Capito introduces bill intended to spur rural broadband expansion | The State Journal | theet.com

Capito introduces bill intended to spur rural broadband expansion | The State Journal | theet.com: U.S. Sen. Shelley Moore Capito, R-W.Va., has introduced federal legislation intended to make it easier for companies to expand broadband internet service to rural communities. Capito introduced the Gigibit Opportunity Act on Wednesday, May 3, according to a a news release. The legislation would give temporary tax deferments to broadband providers and allow communities to set up "Gigabit Opportunity Zones" to encourage expansion.

Perhaps well intended, but misses the mark. Private sector ISPs aren't deterred from investing in telecommunications infrastructure due to tax burdens. Rather, it's long waits for return on investment with their business models based on selling subscriptions one premise at a time to Internet-enabled services over their networks.

Infrastructure costs a lot -- billions. The United States isn't going to get the advanced telecommunications infrastructure it needs quickly today and for the future as demand for service and bandwidth grows exponentially by offering tax breaks worth millions. Particularly by continuing to rely on private sector investment due to the aforementioned ROI obstacle. The public sector has to take the lead just as it has with roads and highways.

Beyond Net Neutrality: The Importance of Title II for Broadband - Public Knowledge

Beyond Net Neutrality: The Importance of Title II for Broadband - Public Knowledge: Title II classification is critical for protecting an open internet, but it is also just as important for preserving our values of service to all Americans, including universal service and consumer protection. Broadband has the power to transform people’s everyday lives. Title II classification of broadband must remain in place to continue protecting the fundamental values of our communications systems.

H/T to Yosef Getachew of Public Knowledge for this item emphasizing the Federal Communications Commission's reclassification of Internet as a common carrier telecommunications utility under Title II of the U.S. Communications Act in its 2015 Open Internet Rulemaking. 

Title II's universal service provision has unfortunately been buried under the mainstream media "net neutrality" meme that is utterly meaningless from the perspective of the 34 million Americans the FCC found in 2016 lack access to advanced telecommunications infrastructure capable of delivering high quality voice, data, graphics and video. Here's what I wrote on the topic shortly before the rulemaking was adopted.

A universal service standard prevents all too common crazy quilt pattern of telecom infrastructure deployment such as this accompanying a post at Steve Blum's blog illustrating how legacy incumbent providers engage in neighborhood cherry picking and redlining.

Deceptive deal: Verizon Wireless 4G LTE "unlimited" isn't

Verizon Wireless which like other wireless ISPs has historically offered metered "data plans," sold in multiple price tiers based on the amount of data transacted over the connection. Under pressure from falling subscriber growth, Verizon Wireless recently introduced an "unlimited" service that dispenses with the meter and offers a flat monthly recurring charge under a 2-year contract. Sounds like a good deal, right, especially for the many households in areas redlined by landline ISPs and without an option for service?

Wrong. It's a lousy, deceptive deal. The VZ Wireless meter is still running under this so-called "unlimited" service which is in fact data limited. And it's a hard limit. Once the meter hits 10GB, the service is shunted off VZ Wireless's 4G LTE network and onto its outmoded and crippled 3G network that can't support streaming or Skype until the start of the next monthly billing cycle.

FCC Chair Pai wrongly describes natural monopoly of telecom infrastructure as competitive market

FCC Chairman Ajit Pai on Why He's Rejecting Net Neutrality Rules - Reason.com: If left in place, however, the Title II rules could harm the commercial internet, which Pai described as "one of the most incredible free market innovations in history. Companies like Google and Facebook and Netflix became household names precisely because we didn't have the government micromanaging how the internet would operate," said Pai, who noted that the Clinton-era decision not to regulate the Internet like a phone utility or a broadcast network was one of the most important factors in the rise of our new economy.

Companies like Google (excepting Google Fiber's now defunct venture into fiber to the premise service), Facebook and Netflix aren't network providers. Consequently, they don't face the high costs associated with building and operating telecommunications infrastructure serving homes, businesses and institutions that deters market competition and promotes market failure.

Ajit Pai: The funny thing about that is because it's precisely because the phone company was a slow moving monopolist. That's exactly the point we're trying to make. These rules, Title II rules were designed to regulate Ma Bell, and the promise with Ma Bell, the deal with the government was, we'll give you a monopoly as long as you give universal service to the country. As a result, for decades, we didn't see innovation in the network we didn't see innovation in phones and it's when you have a competitive marketplace and you let go of that impulse to regulate everything preemptively, that you finally get to see more of a competitive environment.

Pai is engaging in the distortion of describing the natural monopoly market that telecommunications infrastructure is as a competitive market. Wishing it were competitive won't make it so. The cost barriers to entry are simply too high. Just ask Google Fiber. Or the 34 million Americans who have experienced sell side market failure, their homes and small business not offered landline connections capable of delivering high-quality voice, data, graphics and video, according to figures released by the U.S. Federal Communications Commission in 2016. Market failure is hardly an indicator of a robustly competitive market.

Pai's predecessor Tom Wheeler indulged in the misguided notion that telecom infrastructure could be competitive market, even though the FCC under his leadership adopted the 2015 Open Internet rulemaking predicated on regulating Internet service as a natural monopoly, classifying it as a common carrier telecommunications utility.

No FCC enforcement of universal service, anti-redlining provisions of Open Internet rulemaking

Cable, internet connection still not available for many: After 36 years of not being able to access standard internet and cable TV at their home in Deerfield, Gloria and Greg Kasprowicz recently had a Spectrum representative come to their door asking if they would like to have service. The couple, who live three miles from the local Spectrum headquarters on Firehouse Road, were excited when the representative told them they could get service through Spectrum, so they set up an appointment and waited anxiously.

But the date and time of the installment came and went, and no one showed up. So Gloria gave Spectrum a call to see what was going on and was told the company wasn’t able to service her house at this time. “What do you do at this point?” Gloria asked. “(Service) comes up from the bottom of the road, so the first couple of houses, I believe, have it. And it comes down the road to probably a half a mile up the road from us. There’s like a mile stretch — the last mile — for some reason they started from the top and came down and started from the bottom and came up.”

Technically under the U.S. Federal Communications Commission's 2015 Open Internet rulemaking that classified Internet protocol-based telecommunications as a common carrier telecommunications service, Spectrum would have to honor the Kasprowiczs' request for service. That's because the reclassification under Title II of the federal Communications Act includes that requirement as part of Title II's universal service and anti-redlining provisions. But despite adopting the rule, The FCC has never enforced those requirements. The current FCC chairman, Ajit Pai, is reportedly preparing to reverse the rulemaking.

NC bill that permits leasing of muni fiber raises question of how it reduces infrastructure construction costs

Rural broadband internet bill passes NC House | News & Observer: House Bill 68 is titled the BRIGHT Futures Act, which stands for Broadband, Retail, Internet of Things, Grid Power, Healthcare and Training. Its main goal is expanding access to high-speed, broadband internet in rural areas of the state where it’s often too expensive for private service providers to extend their lines.

*  *  *
Bill sponsors say cities, towns and counties could make use of what’s known as “dark fiber” – additional capacity in existing infrastructure that government uses to connect traffic lights, schools and public facilities. Leasing capacity to private internet providers could provide revenue to local governments that could support the expansion of
government-owned fiber networks.

The problem as stated here is it's too costly for private telecom providers to extend their infrastructure to rural areas. So how does allowing these providers to lease local government owned fiber address the cost of building the needed infrastructure that connects homes and small businesses? Particularly given the challenging business case to justify building infrastructure to serve these areas?

