term?

Indeed, Mr. President. With some 34 million Americans are unable to obtain telecommunications service capable of delivering high-quality voice, data, graphics and video according to FCC data released earlier this year, an ideal infrastructure project for the 21st century would be modernizing and building out America's telecommunications infrastructure.

Such a project would offer both direct and indirect economic benefit and would generate future tax revenues from increased economic activity powered by fast Internet services delivered over fiber connections serving all American homes, businesses and schools. I've offered just such a proposal in my recently issued eBook Service Unavailable: America's Telecommunications Infrastructure Crisis.

Key U.S. telecom issue is market failure, not market competition

Verizon FiOS finally coming to Boston as mayor announces $300M fiber network - The Boston Globe: “Today, 90 percent of Boston residents have only one option for broadband,” said Jascha Franklin-Hodge, Boston chief information officer. “The free market only works for consumers when companies compete for their business. And when this project is complete, the majority of Boston residents will have real choice for the very first time.”

*  *  *
In a report on high-speed Internet access last year, the Federal Communications Commission said 45 percent of American households have only one provider for such access.“We have seen first-hand that competition does in fact encourage other providers to build-out or upgrade broadband services,” the commission wrote. A good example of that dynamic is Google Fiber, the Internet giant’s push to install high-speed Internet in select US cities, said Deb Socia, executive director of Next Century Cities, an Internet advocacy group.

This is a parochial misconceptualization of America's telecommunications infrastructure crisis. It's not about competition or the lack thereof in a "free market." Telecommunications infrastructure has never been and will never be a competitive market offering in a market with many sellers and buyers. There cannot be many sellers because the microeconomics simply don't support it. In telecom infrastructure, the "free market" isn't so free -- it's highly constrained by large CAPEX and OPEX costs. The desire for competition is driven by the tendency of many to view "broadband" as other consumer services where consumers are accustomed to having the ability to choose among many vendors. That thinking is flawed insofar as it neglects the underlying infrastructure necessary to deliver it.

The real issue for the United States isn't market competition. It's market failure and the disparate infrastructure access that leaves 34 million Americans unable to obtain telecommunications service capable of delivering high-quality voice, data, graphics and video, according to figures released by the U.S. Federal Communications Commission earlier this year.

Fat lady singing on AT&T residential landline service; big telco going out with a whimper

New AT&T Plans Guarantee Pricing for 2 Years; Customers Can Save More Than 40% on on TV, Home Internet and Voice | AT&T: Choose DIRECTV You’ll get our DIRECTV SELECT™ All Included package for $50 a month, guaranteed for two years when you add it to an eligible new or existing AT&T service, like wireless or home Internet. The monthly equipment fees for up to four TV receivers are now built into the cost and guaranteed for two years. Taxes are still separate, since those vary based on where you live.

Add in High-Speed Internet and Voice

When you have DIRECTV you can add home Internet service with speeds up to 6 megabits per second for an additional $30 a month. And you’ll get a Wi-Fi gateway included at no extra charge. All guaranteed for two years. Also, when you pay for both services on a single bill you’ll automatically receive unlimited home Internet data – a value worth $30 a month.

The above excerpt from an AT&T news release issued April 11, 2016 shows AT&T retreating from its VDSL-based U-Verse product that offered Internet throughput that could marginally -- with ample data compression -- support video offerings. It's now offloading its video TV programming to DBS via its recent acquisition of DirecTV and dialing back Internet to first generation ADSL with "up to" speed of 6 Mbs (A fine print footnote tamps that down further, noting "Actual speeds are not guaranteed.")

The fat lady is singing. This latest product bundle marks AT&T's final landline offering in the residential premise market. The big telco is going out with a whimper. Legacy class DSL service isn't going to be able to support growing consumer preference for OTT and on demand video delivered via Internet versus TV programming packages offered over AT&T's DirecTV holding. Nor does it even measure up what the U.S. Federal Communications Commission defines as minimum standard Internet service of 25 Mbs. Moreover, AT&T's announced plans in 2015 to deploy fixed "wireless local loop" Internet service to about 13 million residential premises in its service territory not offered landline Internet service appears to have been a head fake, with no reported deployments.

AT&T seeks state sanction to exit residential premise service, transition customers to mobile wireless

Fellow blogger Steve Blum of Tellus Venture Associates calls bullshit on AT&T for sponsoring California legislation that would relieve it from its premise landline universal service obligations under Title II of the federal Communications Act. Blum has the same problem with the bill as I do. It's dressed up as enabling AT&T to transition from copper POTS service to Internet protocol-based service. As Blum points out, AT&T can do that without the need for enabling legislation. It has chosen not to make an orderly transition over the past two decades. That's a business issue, not one of regulatory policy.

The bill is essentially seeking state sanction to transition AT&T residential landline customers to its mobile wireless service. The thing is, that's not premise service under Title II's universal service obligation. However, with the U.S. Federal Communications Commission not enforcing its 2015 Open Internet rulemaking bringing IP-based services under Title II's universal service requirement, AT&T faces no regulatory consequence for "mobilizing the world" of its residential customers with service not engineered or priced for residential premise service.