A concise summary of poor state of American telecom

The FCC Is Leading Us Toward Catastrophe – Backchannel: Adding a little internet-y flavor to basic, physical telecommunications lines makes zero difference to the economics of building these essential connections. Because the upfront costs of building communications lines — very physical things, lots of labor costs involved — are high, because no one needs two lines to their house, and because it was cheaper to upgrade the cable systems to higher speeds than to dig up copper wires and replace them with fiber, we have ended up with a country subject to geographically divided markets, private, unconstrained monopolies, and big holes where internet access is rare and expensive where it exists at all. In urban areas, local cable monopolies generally wield tremendous power and charge as much as they like. Rural places, meanwhile, are often relegated to inadequate connections over copper phone lines.

Susan Crawford provides an concise summary of the poor state of American telecommunications borne out of misguided and excessive reliance on market forces to modernize and build out the nation's telecom infrastructure in a natural monopoly market where market forces don't work.

Robert W. Taylor, a pioneer of the modern computer, dies at 85 - LA Times

Robert W. Taylor, a pioneer of the modern computer, dies at 85 - LA Times: Robert W. Taylor, one of the most important figures in the creation of the modern computer and the Internet, has died. He was 85. According to his son Kurt Taylor, the scientist died Thursday at his home in Woodside. He suffered from Parkinson’s disease and other ailments. Taylor’s name was not known to the public, but it was a byword in computer science and networking, where he was a key innovator who transformed the world of technology. Taylor was a Pentagon researcher in the 1960s when he launched Arpanet, which evolved into what we know today as the Internet.

Presaging the concern in our current time over disparate access to advanced Internet-based telecommunications, Taylor wrote the following in a paper he co-authored, The Computer as a Communication Device published in April 1968 in Science and Society:

For the society, the impact will be good or bad, depending mainly on the question: Will "to be on line" be a privilege or a right? If only a favored segment of the population gets a chance to enjoy the advantage of "intelligence amplification," the network may exaggerate the discontinuity in the spectrum of intellectual opportunity.

USTelecom is right -- and wrong -- on public telecom infrastructure

Survey: Most Americans cities to build, sell Internet plans: Proponents of independent Internet networks argue that a "public option" for Internet access could help drive down the price of broadband and increase speeds. Opponents say the expense of building new networks represents an unacceptable financial risk for many local governments. "Municipal broadband networks too often end up failing and costing taxpayers millions," said USTelecom, a trade association representing Internet providers and telecom companies.

USTelecom is right. Modernizing telecommunications infrastructure rapidly enough to meet the nation's needs in an era of Internet protocol-based services will indeed cost tax dollars. It simply has to because infrastructure costs billions to build. That high price is not compatible with the short term business models of private investor owned legacy telephone and cable companies. That's why they're confined to piecemeal build outs and bandwidth rationing that leave many existing and putative customers in their service territories unserved and undeserved and complaining about lousy, poor value service. Even conservatives are waking up to the fact of this market failure, recognizing that market forces don't work well when it comes to high cost infrastructure. And it's about time.

USTelecom is also correct that local governments face significant financial risk due to the large sums involved. That's why I propose in my eBook Service Unavailable: America’s Telecommunications Infrastructure Crisis a federal "public option" since only the federal government -- and not state and local government -- can shoulder the burden.

Where USTelecom as well as those who support local government telecom infrastructure modernization projects are wrong is claiming these projects represent market competition with legacy incumbent telephone and cable companies. They do not and cannot. Local governments are responding to market failure, not any desire to compete in the telecommunications industry. They are looking to meet their needs to support economic development in the digital economy and address their citizens' complaints about crappy service from the incumbents. That situation has occurred because telecommunications infrastructure by definition is a natural monopoly and not a competitive market characterized by many sellers and buyers. Thus market forces fail, too weak to provide incentive for incumbent telephone and cable companies to provide better service.

U.S. at crossroads on telecom infrastructure modernization. The choice is to look to the past -- or to the future.

The United States stands at a crossroads when it comes to modernizing its telecommunications infrastructure. Many observers including Susan Crawford and this writer believe that modernization must be future-focused, providing an infrastructure that’s sufficiently robust and able to accommodate the rapidly growing demand for bandwidth that comes with the transition to digital, Internet-protocol based telecommunications. That means replacing the legacy metallic infrastructure that worked well for telephone and cable TV service in the 20^th century with the infrastructure of the 21^st: fiber optic connections serving every American doorstep. The future is big and it demands big thinking.

Others such as Doug Brake of the Information Technology & Innovation Foundation argue for a retrogressive approach that encourages us to think small. It proposes incremental fixes, prioritizing those areas worst impacted by market failure borne out of the misguided heavy reliance on investor-owned infrastructure. Instead of producing a future of bandwidth abundance where the term “broadband speed” is obsoleted, Brake’s incremental outlook would condemn Americans to a future of ongoing bandwidth poverty and its adverse effects for the larger socio-economy.

Competition isn't the answer for better premise telecom service

California lawmakers give cable utility perks, without utility obligations: Historically, there was a difference between telephone companies, which have been state regulated utilities for more than a century, and cable companies, which were originally franchised by local governments but managed to escape that oversight ten years ago. At least in California. Today, the differences are diminishingly small, particularly in urban and suburban markets where cable and telephone companies sell the same services and enjoy a comfortable, unregulated duopoly.

The distinguishing characteristics of a natural monopoly are high initial capital costs, usually related to infrastructure construction, and powerful economies of scale, both of which give the first mover in the market insurmountable advantages over would be competitors. In the old analog world, telephone and television service were completely different businesses, linked only by a common dependence on wireline networks. Now, both offer voice and video, and face competition in those segments from wireless providers. But they are also almost always the only wireline broadband option and wireless service is not a credible substitute, in either practical or microeconomic terms.

This is an excellent and much needed microeconomic description of the dominant privately owned telecommunications infrastructure that dominates in the United States that is all too often absent from the current policy discussion. Many ask why there isn’t competition in the telecommunications industry like exists in most consumer products and services. If it works there, then it must work in telecommunications also. More competition is the answer for better choice and consumer value, they conclude.

But as Steve Blum explains in his blog post, that reasoning is fatally flawed. More competition isn’t possible in a natural monopoly market where high cost barriers and the power of incumbency deter would be competitors. (Just ask Google how its flagging Google Fiber venture worked out) Telecommunications infrastructure will never be a robustly competitive market, defined as one with many sellers and buyers offering consumers many choices, enabling market forces that allow consumers to choose the best value and force out uncompetitive players.

When it comes to landline premise telecommunications service, most Americans can select from no more than two providers. And sadly for millions, none at all since the business model of vertically integrated investor owned providers must naturally redline and cherry pick among neighborhoods, creating winners and losers among consumers. As long as the nation relies on this broken model, it
will continue to lag when it comes to building the world class telecom infrastructure it needs to accommodate the explosion in digital communications.

The latest telco FTTP CapEx avoidance strategy: "wireless fiber"

Handcuffing Cities to Help Telecom Giants – Backchannel

This piece by Susan Crawford describes the latest large incumbent legacy telephone company strategy to avoid capital expenditures on fiber to the premise (FTTP): radio. Or as some incumbent voices term it, "wireless fiber." It follows the first CapEx avoidance strategy employed by AT&T a decade ago: running fiber to neighborhood nodes and serving customer premises via existing twisted pair copper designed for analog voice service. Naturally, there were lots of technology and service problems with that approach mixing old and new technology. And like the wireless everywhere strategy, it doesn't serve large portions of telco service territories where population density is lower.