AT&T miscasts telecom infrastructure as competitive market requiring level playing field

AT&T GigaPower Ready to RSVP | Light Reading: AT&T has been known for taking action, politically and in the courts, to fight municipalities that want to build and operate their own networks, but Harrison insisted her company does not oppose government-owned networks. "We only want to have a level playing field for all competitors, so everyone works by the same rules and regulations," she said. That means a municipality can't favor its own network when it comes to using public rights of way or issuing permits in a more timely fashion.

Translated, that means we (AT&T) want to control the rules on our terms, not the public's. That's an overreach on AT&T's part. The government and the private sector are not equal partners and cannot be because unlike a private company, the government is obligated to act in the public interest. If the government wants to provide telecommunications as a common carrier utility consistent with the U.S. Federal Communications Commission's Open Internet rules (and accordingly serve all properties unlike AT&T's rampant redlining and cherry picking), it can do so regardless of what AT&T or any other legacy incumbent desires.

Finally, AT&T as a monopoly market player knows better than to cast telecommunications infrastructure as a competitive market of many sellers where a level playing field is necessary to ensure fair competition. It is not.

Service Unavailable: The Failure of Competition - Community Broadband Bits Podcast 196 | community broadband networks

Service Unavailable: The Failure of Competition - Community Broadband Bits Podcast 196 | community broadband networks: If you are paying close attention to discussions about broadband policy, you may have come across Fred Pilot's reminders that competition is not a cure-all for our Internet access woes across the United States. The blogger and author joins us for episode 196 of Community Broadband Bits.

Fred Pilot's new book, Service Unavailable: America's Telecommunications Infrastructure Crisis, discusses some of the history behind our current challenges and proposes a solution centered around federal funding and cooperatives.

We discuss the switch from telecommunications as a regulated utility, to which everyone was guaranteed access, to a system relying on competition, in which some people have many choices but others have no options. We also discuss the merits of a national solution vs encouraging more local approaches with federal financial assistance.

Christopher Mitchell interviews me for his Community Broadband Networks podcast. Give it a listen.

Barring ambitious federal program, state & local government P3s with legacy providers not a solution for U.S. telecom infrastructure deficits

CenturyLink, Frontier and TDS mull public, private fiber network partnerships - FierceTelecom: CenturyLink (NYSE: CTL), Frontier Communications and TDS are amongst a growing group of service providers that are considering partnering with local communities to build out and upgrade their networks to support higher speed residential and business services. Jennifer M. Fritzsche, senior analyst for Telecommunication Services - Wireless/Wireline at Wells Fargo, said that while CenturyLink, Frontier and TDS are looking at working with local communities, the one remaining barrier is who will oversee and operate these networks.

Actually, the bigger -- and biggest barrier -- is funding. These legacy players lack business models to generate adequate funding to build out fiber to the premise infrastructure serving all premises within their service territories within a reasonable time frame. But so do state and local governments. Especially as they continue to cope with the aftermath of the Great Recession and many competing needs for public funding such as deteriorated roads and highways and other infrastructure and enormous public pension obligations.

Some local governments and particularly those with pre-existing telecom or electric power infrastructure such as those mentioned in this article are the sole viable candidates for these P3 arrangements. That could change if the federal government launched an ambitious program appropriating the many billions needed to ensure every American home, business and institution has a fiber connection.

Affordability only part of the solution to #homeworkgap; lifeline goes hand in hand with universal service

Boost the homework connection - Times Union: But more can be done. For starters, on Thursday, the FCC is expected to vote on a proposal to modernize a program called Lifeline. Lifeline began more than three decades ago, when President Ronald Reagan was in the White House and rotary phones were still in style. Then and now, this program provides a discount for basic phone service. But broadband is the essential technology of our time. So it's time for the FCC to take steps to make this program broadband-capable and use it to help close the homework gap.

It should be recalled that when lifeline was implemented in 1985, the United States had achieved universal or near universal access for telephone service. Unlike today when according to the FCC's figures released earlier this year, 34 million Americans are unable to obtain telecommunications service capable of delivering high-quality voice, data, graphics and video.

Universal service is an essential component and not separate and distinct from lifeline subsidies for low income households. Another difference from 1985 is telephone service rates were tightly regulated in order to keep them affordable, unlike Internet service today. Notwithstanding the fact the FCC classified Internet service as a common carrier telecommunications utility in 2015 with its Open Internet rulemaking. Prices will naturally tend to be unaffordable for low income households in a price unregulated natural monopoly market.

Why the privatized, vertically integrated business model of telecom produces market failure and disparate access

Australian telecom strategist Malcolm Moore posted in a LinkedIn discussion forum one of the best and most succinct explanations I've read of why market failure and disparate access results from regarding telecommunications infrastructure as privately held, vertically integrated and highly localized service. According to Moore, this is a "diametrically incorrect business model for infrastructure (that) focuses on every wrong economic aspect." Moore adds its widespread adoption explains why fiber to the premise technology "was developed about 20 years ago but never rolled out."