As Crawford points out, wireless infrastructure no matter how fast can't offer the carrying capacity of fiber to accommodate inevitable future increases in bandwidth demand. It requires radios -- many of them -- mounted on utility poles and backhauled by lots of fiber. Running so much fiber into neighborhoods, Crawford begs the question of why not extend it all the way to customer premises (FTTP)? Anticipating resident push back against ubiquitous, unsightly field equipment installations in local government approval processes, the incumbents are aiming to preempt the locals while telling them "wireless fiber" will solve their telecom needs.

West Virginia telecom infrastructure initiative embodies 3 fatal public policy flaws

Charleston Gazette-Mail | Groups push for broadband expansion in WV: Senate President Mitch Carmichael, R-Jackson, said Tuesday that at least two broadband-related bills are in the works, and lawmakers expect to introduce legislation in the coming days. The Senate bill would offer tax credits for companies to help recoup costs of bringing internet to remote areas, said Carmichael, an executive with internet provider Frontier Communications. The bill also may authorize the state to provide loan guarantees to internet firms that plan to expand broadband service. Carmichael said some internet providers want legislation designed to bring internet service to households that don’t currently have it, while other companies support measures that would increase internet speeds.

“We want to [encourage] competition,” Carmichael said. “If we’re going to do investment of any type, it should go to the areas that have no service.” Generation West Virginia, AARP West Virginia and the state Broadband Enhancement Council held a press conference at the state Capitol Tuesday to raise awareness about the importance of high-speed internet service and to unveil a plan — called Gig Ready — to bolster support for broadband expansion.

This West Virginia effort although well intended contains three fatal flaws that are unfortunately frequently embraced by other states and by federal policymakers.

1. Offering loan guarantees and tax credits to legacy telephone and cable companies to invest in advanced telecommunications infrastructure in the belief that will help achieve universal service. It will not. The incumbents' short term business models are designed to extract maximum cash flow from current assets and do not allow them to make significant long term capital investments in new infrastructure. Tax credits and loan guarantees can't overcome that hard economic reality.
2. The belief that the role of government vis telecommunications infrastructure is to promote market competition. Telecom infrastructure is a natural monopoly and cannot and never will be a competitive market. Promoting market competition in telecom infrastructure is like promoting water skiing in the arctic.
3. Sloganeering. Call it Game of Gigs or Gig Ready, slogans can't construct telecom infrastructure. They are not so much aspirations for the future but rather reflect a poverty of action and commitment (harder) relative to a surplus of talk (far easier).

Net neutrality hurts health care and helps porn, Republican senator claims | Ars Technica

Net neutrality hurts health care and helps porn, Republican senator claims | Ars Technica: Sen. Ron Johnson (R-Wisc.) agreed that net neutrality rules harm ISP investment and offered a lengthy analogy to explain why. Johnson said he wants to cut through the “rhetoric, slogans, and buzzwords,” before saying that enforcing net neutrality rules is like letting too many people use a bridge and ruin people’s lawns. Net neutrality rules, he said, also give pornography the same level of network access as remote medical services.

This is an unfortunate outcome of the misplaced obsession with the "net neutrality" aspect of the U.S. Federal Communications Commission's 2015 Open Internet rulemaking that erased the line between legacy and advanced telecommunications services by reclassifying Internet service as a common carrier telecommunications utility under Title II of the Communications Act. The obsession with net neutrality is so exaggerated that the term has become synonymous with the rulemaking.

The Open Internet rulemaking does properly require ISPs to treat all telecommunications traffic equally and without preference as to content. But with millions of Americans left offline and many still using circa 1994 dialup access that was state of the art when Bill Clinton was serving his first term as president, the higher value of the rulemaking is bringing Internet service under the universal service and anti-redlining requirements of Title II that have governed telephone service for decades -- and not debating whether the network should give priority to porn or any other information. Those requirements also comport with Metcalfe's Law, which holds a network is only as valuable as the number of subscribers on it.

Senate to Look at Infrastructure Challenges | Broadcasting & Cable

Senate to Look at Infrastructure Challenges | Broadcasting & Cable: The Senate Commerce Committee has scheduled a hearing for Wednesday, March 1, on the telecom and transportation infrastructure challenge. The Donald Trump Administration has pledged a trillion-dollar infrastructure upgrade, which is expected to include broadband infrastructure. In addition, there are legislative efforts to spur infrastructure buildouts, and FCC chairman Ajit Pai has backed making broadband part of that effort as well.

“With a national discussion on federal infrastructure investment underway, it’s worth remembering that many Americans live far away from the highest-ticket projects their tax dollars are asked to fund,” said Sen. John Thune (R-S.D.), chairman of the committee, in announcing the hearing. “This hearing will look at how wise infrastructure investment decisions can ensure that all Americans benefit from improvements to national transportation and digital networks.”

It's great to see Sen. Thune recognizing that digital telecommunications infrastructure is also important 21st century infrastructure. Yes, 20th century transportation infrastructure is also need of investment. But it shouldn't come at the expense of telecom infrastructure that like roads and highways has also been neglected for decades.

Had proper planning and policies been put in place a generation ago as I write in my recent ebook Service Unavailable: America's Telecommunications Infrastructure Crisis, nearly all American homes, schools and businesses would have fiber optic connections by 2010 rather than relying on the failed investor owned corporate business model that has caught the nation up short. That leaves millions of Americans unable to access modern advanced telecommunications services or served by poor value and sluggish metallic connections that can't accommodate the growing bandwidth demand of today and tomorrow's digital economy.

The digital economy requires the capacity to handle the efficient movement of ideas, products and services just as 20th century transportation infrastructure did for people, goods and services. Telecom infrastructure thus should be properly regarded as interstate infrastructure as is transportation infrastructure.

R&D won't solve America's urgent telecom infrastructure deficiencies

That group “really push[es] a comprehensive narrative that the U.S. broadband -- private-sector broadband -- has failed the country, that we are falling behind other countries in our broadband performance,” said Doug Brake, telecom policy analyst at ITIF and coauthor of “How Broadband Populists Are Pushing for Government-Run Internet One Step at a Time,” released in January. The populists think “we have these rapacious broadband monopolists that are not upgrading and just harvesting rents from the entire population,” Brake said. “We see that narrative as being incorrect on almost all the points that it puts forward.” Broadband populists have a two-pronged approach and use small tactical debates to achieve their overall goal, Brake said. On one hand, they support the bottom-up solution of government-owned infrastructure with internet service providers delivering services on top of it -- even while acknowledging the limitations of that approach. “We think that that model does not fundamentally support long-term innovation,” Brake said. “That’s competition just based on price andcustomer service. It’s not competition based on the technology itself.” He said he’d rather see ISPs incentivized to pour money into research and development of the next generation of broadband, for instance.

The debate over muni broadband expansion -- GCN

Brake's position is utter nonsense. Fiber optic connections to customer premises could have been made to nearly every American home, school and business by 2010 had the nation put in place the right telecommunications policy and planning in the late 1980s and early 1990s when it was becoming apparent that telecom would shift from analog to digital and be distributed via Internet protocol. Fiber optic infrastructure remains the state of the art telecommunications infrastructure technology, with plenty of capacity to carry burgeoning bandwidth demand well into the future. Performing R&D on a possible successor is fine. But it's not going to solve today's urgent telecommunications infrastructure needs that require rapid deployment of fiber connections.