Moore elaborates on the economics and makes a case for policymakers to regard telecommunications as essential public infrastructure and to stop thinking of it as a private "broadband" service offering:

The primary focus of (privately held telecom infrastructure) is very short term maximised ROI (minimised service delivery, maximised end user cost) - perfect for retail reselling / product bundling.

For Infrastructure Business: e.g. Telecomms / FTTP / Mobiles, Electricity Power Stations / Distribution, Transport / Roads / Rail / Ports, etc., the primary focus is long-term, minimum cost, maximised service delivery.

Why states fall short, kick the can on telecom infrastructure modernization

Minnesota to Expand Its Broadband Grant Program: Broadband Internet access has been one of the main policy discussions in Minnesota for the past few years. Governor Dayton’s Broadband Task Force has recommended the state use public dollars to jumpstart broadband infrastructure investment. For FY2016-2017, Governor Dayton and Lt. Governor Smith propose a $100 million in their supplemental budget for this issue, while the Minnesota House’s bill proposes $35 million.

Back in 2010, Minnesota set its broadband development goal: that every resident and business have access to high-speed broadband with minimum download speeds of ten to 20 megabits per second and minimum upload speeds of five to ten megabits per second by 2015 at the latest. As we recently reported, the state failed to achieve its goal, but recently updated its goal to match the FCC’s latest definition of broadband Internet with minimum download speed of 25 megabits per second and minimum upload speed of three megabits per second.

This item points up the futility of state "broadband" initiatives. Instead of setting an infrastructure-based goal of universal service, they use throughput speeds as a benchmark. In doing so, they fall into the speed trap set by the incumbents who've framed the issue of modern telecommunications service as being all about "broadband speeds." That promotes a "how many angels can dance on the head of a pin" and "what's fast enough?" debate that by cynical design shifts the focus away from infrastructure. Then when the "broadband speed" goal isn't met, states kick the can and set a new "broadband speed" goal.

Why do states end up kicking the can? Because they are endeavoring to build the 21st century's information highways that cost billions with mere millions -- and without the federal funding that was available for the blacktops and interstates of the 20th century. “This is not a million-dollar problem," Fletcher Kittredge, CEO of Maine's Great Works Internet astutely observed in 2015. "It is far larger.”

Local government Internet infrastructure efforts spurred by FCC's non-enforcement of Title II, encourgement of "competition"

EPB Lays Out Plans To Provide All Of Bradley County With High-Speed Internet, TV Service; Cost Is Up To $60 Million - Chattanoogan.com: State Rep. Dan Howell, the former executive assistant to the county mayor of Bradley County, was in attendance and called broadband a “necessity” as he offered his full support to helping EPB, as did Tennessee State Senator Todd Gardenhire. “We can finally get something done,” Senator Gardenhire said. “The major carriers, Charter, Comcast and AT&T, have an exclusive right to the area and they haven’t done anything about it.”

The "exclusive right" mentioned here isn't generally a government-granted or regulated license or franchise to offer Internet service. It's actually a de facto duopoly market of legacy telephone and cable companies. Title II of the federal Communications Act recognizes that telecommunications infrastructure due to its high cost of construction and operation tends to function as a natural monopoly. In accordance with this, the Federal Communications Commission classified Internet as a telecommunications utility under Title II by adopting its Open Internet rules in 2015. But the FCC is currently not enforcing the universal service and anti-redlining provisions of Title II.

It's therefore unsurprising that barring such enforcement, local governments will attempt to fill in the gaps in unserved or poorly served areas in response to their citizens' complaints. When those living and operating businesses in landline unserved areas attempt to order Internet service, without FCC enforcement of Title II the incumbent telephone and cable companies can summarily turn them down without consequence. That leaves them little recourse other than to demand their local elected officials do something to help. The FCC's non-enforcement of these Title II provisions correlates with its current policy position advocating local government "competition" with incumbent telcos and cablecos -- in conflict with its Open Internet rules predicated on a monopolistic and non-competitive market.

Another year, another U.S. "broadband" conference & same conclusion: Great need for fiber infrastructure -- but no funding

Mayor Murray: Municipal broadband too costly; public-private deal is way to go | The Seattle Times: The best way to expand Internet access in Seattle is through public-private partnerships, (Seattle) Mayor Ed Murray said at a regional broadband conference Monday. The mayor reiterated the position he formed after a city-commissioned study released last summer showed it would cost between $480 million and $665 million to build out a municipal-broadband network across the city. That price tag is less than previously estimated, but the mayor said it was still too much to be feasible.
“When I came into office, I was very excited about the possibility of municipal broadband until the study came back and indicated it would be literally the largest tax increase in Seattle,” Murray said Monday at the conference, co-hosted by the nonprofit Next Century Cities and the National Telecommunications and Information Administration, an agency of the U.S. Department of Commerce.