As for Brake's characterization of incumbent legacy telephone and cable companies being "rapacious broadband monopolists that are not upgrading and just harvesting rents," they had better well be. Because it's exactly what their investors expect of them: minimal capital expenditures and maximizing revenues from a captive, natural monopoly market.

Gov. Brown sets California's priorities for U.S. infrastructure bill -- but telecom not on list

Brown Sets California's Priorities For Trump Infrastructure Bill - capradio.org: Gov. Jerry Brown’s administration has released its list of California priorities for a potential federal infrastructure funding package backed by President Trump. The list is noteworthy not only for the projects it includes but for the ones left off. On the list? Highway projects throughout the state, including new carpool and toll-charging express lanes. California’s earthquake early warning system. And, of course, Brown’s legacy projects: high-speed rail and the Delta tunnels. “Mostly, the projects that we have submitted all have a request of $100 million or more,“ says the governor's transportation secretary, Brian Kelly. “So we really did focus on larger projects with clear, long-term and short-term benefits to the state.” Notably absent? Two prominent water storage projects backed strongly by California Republicans: Sites Reservoir northeast of Sacramento and Temperance Flat Dam northeast of Fresno.

Also missing from the list: telecommunications infrastructure. This in a state regarded as a leader in information and communications technology and home to Silicon Valley as surrounding communities continue to lack modern fiber optic service. Telecom infrastructure deficiencies are most pronounced in the Golden State's Central Valley municipalities of Modesto and Fresno, in the Sierra Nevada foothills east and northeast of the state capital of Sacramento in Placer and El Dorado counties, and up the Interstate 5 corridor in Sutter, Butte and Yuba counties to the Shasta County seat of Redding. (See related post here). Is is truly good public policy to finance 20th century infrastructure while neglecting vital infrastructure for the 21st?

U.S. requires crash federal telecom infrastructure program

Like other forms of infrastructure that were largely built out in the 20th century – such as transportation, energy, water and sewage – broadband is a foundation for economic activity across many sectors. But, unlike other potential infrastructure priorities, the public benefits of broadband could grow exponentially in the coming decades, as the nation is just beginning to realize the potential innovation and productivity gains from combining high bandwidth, low-latency connectivity with massive sensor, computing, and storage capabilities.

Unlike most other types of infrastructure, the nation’s digital infrastructure is largely corporate owned and generates revenues from paying subscribers. However, the private carriers who invest in broadband capex do not, in general, capture the full benefits of those investments (e.g., the positive externalities of the internet economy and the multipliers from increasing innovation and efficiency in adjacent sectors), so their investment levels are lower and slower than would be optimal for the country. (Emphasis added). The public-policy challenge, therefore, is to increase largely private capital flows to levels consistent with the potential public benefits of abundant, ubiquitous broadband without crowding out existing private sector investment.

The above is excerpted from a white paper by Paul de Sa, who formerly headed the U.S. Federal Communications Commission's Office of Strategic Planning and Policy Analysis. The paper was published on the U.S. Federal Communications Commission website last month. de Sa's point on the larger benefits of ubiquitous modern telecommunications infrastructure and its economic stimulus and multiplier effect mirrors my own, discussed in my recent eBook, Service Unavailable: America's Telecommunications Infrastructure Crisis.

I fully agree with de Sa's assessment that relying on the current dominant model of privately owned infrastructure where Internet Service Providers own the connections to customer premises as well as the services offered over them cannot support rapid and robust infrastructure construction to catch the nation up to where it needs to accommodate exploding bandwidth demand today and in the future. It's naturally limited by investment risk that comes with selling and servicing monthly subscriptions one customer premise at a time that constrains access to the needed many billions of investment capital and is prone to market failure. Until the United States explicitly recognizes the limitations of this model and treats telecommunications as the national infrastructure asset that it is and launches a crash publicly-financed telecom infrastructure initiative, the nation will continue to rapidly fall further behind as the 21st century advances.

As a footnote, de Sa's paper was retracted this week by his acting replacement, Wayne A. Leighton. (h/t to Steve Blum's blog).

FCC’s O’Reilly defends unacceptable status quo in U.S. telecom infrastructure

As federal policymakers consider addressing America’s telecommunications infrastructure deficit as part of a broad national infrastructure modernization plan, Federal Communications Commissioner Michael O’Reilly has written a blog post clearly intended to lower expectations and preserve an unacceptable status quo. It comes at a time when the United States by 2010 should have had modern, fiber optic-based telecommunications infrastructure deployed serving every home, small businesses and public institution instead of the legacy metallic telephone and cable company infrastructure he wants to preserve. Not to mention the national embarrassment of third world satellite Internet and dialup serving too many American homes where landline telecom connections – metallic or fiber – are nonexistent.

Instead of a robust federal telecommunications infrastructure program, O’Reilly seeks to protect the incumbent telephone and cable companies by preserving their emphasis on “broadband speeds” and the related and increasingly outdated, tail chasing debate over how much speed is sufficient. That fits nicely with the legacy incumbents’ outdated metal cable connections to premises since those lack the capacity of fiber to serve burgeoning bandwidth demand. In his points about geography and population density, O’Reilly also lends support to incumbents’ redlining market practices based on premise density in violation of the FCC’s 2015 Open Internet rulemaking making Internet a universally available common carrier telecommunications utility. That speed-based versus fiber to the premise (FTTP) metric comports with the FCC’s weak subsidy program that funds incumbents’ deployment of obsolete infrastructure on a par with circa 2005 DSL.

In sum, O’Reilly’s position is all about incrementalism and buying more time for these legacy incumbent providers. Public policymakers have already allowed them to buy a quarter century of delay as American has fallen ever further behind in the 21^st century, when modern telecommunications infrastructure is as critical as roads and highway were in the previous century. It’s time for that to end.

Finally, O’Reilly -- like former FCC Chairman Tom Wheeler before him --miscasts telecommunications infrastructure as a competitive market. If it were, there would be lots of service providers to choose from and sufficient capital to finance their ventures. The fact that there are not reflects simple microeconomics. High cost endeavors like infrastructure erect natural barriers to new providers. In telecommunications infrastructure, incumbents also exert a chilling effect with their natural monopolies since new providers are reluctant to take on the risk of overbuilding them – a primary reason for Google Fiber’s recent retrenchment.

Neither investor-owned ISPs nor "muni broadband" can meet America's urgent telecom infrastructure modernization need

How Broadband Populists Are Pushing for Government-Run Internet One Step at a Time | ITIF: To most observers of U.S. broadband policy, the regular and increasingly heated debates in this area appear to be about an evolving set of discrete issues: net neutrality, broadband privacy, set-top box competition, usage-based pricing, mergers, municipal broadband, international rankings, and so on. As each issue emerges, the factions take their positions—companies fighting for their firms’ advantage, “public interest” groups working for more regulation, free market advocates working for less, and some moderate academics and think tanks taking more nuanced and varied positions.

But at a higher level, these debates are about more than the specific issue at hand; they are subcomponents of a broader debate about the kind of broadband system America should have. One side wants to remain on the path that has brought America to where it is today: a lightly regulated industry made up of competing private companies relying on a variety of technologies. Another side, made up of mostly public interest groups and some liberal academics, rejects this, advocating instead for a heavily regulated, utility-like industry at minimum and ideally a government-owned system made up of municipal networks. The Information Technology and Innovation Foundation (ITIF) firmly believes the former model—lightly regulated competition—is the superior one. But if we are to get broadband policy right going forward, it’s this broader strategic issue we need to identify and debate, not just narrow tactical matters.

Broadband networks are a critical part of America’s digital technology system and, as such, the issue of how to continue to drive investment and innovation in these networks is worthy of robust and sustained debate. But the broadband policy debate should be transparent about what it really involves: Is America better off with an ISP industry that is structured the way the vast majority of the U.S. economy is structured (private-sector firms competing to provide the best product or service at a competitive price, with the role of government to limit abuse and support gaps where private-sector competition does not respond), or do we want to transform this largely successful industry model into either a regulated utility monopoly model or government-owned networks? As we ponder this question, policymakers need to understand what the debate is fundamentally about and what is at stake as broadband populists push for each one of their thousand cuts.

Actually, neither leaving telecommunications infrastructure fully in the hands of the private sector nor relying on local "municipal broadband" builds will bring the United States modern, fiber optic telecommunications infrastructure rapidly enough to meet the ever growing bandwidth demand of Internet protocol-based services. The former because of sell side market failure due to slow and uncertain return on investment inherent in its customer premise subscription-based business model. The latter because state and local governments lack the capital and debt capacity to finance publicly owned telecom infrastructure with so many competing needs for aging infrastructure such as roads, schools and sewer and water systems as well as enormous public pension obligations.

Only the federal government has the resources and policy power to meet this critical infrastructure need of the 21st century as I posit in my 2015 eBook, Service Unavailable: America's Telecommunications Infrastructure Crisis. Telecommunications infrastructure like the highway system is fundamentally interstate and not municipal, connecting states to each other and the nation to the world. It's too important to be left to either the private sector alone or state and local governments that lack the resources to do the job.

Senate Democrats to propose $1 trillion infrastructure plan

News from The Associated Press: A proposal by two of Trump's financial advisers circulated just after the election calls for using $137 billion in tax credits to generate $1 trillion in private investment in infrastructure projects over 10 years. But investors are typically interested only in projects that have a revenue stream like tolls to produce a profit. Charging tolls for roads and bridges is often unpopular. A recent Washington Post poll found that 66 percent of the public opposes granting tax credits to investors who put their money into transportation projects in exchange for the right to charge tolls. The American Association of State Highway and Transportation Officials and transportation industry lobbying groups want a hike in direct federal spending instead of tax credits. What is needed most, they say, is money to address the growing backlog of maintenance and repair projects, most of which are unsuitable for tolling.

This also applies to America's aging and obsolete telecommunications infrastructure. It should have been modernized with fiber optic technology all the way to customer premises starting a quarter of a century ago. Instead today, the nation remains on outmoded metal wire infrastructure designed for the pre-Internet days of telephone and cable TV service.

The financial points of this article also apply. Just as it won't for roads and highways, a for-profit business model isn't going to generate the low hundreds of billions of dollars needed to build the telecom infrastructure to accommodate the ever increasing demand for Internet protocol-driven bandwidth. There simply isn't enough return on investment given the enormous capital expenditure requirements. Ditto tax incentives.

Americans also understandably dislike a toll-based scheme that subjects them to the tender mercies of vertically integrated Internet Service Providers (ISPs) -- who because they own both the pipe that brings telecom services to customer premises as well as the services delivered over it -- enjoy hugely disproportionate market power. Just ask anyone who received a notice their monthly bill would be going up this year. Telecom infrastructure should be in the public realm and treated -- and funded-- as a public good.

Why aggressive federal intiative needed to modernize inadequate U.S. telecom infrastructure

Virginia “Broadband Deployment Act” would kill municipal broadband deployment | Ars Technica: Virginia lawmakers are considering a bill called the "Virginia Broadband Deployment Act," but instead of resulting in more broadband deployment, the legislation would make it more difficult for municipalities to offer Internet service.

The Virginia House of Delegates legislation proposed this week by Republican lawmaker Kathy Byron (full text) would prohibit municipal broadband deployments except in very limited circumstances. Among other things, a locality wouldn't be allowed to offer Internet service if an existing network already provides 10Mbps download and 1Mbps upload speeds to 90 percent of potential customers. That speed threshold is low enough that it can be met by old DSL lines in areas that haven't received more modern cable and fiber networks.

This is a big part of the justification for an aggressive federal telecom infrastructure initiative to build and publicly own fiber optic connections to nearly every American home, business and institutions. While many have placed hope in state and local government "muni broadband" efforts, they won't scale and rapidly enough to address the nation's current and future telecom needs. The nation now faces an infrastructure crisis, getting further and further behind the demand curve as time goes on and the need for robust connectivity grows.

There are two reasons why these local efforts fall short. First and most importantly, existing state and local governments lack the many billions of dollars and debt capacity needed to finance the job. They're already strapped by deferred infrastructure maintenance such as for highways, roads, government buildings, and water and sewerage systems. Not to mention the yawning economic black hole of underfunded public employee pension obligations that sucks up state and local funds. In a similar vein, we don't read accounts of new special districts being formed to build and operate telecom infrastructure, with the locals signing on to tax themselves to pay for it.

The second is the legacy incumbent telephone and cable companies call the shots on telecom infrastructure and will do -- as the above story reports -- whatever it takes to keep control, even if it means keeping in place obsolete infrastructure and impeding technological progress with minimalist incrementalism. State and local governments are simply outgunned by boatloads of campaign cash and armies of lobbyists and propagandists intent on keeping the calendar set at 1999 in order not to disrupt their capital expenditure averse business models. Nor is there any real private sector threat. For example, Google Fiber got its ass kicked and then publicly mocked by AT&T when it ventured into the telecom infrastructure business to connect homes with fiber and forming public-private partnerships with local governments.

As I wrote in my 2015 eBook, Service Unavailable: America’s Telecommunications Infrastructure Crisis, the United States requires an aggressive federal initiative to modernize the nation's aging and hugely inadequate telecom infrastructure so that it serves all Americans and not just some. Only the federal government has the authority and resources to make that happen and is justified in doing so given the essentially interstate nature of telecommunications.

US Telecom head fundamentally misstates key obstacle to telecom infrastructure

The Next National Infrastructure Push Must Be Powered by Broadband - Morning Consult: Clarity. Broadband companies have invested more in America’s infrastructure over the last two decades than any other sector of our economy – $1.5 trillion and counting. Yet these same companies in recent years have suffered a case of Washington whiplash. On one hand, heady (and wholly accurate) talk about broadband’s importance to all citizens. On the other, increasingly regressive policy decisions that undermine that potential and are widely credited with 2015’s decline in capital investment in U.S. broadband networks. We need to reverse this troubling trend by establishing policies that encourage investment in new and better broadband.

This opinion from Jonathan Spalter,  president and CEO of the trade association USTelecom, is remarkable in that it fundamentally misstates what is a business problem as a public policy problem for telecommunications companies. The biggest obstacle facing the industry when it comes to investing in telecommunications infrastructure is its own business model. It's out of sync with the long term return on capital that comes with high cost telecom infrastructure, seeking lower risk short term gains. That's not public policy. That's just plain microeconomics.