And so it goes across the United States as it has at these "broadband" confabs for the past decade like a never ending season of Seinfeld reruns. Municipalities can't ante up their own dollars to build telecommunications infrastructure, particularly with so many other needs such as transportation infrastructure, public buildings and skyrocketing employee pension obligations all competing for big bucks. Don't look to the states either. They're dealing with similar financial challenges on a larger scale in the slow economic recovery in the years since the 2008 recession. Billions of dollars are needed to fund America's long overdue replacement of its legacy metallic telecom infrastructure with fiber -- now a generation late. Only the federal government can step up with that level of funding. But don't expect much from the current federal government as the Seattle Times story reports:

The federal government did finance about 230 broadband projects nationwide through the 2009 American Recovery and Reinvestment Act. Those funds are now spent, but municipalities can apply for smaller grants through other federal agencies, said Lawrence E. Strickling,assistant secretary of commerce for communications and information.
Strickling said Monday the federal government helps municipalities by providing guides to funding and other technical expertise.

Vermont lawmaker: "No adequate ongoing resource" to fund telecom infrastructure

Deerfield Valley News - VTel House at odds over Internet access info: Guite also said that some Vermonters may have been misled into believing covering every person in the state was possible. “That could require a billion dollars,” he said. He also said that he has been making this comment publicly for at least five years. “I made that statement at a meeting that Bernie Sanders organized in 2010.” H. 870 also calls for an increase of 0.5% in the universal service charge. Sibilia said that this was to help create a vitally needed program. “There is no adequate ongoing resource for expanding Internet or cell,” she said. Her hope, she said was this increase would help create that resource. She also said it would be an inadequate amount.

Bernie Sanders should paraphrase the late Illinois Senator Everett Dirksen: "A billion here, a billion there, and pretty soon you're talking about real access."

San Francisco eyes municipal telecom infrastructure project to bring fiber to every doorstep

San Francisco Municipal Broadband Targets $26 Monthly Base Price - Telecompetitor: City officials have recommended construction of a San Francisco municipal broadband network based on a public-private partnership. The recommendations came in a 103-page report issued by the office of Supervisor Mark Farrell on March 15.
According to the San Francisco Municipal Fiber Advisory Panel’s report – Financial Analysis of Options for a Municipal Fiber Optic Network for Citywide Internet Access – a publicly funded broadband utility network would cost the city an estimated $867.3 million in construction costs plus $231.7 million a year in maintenance costs. Projected subscriber revenue would result in an annual deficit of $145 million. Given this, as well as the desire to build in some market competition, the authors recommended the city launch a public-private partnership model that calls for all San Francisco homes and businesses to pay an average $26 per month utility fee for baseline Internet access. Introducing tiered pricing models based on type of service or bandwidth use could offset operating costs and lower baseline fees.

The Utah Telecommunication Open Infrastructure Agency (UTOPIA) had planned to expand its services using a similar financing mechanism with a private finance partner, Macquarie Capital Group. It pulled the plug on the partnership last month amid resistance to the utility fee. However, the model could fare better in the city by the bay due to multiple factors including its relative affluence, more liberal political leanings and its well established place in the information technology industry. Unlike UTOPIA, a regional network involving several municipalities, San Francisco is also a much more compact service area of just 14 square miles with pre-existing municipal infrastructure that would facilitate construction. That likely made it easier for San Francisco to reject the model used by legacy telephone and cable companies and Google Fiber that builds infrastructure serving some but not all neighborhoods.

Why the “more competition” argument for better Internet service is misguided

Hardly a day goes by without calls for “more competition” as the elixir to make modern Internet-based telecommunications services more widely available and offering better value than those offered by the legacy incumbent telephone and cable companies. U.S. Federal Communications Commission Chairman Tom Wheeler has curiously joined the chorus calling for more competition -- even though his agency and its 2015 Open Internet rules are predicated on regulating Internet service as a natural monopoly common carrier utility.

The problem is telecom infrastructure by nature isn’t a competitive market defined as having many sellers and buyers. There are many buyers but there cannot be many sellers because it’s too costly and economically inefficient to have multiple providers building and owning infrastructure connecting homes and businesses. More competition isn’t a solution here. 

In the states, the legacy incumbents reinforce the notion of competition by blocking projects that would threaten their service territory monopolies. From their perspective, these projects represent competition because they would potentially steal away customers. Therefore, proponents reason, competition must be a good thing if the incumbents oppose it. This however illustrates the faulty reasoning of the “more competition” argument. 

The problem is the pro-competition proponents are buying into the incumbents’ concept of competition -- and not a consumer perspective. For the incumbents, any project that would build infrastructure in their service territories is competition. However, for consumers, having a choice among many sellers is competition. That’s not possible with telecommunications infrastructure. But it is possible if the infrastructure is publicly owned like roads and highways. That would open up Internet service to competition since multiple Internet service providers could offer their services over that infrastructure.