As usual, AT&T decades late & dollar short, betting heavily on the come

Meanwhile, in terms of its fixed line activities AT&T confirms it is now marketing a 1Gbps connection to nearly four million locations across 46 metropolitan areas nationwide, including more than 650,000 apartments and condominium units. By mid-2019 the telco plans to reach at least 12.5 million locations across 67 metro areas with its fibre service. In addition, AT&T is conducting technology trials over fixed wireless point-to-point mmWave and G.fast technologies with a view to delivering greater speeds and efficiencies within its copper and fibre networks. Finally, the telco expects to launch a new fixed wireless internet (FWI) service in mid-2017 in areas where it has accepted Federal Communication Commission (FCC) Connect America Fund Phase II (CAF II) support. The operator expects to reach more than 400,000 locations by the end of 2017 across 18 states, most of which will get internet access for the first time. By the end of 2020 AT&T plans to reach 1.1 million locations in those 18 states.

It's mind boggling to consider the boldfaced sentence above that notes premises in AT&T service territory will get their first Internet access between 2017 and 2020. Those premises will be served by a bolt on adjunct to its mobile wireless infrastructure that will be obsolete even before its deployed and highly likely bog down during peak periods as its shared bandwidth becomes saturated with heavy, multi-premise demand. Had AT&T's predecessor SBC Communications and other regional bell operating companies stuck to their early 1990s plans to replace their copper networks with fiber to customer premises, they would have likely completed that task by 2008 to 2010. They didn't. Consequently, the quality of America's telecommunications infrastructure has suffered greatly, deficient for the needs of today and tomorrow.

This item from TeleGeography (excerpted above) also outlines AT&T's residential strategy that heavily relies on its mobile wireless plant as a successor to its VDSL-based U-Verse hybrid fiber/copper service that suffers from severe bandwidth constraints due to the aging copper cable plant service customer premises. The wireless link to customer premises is apparently going to replace the twisted pair copper. It remains to be seen whether AT&T can overcome the technological challenge of being able to deliver adequate bandwidth over the wireless link to customer premises. And equally critical, the economic challenge of having to invest considerable capital in fiber to backhaul all of the necessary radios that would essentially require nearly every premise to have one, similar to step down transformers for residential electric service. 

The legacy telco communications strategy to shift focus away from infrastructure deficiencies

Understanding the Broadband Adoption Gap | USTelecom: And most Americans have chosen to take advantage of widely available internet service. According to NTIA’s data, the share of American households using the internet at home has risen from 26 percent (27 million households) in 1998 to 73 percent (92 million households) in 2015. The share of households in which someone uses Internet anywhere—at home or in other locations such as a school, a library, or a workplace—is now at 79 percent, Yet, 33 million U.S. households (27 percent) still do not use the internet at home. Government data suggests (link is external) that the gap between rural and urban area internet usage has remained stubbornly constant at anywhere from 6 to 9 percentage points. In 2015, 69 percent of rural residents reported being online, compared to 75 percent of urban residents. 

This is part of a continued push by the telephone company trade group to shift the focus away from modernizing America's outdated, metallic telecommunications infrastructure to fiber to the premise (FTTP). The strategy is to shift time back 15 to 20 years when consumers were first using Internet protocol-based advanced telecommunications services to "go online" to access email and websites via dialup and later "broadband" Digital Subscriber Line (DSL) service. That glosses over the fact that IP provides other modes of telecommunications including video and voice in addition to these applications. Legacy telcos also like to conflate mobile wireless service with premise service to distract from landline infrastructure deficiencies.

Why the propaganda campaign? Because as the nation's crisis of inadequate telecom infrastructure deepens and grows more urgent, pressure builds for public policy solutions that could seriously disrupt the industry as it lacks the resources to address the infrastructure gaps. Lacking the financial resources, all the industry can do is to attempt to reframe the issue in an attempt to ward off any disruptive policy changes.

State "Connect" efforts symbolic, fail to address U.S. telecom infrastructure deficiencies

Yemassee, Furman to get new fire trucks | The Hampton County Guardian: According to Connect South Carolina's website, the non-profit organization’s mission is to increase high-speed Internet access, adoption and use to diversify the economy and ensure South Carolina's competitiveness in the connected global economy of the 21st Century, the website states. Connect South Carolina was commissioned by the Office of the Governor to work with each of the state's broadband providers to create detailed maps of broadband coverage and to assess the current state of broadband adoption, community-by-community, across South Carolina. Connect South Carolina will continue to develop and update broadband data over time, ensuring state policymakers and citizens alike are equipped with important information. Connect South Carolina's efforts are funded by the United States Department of Commerce's State Broadband Initiative (SBI) Grant Program through the National Telecommunications and Information Administration. More information is available at www.broadbandusa.gov.

This exemplifies the misguided and misleading "Connect" response throughout the United States to the nation's telecommunications infrastructure deficit. It is predicated on a lack of information as the source of the deficit. Gathering information about deficient infrastructure as well as use of existing telecommunications infrastructure isn't going to remedy the deficits. But policymakers have endorsed the approach because it gives the appearance of doing something about them.

Federal government must take lead on U.S. telecom infrastructure modernization

Under Trump, look to cities and metros to power America forward | Brookings Institution: As Republicans begin to exercise relatively unchecked executive and legislative power, it remains to be seen how they will interact with core tenets of our country’s federalist arrangement. The Trump administration and the Republican legislature should recognize that many essential public functions can only realistically be provided by the federal government. Washington must lead in promoting American interests overseas, providing a safety net for the elderly and disadvantaged, protecting civil rights, maintaining environmental and regulatory standards, and funding basic science and research. If the Republican-led federal government relinquishes these responsibilities, our country will undoubtedly suffer.

But on many other matters that determine our country’s future prosperity and shared growth—the vitality of our businesses, the education of our children, the quality of our infrastructure, the vibrancy of our public spaces, and the skills of our workers—Washington is a junior investor and partial decider. Of every public dollar spent on K-12 education and transportation infrastructure, for example, the federal government invests only 12 cents and 25 cents, respectively. These small contributions are also likely to decline further as our nation’s elderly population grows and spending on healthcare and retirement programs rises.

Relying on local governments to fill in the innumerable gaps in modern fiber optic telecommunications infrastructure is folly. State and local government budgets were decimated in the 2008 economic crisis and it's taking years to fully recover. They also have a pressing need to modernize other aging infrastructure such as roads, schools, and sewer and water systems. Not to mention the enormous burden of health care benefits and public employee pension obligations.

Telecommunications infrastructure is fundamentally interstate and international and not municipal. Replacing yesterday's metallic infrastructure designed to support voice telephone and cable television service with fiber optic infrastructure to support today's Internet-based telecommunications requires many billions of dollars of investment state and local governments cannot fund. The federal government -- not state and local government -- must take the lead as the senior investor.

AT&T official rejects comparison between today's telecom infrastructure gaps and electric power disparties of 1930s

Arkansas Cooperatives Apply Rural Electrification Model to Internet Access | Arkansas Business News | ArkansasBusiness.com: Cooperatives around the country, he said, are comparing providing broadband to bringing electricity to rural residents in the 1930s, calling it the next necessity for rural America. For-profit providers disagree with the rural electrification analogy. Ed Drilling, president of AT&T’s Arkansas Division, said internet is different because there was a guarantee in the 1930s that every resident would buy electricity and pay a usage-based price for it, while only 30 percent might buy broadband access and pay a fixed-rate price for it.

There is a clear parallel here to another failed market: individual health insurance. The Patient Protection and Affordable Care Act employs a similar guarantee -- the individual shared responsibility mandate that everyone have some form of health coverage -- in exchange for health plan issuers agreeing to provide coverage to whomever applies for it without medical underwriting. That is intended to remedy market failure on both the sell and buy sides by effectively forcing sellers and buyers together.