Time to punch the reset button on U.S. telecom infrastructure

AT&T, Comcast Kill Local Gigabit Expansion Plans in Tennessee | DSLReports, ISP Information: For some time now municipal broadband operator EPB Broadband (see our user reviews) has been saying that a state law written by AT&T and Comcast lobbyists have prevented the organization from expanding its gigabit broadband offerings (and ten gigabit broadband offerings) throughout Tennessee. These state laws currently exist in more than twenty states, and prohibit towns from deploying their own broadband -- or often even striking public/private partnerships -- even in cases of obvious market failure. A proposal that would have recently lifted this statewide restriction in Tennessee was recently shot down thanks to AT&T and Comcast lobbying. Even a new compromise proposal (which would have simply let EPB expand slightly in the same county where it is headquartered as well as one adjoining county) was shot down, after 27 broadband industry lobbyists -- most of whom belonging to AT&T and Comcast -- fought in unison to kill the proposal.

It's understandable the legacy telephone and cable companies want to keep out interlopers who might threaten their de facto monopolies for Internet service. The incumbent protectionism on display in Tennessee plays out in multiple states in the form of laws barring public sector involvement in telecom infrastructure projects or as this month in California and Kentucky, efforts to block fiber to the premise (FTTP) projects from gaining access to utility poles. This obstructionism isn't going to go away and requires a major reset in order for it to come to an end.

As I wrote in my recently issued eBook Service Unavailable: America's Telecommunications Infrastructure Crisis, the nation is already two decades behind where it should be relative to replacing its legacy metal wire telecom infrastructure with FTTP. The book proposes the federal government construct universal FTTP as public works. As roads and highway were to the 20th century, it's vital infrastructure for the 20th that's too important to be left in control of the legacy incumbents. It's time to punch the reset button so the United States can move forward to the future.

Vermont regional telecom district accesses institutional bond funding for expansion

ECFiber's growth plans could double service area | Vermont Business Magazine: ECFiber, based in Royalton and now officially known as the East Central Vermont Telecommunications District, announced plans to activate 110 miles of network in 2016 and build an additional 250 miles in 2017. “Working with bond underwriters, we believe ECFiber has reached the point in its financial development that allows us to access institutional capital markets for the first time in 2016,” says Irv Thomae, District Chairman. “Since 2011, we have relied on 450 local investors, some state-provided dark fiber, and VTA and Connectivity Fund grants to build the first 340 miles of network. By the end of 2016 we will be in parts of 21 of our 24 member towns, but many neighborhoods that desperately need ECFiber service cannot afford to raise the $30,000 per mile to complete a build. Outside financing would finally allow us to build to those towns that need us the most, not just those where we can raise capital.”

Regional telecom fiber modernization projects such as the Utah Telecommunication Open Infrastructure Agency and WiredWest in western Massachusetts have hit obstacles obtaining sufficient capitalization to expand. Due to the high cost of infrastructure projects, access to capital finance markets is critical given limited funding available from local governments and property owners.

According to this story by Vermont Business Magazine, the East Central Vermont Telecommunications District is accessing the institutional bond market for the first time for needed expansion capital, a development that bears watching since it demonstrates the bond markets' receptiveness to working with projects sponsored by utility districts.

Google fights AT&T, Comcast over Bay Area Google Fiber service - San Jose Mercury News

Google fights AT&T, Comcast over Bay Area Google Fiber service - San Jose Mercury News: MOUNTAIN VIEW -- Google's plan to bring ultrahigh-speed Internet service to the Bay Area has run into a decidedly nontech hurdle: utility poles. To roll out Google Fiber in five Silicon Valley cities, the tech giant needs access to the poles for stringing up fiber cable. But in several cities a who's who of Google competitors are standing in the way. The outcome of the pole fight is likely to have a profound effect on which communities get Google Fiber and which don't. "The infrastructure needs to be mostly above ground," said MoffettNathanson Research analyst Craig Moffett. "You can't proceed ... if you don't have pole access." Similar battles have played out in other cities across the nation, slowing Google's multibillion-dollar program while competitors push forward with their own gigabit-speed offerings.

This illustrates the death by thousand cuts delaying strategy of the legacy incumbent telephone and cable companies to protect their service territory monopolies from interlopers offering telecommunications infrastructure far superior to their own. Those legacy dinosaurs have armies of attorneys prepped to spend years if not decades in the courts erecting legal speed bumps to slow the progress of new entrants like Google Fiber.

Some observers believe the U.S. Federal Communications Commission's promulgation of its Open Internet rules in 2015 deeming Internet service providers common carrier utilities would make pole access easier. But so did others when Congress amended the Communications Act in 1996 to allow competitive local exchange carriers (CLECs) the right to use incumbent telephone central offices and cable plant to offer competing telephone and DSL services that was just emerging in the late 1990s. The incumbent telcos took a decidedly uncooperative and litigious stance to hamstring those providers as well.

These incumbent delaying tactics deepen America's telecommunications infrastructure crisis because they push a nation that's already a generation behind where it should be in terms of replacing its legacy metal cable system with fiber to the premise (FTTP) even more behind the curve. The situation calls for aggressive federal intervention in the form of a crash program to modernize and build out this vital telecom infrastructure to serve the nation's needs in the 21st century.

Obama administration, FCC use incumbent "broadband adoption" talking point designed to shift attention from nation's telecom infrastructure deficiencies

Obama Seeks Broadband for 20 Million More Low-Income Subscribers - The New York Times: The White House also released a report outlining the economic effects of broadband adoption, focused on how families without broadband at home are at a disadvantage in finding jobs.

Once again, the Obama administration and the U.S. Federal Communications Commission conflate access to advanced telecommunications service with its use. They are two different things. The unfortunate use of the term "broadband adoption" parrots a favorite talking point of the legacy telephone and cable companies to take the focus off the nation's telecommunications infrastructure deficiencies that leave some 34 million Americans without access to landline premise service according to the FCC's most recent estimate released in January. After all, the incumbent argument goes, why should we build Internet telecom infrastructure when people aren't using computers at home and therefore not adopting "broadband?"

The term "broadband" dates back to the late 1990s when people were beginning to migrate from narrowband, dial up Internet service to faster "broadband" connections. The context there was personal computer connections to the Internet. Which is also outdated given that today, Internet connections also provide voice and video services that don't require a personal computer.

As long as policymakers insist upon living in 1999, it will be difficult for America to advance into the 21st century.

DSL faces obsolescence -- with no successor in place

Two Tales of DSL | POTs and PANs: But the problem for all DSL providers is that within a few years the demand for broadband speed is going to exceed their capabilities. The statistic that I always like to quote is that household demand for broadband speeds doubles about every three years. This has happened since the earliest days of dial-up. One doesn’t have to chart out too many years in the future when the speeds that can be delivered on DSL are not going to satisfy anybody.

Telecom consultant Doug Dawson lays out the disconcerting reality that is a major manifestation of America's telecommunications infrastructure crisis. Digital subscriber line (DSL) technology was put in place as a temporary method of enabling Internet protocol service over twisted pair copper cable that delivered voice service pre-Internet. The problem is there is no succession plan to replace the copper with modern fiber to the premise (FTTP) technology as I discuss in my recent eBook Service Unavailable: America's Telecommunications Infrastructure Crisis.

Susan Crawford's Rx for ailing U.S. telecom infrastructure

Susan Crawford has added another component to her prescription to cure America's ailing telecom infrastructure, modernizing it with fiber optic technology to replace the increasingly obsolete metallic cables the legacy telephone and cable monopolies use to connect homes and businesses.

In January, she proposed the financial element: harnessing private investment capital via a regionally administered federal telecom infrastructure development and finance agency, funded by federally subsidized bond proceeds. (See related blog post)

Google Fiber's recent move to use existing fiber infrastructure owned by local governments in those select areas it will offer services spurred Crawford to elaborate on the infrastructure component of her solution. Her proposed federal telecom infrastructure development and finance agency would help local governments build open access fiber networks and sell access to retail providers on a wholesale basis.

Crawford sees Google Fiber's willingness to sell retail services over municipal infrastructure it does not own as a game changing move because the business model of local government-owned open access networks like Utah's Utah Telecommunication Open Infrastructure Agency (UTOPIA) have historically not meshed with the vertically integrated, monopolistic business models of the legacy telephone and cable companies that shun open access infrastructure. That model is based on owning the customer and selling monthly subscriptions to one premise at a time. That makes it highly risk averse since these legacy providers target their infrastructure only where they can get the most subscriptions and redline other neighborhoods that aren't as promising, creating widespread market failure and access disparities.

Google Fiber had initially followed the same model in its proprietary infrastructure projects such as in Kansas City and Austin, Texas. Now it is saying if a local government like Huntsville, Alabama has the resources to build fiber to the premise to serve its residents, it will be happy to sell services on that network. Crawford's federal bond finance model could scale up open access networks nationwide by aiding localities that lack Huntsville's pre-existing municipal electric company infrastructure to build their own.

The Cord Empire Strikes Back - Bloomberg Gadfly

The Cord Empire Strikes Back - Bloomberg Gadfly: Like in the rule-making for set-top boxes, incumbents are showing they're good at putting up roadblocks. AT&T last week sued the city and county and said local officials don't have the authority to regulate attachments to its poles. The telecom company also said tinkering with its equipment might cause outages for its own customers.

As the scuffles show, breaking Big Cable won't be easy. And it is cringeworthy that Americans' best chance to end the cable-and-telecom monopoly may lie with Google, another monopolist. But if the status quo doesn't change, ambitions for more robust Internet connections and more compelling home entertainment options will be realized painfully slowly, or not at all.

Telecommunications infrastructure is a natural monopoly. As such, it warrants strong monopoly regulation such as Title II of the Communications Act (implementing regulations symbolically adopted but not being enforced by the U.S. Federal Communications Commission ) or government ownership. The United States currently has neither and is reaping the consequences in the form of widely disparate access and high prices. The legacy incumbent telephone and cable companies are only all too happy to take advantage.