The AT&T official stops short of suggesting a requirement that every premise take service in exchange for halting current market practice by AT&T and other investor-owned telecom providers that cherry picks some areas while redlining others within their nominal service territories -- market conduct that's now illegal under the U.S. Federal Communications Commission's 2015 Open Internet rulemaking.

AT&T is correct that the electrical distribution infrastructure deficits of the early 20th century differ from the telecommunications infrastructure gaps of 2016. Back then, electrical distribution infrastructure was largely concentrated in urban areas, leaving entire rural regions unserved and in the dark. A major difference is today's Internet-based telecommunications infrastructure is deployed in rural areas but in a very granular and arbitrary manner that leaves one neighborhood or even part of a road or street unserved or poorly served while an adjacent one has decent access.

Doug Dawson's policy Rx for telecom infrastructure

A couple of telecom policy prescriptions from fellow blogger Doug Dawson that make a lot of sense:

A New Telecom Act? | POTs and PANs: Fund Fiber Everywhere. There was recently a bill introduced in Congress to add $50M to the RUS for rural broadband grants. That makes such a tiny dent in the problem as to be embarrassing. If we believe as a country that broadband is essential for our economic future, then let’s do what other countries have done and start a federal program to build fiber everywhere, from rural America to inner cities. I could write a week’s worth of blogs about how this could be done, but it needs to be done. 

Dawson's spot on here. Under current public policy (the U.S. Federal Communications Commission's 2015 Open Internet regulations), Internet telecommunications is considered a common carrier public utility with a universal access mandate like Plain Old Telephone Service (POTS) for decades beforehand. But de facto policy is to grant an effective franchise to dominant legacy telephone and cable companies to operate in limited "footprints," negating universal service. Dawson's also right on in criticizing pathetically underfunded and largely symbolic efforts to create a "public option" for telecommunications infrastructure. The United States can't do the job by setting aside millions for infrastructure that costs billions to construct and operate.

Stop Subsidizing Non-Broadband. It should be impossible for the FCC to provide any funding or subsidies to broadband connections that don’t meet their own definition of what constitutes broadband speeds.

Again, Dawson hits on a huge disconnect between de jure and de facto public policy on telecom infrastructure. It makes no sense to waste money on technology that's obsolete the day it's deployed such as the FCC's 2015 high cost area subsidy program rules allowing funding of technology that was state of the art in 2005. I would go even further than Dawson's proposal in suggesting abandoning the fixation with "broadband speed" altogether and instead defining all premise telecom infrastructure as fiber optic technology.

Incumbent "fight the future" propaganda agenda: Keep calendar fixed at year 2000, lower expectations

Understanding the Broadband Adoption Gap | USTelecom: Some 26 million households (21 percent) are never online. To bring these remaining 33 million non-internet households online, price and affordability have been the more common levers that advocates and government have used. However, less than a quarter (24 percent) of the 33 million non-internet homes cite price as the main reason they don’t have access at home.

More than half (55 percent) of these non-internet households say they don’t need the internet or have no interest in Facebook, Pinterest, Snapchat, Pandora and the myriad other apps and services available online. That’s more than twice the number of households that say they can’t afford internet services.

These digital “don’t cares” are a much tougher segment to address through industry and government programs focused on price and affordability. Instead, programs must also focus on demonstrating that internet is relevant and useful to these consumers. USTelecom supports programs aimed at closing the digital divide and bringing more Americans online. In recent comments to the Commerce Department, USTelecom suggested more research needs to be done on why consumers aren’t going online. Digital literacy is significantly under-studied and federal researchers should focus on those issues, ideally in partnership with experts who work with the unconnected.

This is more of the same tired incumbent propaganda aimed at keeping the calendar fixed circa 2000 when the Internet meant "going online" to visit websites and get email. Legacy incumbent telephone companies know that Internet protocol-based technology supports not only these services but also voice and video residential premise services. That however requires modernizing their infrastructures from metal wires to fiber optic lines to reliably deliver them -- something their CAPex averse business models won't allow.

That reality motivates their "fight the future" strategy designed to lower expectations and attempt to shift blame to tepid consumer demand when in fact America's telecommunications infrastructure deficiencies and disparities are due to market failure on the sell side. Closely related to keeping the focus on "broadband adoption" is the fixation on "broadband speeds." That supports a retro oriented mindset since having adequate bandwidth was necessary to access online services in the early days of the Internet as well as the unit-based, consumption billing models employed in the days of Plain Old Telephone Service (POTS).

AT&T’s bifurcated, speculative strategy on residential telecom service

AT&T has adopted a bifurcated and highly speculative future strategy for its residential premise telecommunications market segment that treats a small portion of it like a specialized business market for its fiber to the premise (FTTP) service while serving other residential customers with a mix of wireless technologies.

AT&T Fiber is primarily aimed at business premises and multi-family buildings and not single family homes. The company is phasing out its legacy U-Verse service that blends fiber to neighborhood distribution equipment with copper from the era of Plain Old Telephone Service (POTS) – metallic infrastructure it is anxious to retire as quickly as possible to avoid the cost of maintaining it. In its place AT&T is relying on proven and unproven radio-based technologies.

In some high cost areas of its U.S. service territory, AT&T recently announced it would construct infrastructure designed to deliver fixed residential premise service as part of upgrading its mobile wireless service to 4G LTE technology. However, that infrastructure will be obsolete the day it’s installed, not even close to approaching what the U.S. Federal Communications Commission considers service capable of supporting high-quality voice, data, graphics and video. It’s essentially a bolt on afterthought to a 4G LTE mobile wireless service upgrade that will likely bog down during peak periods as its shared bandwidth becomes saturated with heavy, multi-premise demand.

As for the unproven radio-based technology that’s still in the development phase, AT&T recently announced its experimental “Project AirGig” technology. It will utilize antennas mounted atop utility poles to transmit millimeter wave signals from pole to pole. It taps into those signals to feed premise service based on 4G (or more optimally, AT&T’s still under development 5G wireless technology.) The service will apparently be similar to electrical power distribution architecture where current from high voltage transmission lines on the tops of poles is stepped down by a transformer before it flows into a home. This service in theory would be capable of meeting the FCC’s minimum service standard. But at this point, it’s largely speculative and leaves much of AT&T’s residential market segment with no clear and certain future path as its legacy copper cable POTS plant rots on the poles.

Incumbent bellyaching over "unfair competition" from public sector fails straight face test

Rural areas in Marion County could still get broadband access | Times Free Press: JASPER, Tenn. — Like many local governments across Tennessee, Marion County leaders have been pushing for a couple of years to change state laws that restrict municipal utilities like EPB's gigabit internet, TV, and phone services from expanding beyond current borders. EPB has petitioned the state and the Federal Communications Commission, too, and Mike Partin, president and CEO of the Sequatchee Valley Electric Cooperative, said broadband access has been "widely debated across the state."

"So far in the [state] Legislature, that has been defeated," he said. "AT&T has a pretty extensive lockdown, it seems like, in the Legislature. That's one of the holdups." Telecommunications companies such as AT&T and Comcast argue that it's unfair to allow government to compete the market with private industry. (Emphasis added)

That argument would hold water but for a single fatal flaw: telecommunications infrastructure is not by nature a competitive market but rather a natural monopoly/duopoly. Shouting "unfair competition" in a noncompetitive market doesn't pass the straight face test.