A manifesto for telecom infrastructure in the 21st century

More than a decade into the twenty-first century, it is clear a new set of principles is needed to support the modernization and expansion of telecommunications infrastructure. Much of the United States remains without adequate advanced telecommunications infrastructure necessary to deliver modern voice, data and video telecommunications services to homes, schools and businesses. A major impediment is how the problem and solutions are conceptualized, based on the subscription-based, vertically integrated proprietary infrastructure model established in the pre-Internet era. A new set of principles is necessary in order to move forward in the 21^st century.

1. Holistic view of telecommunications infrastructure. Rather than discrete, local “broadband networks,” a holistic view of telecommunications infrastructure is needed in accordance with Metcalfe’s Law, which holds the value of a network increases with the number of connections to it. A complete network enables users to obtain information and communicate across town, across state borders and globally. 
   
2.  With fiber to the premise (FTTP) infrastructure, throughput speed should not be key metric. There exists a general consensus that FTTP infrastructure has the capacity to support both current and future telecommunications needs and is not prone to obsolescence. Given fiber’s large carrying capacity, throughput speed should no longer be used as a primary method of defining telecommunications infrastructure.
   
3. Public works infrastructure. Due to high costs of construction and maintenance, telecommunications infrastructure should be built and maintained as public infrastructure like streets and highways. Its high cost structure does not allow it to function as a competitive market offering and produces widespread market failure and disparate access.

Yet another think tank makes false "market competition" argument in defense of legacy incumbent telephone and cable companies

Don’t put bureaucrats in charge of broadband | Columns | richmondregister.com: State lawmakers instead should search for ways to eliminate barriers to additional investment by private ISPs instead of raiding their customer base, which threatens to drive them, the jobs they support and tax revenues they send to Frankfort out of the commonwealth altogether.

By ending KentuckyWired once and for all, the Bevin administration would accomplish what federal bureaucrats who want to dictate the Bluegrass State’s broadband policy can’t be trusted to do: protect the best interests of Kentucky taxpayers and consumers who pay the bills.

Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.bipps.org.

Yet another think tank attempts to argue public sector investment -- even disregarding the fact that it's woefully insufficient -- is inappropriate for telecommunications infrastructure because telecommunications infrastructure is a competitive market. This is the falsity at the heart of the argument. It's not a competitive market because competitive markets by definition have many sellers and many buyers. Telecommunications infrastructure, however, is a natural monopoly or duopoly market because the high cost of building and maintaining it keep out potential new providers. That makes it like other high cost infrastructure such as roads and highways that are financed by the public and not private sector.

Mr. Waters is preying on economic ignorance to make a disingenuous argument and in so doing is rendering a great disservice at a time when the nation's telecommunications infrastructure is far behind where it should be in 2016 and for the future. He also employs a favored tactic of the dinosaur incumbents by focusing the discussion on "broadband speeds" in order to distract from the need to replace America's outdated metallic landline telecommunications infrastructure with modern fiber to the premise networks -- a thought trap that has ensnared most public policymakers and the mainstream and info tech media. It's time he and others stopped trying to postpone the future to protect last century's telephone and cable companies and allow technological progress to take its course into the 21st century.

If a meter of FTTP was installed every time a politician uttered the phrase "Access to broadband is essential," the entire nation would be fibered by now

Congressional Rural Broadband Caucus Launches | Multichannel: “Access to broadband is essential," said (Bob) Latta, vice chairman of the House Communications Subcommittee in a statement.

If a meter of fiber to the premise telecommunications infrastructure was deployed for each time a politician repeated that phrase over the past 10 years, every American address would have a fiber connection in 2016.

Slogans stating an obvious need do nothing to address it. What's needed is a national policy and fully funded initiative to construct fiber to the premise infrastructure every American premise needs in the 21st century. And stop allowing 20th century legacy telephone and cable company dinosaurs to postpone the future to serve their own interests.

Legacy incumbents circle the wagons against WV telecom infrastucture initiative

Charleston Gazette-Mail | Senate OKs creating state-owned broadband network: The West Virginia Senate approved legislation Thursday that would create a state-owned broadband Internet network, but Frontier Communications and cable companies already are lobbying members of the House of Delegates to kill the bill. State senators voted 29-5 to build a fiber-optic network “zone by zone” across West Virginia, using money borrowed through the Water Development Authority, one of the few state agencies authorized to issue bonds.

The legislation (SB 315) aims to expand high-speed Internet in rural areas, drive down prices and bolster Internet speeds.“This bill is one that can really promote West Virginia and move our state forward,” said Sen. Chris Walters, R-Putnam. “Without this type of infrastructure, we aren't giving the people the opportunity to succeed.”

Senate Majority Leader Mitch Carmichael, a Frontier executive, sharply criticized the legislation on the Senate floor, saying the bill would discourage Internet providers from expanding existing broadband networks or building new ones. “The capital allocations are chilled when they know the government is going to be competing,” said Carmichael, R-Jackson. “The best way to deliver broadband is through the private sector. We don't have to always turn to government to solve technological issues.

If it were only a technological issue as Mr. Carmichael wrongly frames it, it would merely need a technological solution the private sector could provide. In fact, it's a market issue. The state is attempting to address private market failure to construct telecommunications infrastructure needed for the 21st century. In that regard, it's also not about market competition. By definition, competitive markets are not failed markets.

Curb your enthusiasm: Google Fiber won't likely serve "thousands" of municipalities

Google To Use City-Owned Network To Bring Fiber To Huntsville 02/22/2016: This private-public model for broadband could spread far beyond Huntsville, according to muni-broadband proponent Christopher Mitchell, director of the Institute for Local Self-Reliance's Community Broadband Networks Initiative."In many ways, I think this is a tremendously hopeful development," Mitchell tells MediaPost. "It gives cities a great confidence that if they build passive infrastructure, they will be able to work with ISPs."

Mitchell adds that many of the municipal officials he has spoken with recently have said they're willing to build fiber networks, but not provide broadband or telephone services. He adds that he expects a few other cities cities to follow Huntsville's lead in the next one to two years, and that "thousands" of municipalities could ultimately do so.

Thousands? Unlikely. Few local governments have the existing utility infrastructure or financial resources to build fiber to the premise networks serving their residents as they continue to recover from the 2008 economic collapse and face competing demands for other infrastructure such as roads and sewer systems and public pension obligations.

Facebook's Telecom Infra Project appears focused on mobile wireless and not premise service

Telecom Infra Project – The Telecom Infra Project (TIP) is an engineering-focused initiative driven by operators, infrastructure providers, system integrators, and other technology companies that aim to reimagine the traditional approach to building and deploying telecom network infrastructure.: The growth of the internet and the rise of data-intensive services like video and virtual reality require us all to collaborate on the development of new technologies, rethink how we deploy existing technologies, and focus on simplicity, flexibility, and efficiency in everything we do.

TIP will explore new approaches and technologies across three initial focus areas: access, backhaul, and core and management. The project groups within these areas will leverage the unique engineering and operational expertise of each member. They will focus on developing new technologies and exploring new approaches to deploying in both developed and emerging markets.

This Facebook-led R&D effort appears targeted at disrupting the mobile device market as the two illustrations on the left of the below schematic suggests. No mention is made of fiber optic to the premise telecom infrastructure needed to adequately serve homes, businesses and public institutions that can provide the robust bandwidth necessary for these settings. Premise service is dominated by stodgy, techno-averse telephone and cable dinosaurs with shitty service options and customer service and is also a fat target for massive disruption.

UTOPIA reconnoiters as resistance to local parcel fee halts PPP with Macquarie

Macquarie is probably dead, and that’s probably okay – Free UTOPIA!: While I wasn’t able to attend the latest UTOPIA board meeting (bit of a drive from Cedar City), I did get a summary of what was discussed during that meeting. One of the things that came up was the long-delayed Macquarie deal. For all intents and purposes, it’s most likely not going to happen. There appears to be slow action on a binding public vote and the utility fee was very unpopular (and wasn’t coming down). The board has voted to pay Macquarie what they are due and take those reports as valuable information to plan for the future with no further action.

As this blog reported last March, resistance to a utility parcel fee stalled progress on a public-private partnership between the Utah Telecommunication Open Infrastructure Agency (UTOPIA) and an Australian firm that invests in public infrastructure projects, Macquarie Capital Group. That resistance created a massive stumbling block to the expansion and financial future of the UTOPIA regional fiber to the premise (FTTP) that serves 11 Utah municipalities.

Now nearly a year later as the blog cited above reports, that resistance has proven fatal to the partnership. In order for it to work under the long term financial plan prepared by Macquarie, the parcel fee was a necessary component of the partnership given that a public-private partnership by definition requires the contribution of public financial resources. No public contribution means no partnership, leaving the private partner like a single hand clapping.

This development is yet another example of the lack of adequate funding mechanisms at the state and local government level to ensure the construction of FTTP telecom infrastructure serving all American homes, businesses, and public institutions. The situation calls for an aggressive federal public works program to construct this needed infrastructure for the 21st century as I propose in my recently issued eBook Service Unavailable: America’s Telecommunications Infrastructure Crisis.

Telco CEO offers succinct description of FTTP market failure at network edge

Cincinnati Bell to Slow Fiber Build by 2017 | DSLReports, ISP Information: "Our buildout of fiber is 100 percent success-based and as long as we see the returns that are appropriate we're going to continue to build," Cincinnati Bell CEO Ted Torbeck told attendees of the company's earnings call.

"We anticipate by the end of the year we'll be somewhere over 60 percent and we fully anticipate that we'll be getting close to the upper range where in 2017 our build will decline significantly. The cost of the build is increasing as we expected as we build out and we're getting to the edge of the buildout and it's getting more expensive," the CEO added. "Once we reach the threshold where the margin decreases to the level is acceptable we'll stop the build.

A very succinct description of market failure in the words of a telco CEO that explains why private market forces cannot ensure the ubiquitous fiber to the premise infrastructure needed in the 21st century.