Outmoded 1990s thinking retards U.S. telecom infrastructure modernization

Digitally Unconnected in the U.S.: Who’s Not Online and Why? | NTIA: But what about those Americans who do not use the Internet? Whether by circumstance or by choice, millions of U.S. households are not online, and thus unable to meaningfully participate in the digital economy. Data from NTIA's July 2015 Computer and Internet Use Supplement to the Current Population Survey confirm that the digital divide persists. In 2015, 33 million households (27 percent of all U.S. households) did not use the Internet at home, where families can more easily share Internet access and conduct sensitive online transactions privately. Significantly, 26 million households--one-fifth of all households--were offline entirely, lacking a single member who used the Internet from any location in 2015.

This report reflects the limited thinking that retards the direly needed modernization of telecommunications infrastructure in the United States. It adopts a one-dimensional view of modern telecommunications rooted in the later 1990s and early 2000s when internet protocol-based telecommunications solely meant going on line with a computer, using dialup or DSL where it was being rolled out.

Nearly two decades later, the internet isn't just about going online, particularly as legacy telephone companies look to retire their aged and obsolete copper cable plants and fiber to the premise (FTTP) obsoletes metallic cable and can support multiple telecom services. Internet protocol also supports voice service (Voice Over Internet Protocol) as well as video, both one way and interactive. It's a multi-modal telecommunications platform.

Why market competition cannot remedy America’s lousy telecom service

Almost daily, the justifiable criticism of the lousy state of America’s telecommunications service includes the demand for more competition as the solution. Providing more competition – and specifically as fiber to the premise (FTTP) -- for indolent incumbent legacy telephone and cable companies in no hurry to modernize their aging and increasingly obsolete metallic infrastructures will provide superior service and value for consumers. Sound good in theory, but completely misguided.

Telecommunications is not and will never be a truly competitive market where consumers can select among many sellers. The economics simply don’t allow it because it costs too much to enter the market and the return on investment under the dominant, vertically integrated, subscription-based business model is too skimpy or too far in the future to attract would be competitors. If telecommunications were a truly competitive market, consumers no matter where they live would have multiple sellers and services from which to choose just as they do other consumer offerings. Cherry picking in a few select metro markets as we’ve seen with Google Fiber and AT&T’s “Gigaweasel” as fellow blogger Steve Blum dubs it is hardly robust market competition.

That’s a key distinction. Telecommunications is not a consumer market. It’s a natural monopoly market and the incumbents have established their place in it. And they vigorously defend that place. That’s not evil as Susan Crawford recently pointed out. The incumbents are merely doing what they must do to faithfully and diligently serve the interests of their shareholders no matter how smarmy, greedy or disingenuous it may appear at times. Shareholders come first, market demand second. And the interests of the demand side of the market can easily remain in second place in a natural monopoly market because there is and won’t be any pressure to offer more to maintain market share because market share is assured. The market will accept whatever it’s offered because it has no choice – and cannot have meaningful choice. That’s why consumers complain service sucks equally between legacy telcos and cable providers.

Light-based quantum Internet protocol requires FTTP

Particle teleportation across Calgary marks 'major step' toward creation of 'quantum internet' - Calgary - CBC News: In a "major step" toward practical quantum networking, researchers at the University of Calgary have successfully demonstrated the teleportation of a light particle's properties between their lab and the city's downtown area, six kilometres away.

It doesn't exist yet, but the dream of a "quantum internet" involves taking advantage of a key element of quantum mechanics — the fact that observing a particle's quantum state changes that particle's quantum state. This creates the opportunity to communicate with a degree of security never before possible, because no one can intercept a communication without the intended receiver of the information knowing about it.

A couple of takeaways here:

1. A light-based Internet protocol will require fiber optic to the premise (FTTP) communications infrastructure. The metallic infrastructures of the legacy telephone and cable companies that dominate today aren't going to cut it. (A bonus: fiber is non-conducting and thus invulnerable to high energy solar flares.)
   
   
2. Quantum-based encryption as described here looks even more hack proof that the current cutting edge blockchain technology.

Relying on legacy incumbents, state government for telecom infrastructure modernization -- That dog don't hunt

Rural residents push for broadband | Local News | daltondailycitizen.com: After hearing from frustrated residents and community leaders, Sen. Steve Gooch, R-Dahlonega, who co-chairs the committee, sought to reassure service providers. "We need the Windstreams, the AT&Ts, the Comcasts," he said. "We're not running anybody off. We're trying to keep them here, keep their jobs here, but encourage more investment." One proposal is the elimination of a sales tax on telecommunications network equipment. Others have recommended boosting coverage by restoring state funding for local public-private projects and doing more to hold companies accountable when their service is not as advertised.

As they say in the south, that dog don't hunt. The "Windstreams, the AT&Ts, the Comcasts" aren't going to invest in telecom infrastructure to fill in service area gaps in any reasonable timeframe because the ROI is simply too far in the future to justify the investment to their shareholders.

Expecting state government to step up with the billions in needed funding isn't realistic either. A robust, well funded national telecommunications infrastructure initiative is needed.

FCC Commissioner Pai's deeply flawed "Digital Empowerment Agenda"

Ajit Pai, a member of the U.S. Federal Communications Commission, has proposed a "Digital Empowerment Agenda" relying on tax incentives to promote telecom infrastructure investment. Pai's proposal is deeply flawed because it:

• Assumes tax breaks combined with regulatory streamlining will eliminate the massive telecom infrastructure disparities in the United States. Pai need only ask legacy incumbent telephone and cable companies (and Google Fiber) why he's misguided. They will tell him the primary impediment is the return on infrastructure investment is too far in the future in certain areas and neighborhoods to justify investment. Net present value is zero or below. That's a fundamental challenge of the investor-owned, vertically integrated business model to when it comes to infrastructure capable of supporting modern advanced, telecom services. Tax incentives and regulatory streamlining may help the math, but aren't alone going to make the business case for investment and eliminate disparities.
• Reinforces existing infrastructure disparities by offering incentives for landline infrastructure in some areas of the nation but only mobile wireless in others that is inadequate for premise service.

Failure of Google's "Homes with Tails" concept correlates to dearth of consumer telecom coops

Britain mulling broadband speed disclosure for every home - AlphaBeatic: The idea is reminiscent of “Homes with Tails,” a paper published back in 2008 by Columbia Law School professor Tim Wu and Google public policy manager Derek Slater. In the paper, the duo envisioned a future where consumers owned the fibre connections to their homes, obviating the need to go through an ISP to connect to the internet. Such fibre connections would lower the cost of internet service and raise the value of the homes. A typical home with a fibre connection was worth $4,000 (U.S.) more than one without, the duo argued.

Home ownership of fibre was attempted in Ottawa several years ago, but the idea never got off the ground. Bill St. Arnaud, the project’s founder, attributed the problems to central exchange providers, who were unwilling to open up their networks to allow competition for the likes of Bell and Rogers. There was also the issue of trying to convince home owners to spring for building the fibre connections, which can run thousands of dollars. Consumers are accustomed to effectively renting their internet connections, rather than owning them, so it may have been an idea ahead of its time.

This also explains why consumer telecom cooperatives have not sprung up in the United States to build and own fiber infrastructure serving member premises. People have been conditioned to see telecommunications as a consumer commodity purchased from a centralized corporate provider. Even though these monopolistic providers have no incentive to avoid redlining neighborhoods they don't want to serve and have a lousy customer service ethic, people would rather bitch about shitty service options when renting their telecommunications circuit than pony up a few thousand dollars to own it and set their own terms of service. Even when that investment would raise the value of their property by amount of the investment as research has shown. Brings to mind the old adage that one gets what one pays -- or not -- for a product or service.