California Broadband Task Force report delayed

A report by Gov. Arnold Schwarzenegger's Broadband Task Force making specific recommendations on "how California can take advantage of opportunities for and eliminate any related barriers to broadband access and adoption" has been pushed back until sometime in January, a spokeswoman for the governor confirms.

The report was due out in late November under an executive order issued by the Governor in November 2006. About a month ago, Schwarzenegger had told the University of Southern California's Annenberg Center for the Digital Future conference it would be released in December.

Comcast applies for California video franchise

Comcast has joined cable providers Cox, Time Warner, Charter and Wave Broadband in applying for a statewide franchise with the California Public Utilities Commission under the Digital Infrastructure and Video Competition Act that took effect in early 2007.

Comcast's Dec. 12 application can be viewed on the CPUC's Web site.

California PUC allocates $100 million as broadband build out incentive

The California Public Utilities Commission announced it has formed the California Advanced Services Fund (CASF), allocating $100 million in matching funds for 2008 and 2009 to encourage broadband providers to bring service to unserved and underserved areas of the state. In order to qualify, providers will be evaluated on a broadband throughput benchmark of 3 Mbps download and 1 Mbps upload and would also have to offer Voice Over Internet Protocol (VOIP) service.

The CPUC said the funds will come from a .25 percent surcharge on telephone bills, estimated to be five cents a month for an average customer. The CASF surcharge will be offset by an equal reduction in the California High Cost Fund-B surcharge created to subsidize deployment of basic voice telephone service.

One year ago, your blogger suggested the administration of Gov. Arnold Schwarzenegger direct the CPUC to reform the five funds in California's Universal Service Fund program including the High Cost Fund-B -- which together received a total of $2.8 billion since 2003 to serve more than 7,600 designated high-cost areas -- to help speed the deployment of high speed Internet access in higher cost areas of the state.

The CPUC action sets a deadline of June 2, 2008 for submission of CASF funding requests. Consideration will be technology neutral and applicants will be required to provide a minimum of 60 percent matching funds as a prerequisite for consideration of their applications.

The CPUC decision finds that broadband infrastructure is critical to the economic health and welfare of the state and that "ubiquitous deployment of broadband holds tremendous opportunities for consumers, technology providers, and content providers, and is important to the continued health and economic development in California."

"Today's decision signals that this state is not content to sit around waiting for federal action to bring broadband to every part of our state," said CPUC President Michael R. Peevey. "We encourage every broadband provider in California to be a part of the solution for ending the digital divide in our state and participate in the CASF process."

As with other state-based broadband build out initiatives, the question is whether funding in the millions is sufficient to result in a meaningful expansion of broadband considering that in California and other states, the existing metal wire line based infrastructure is increasingly obsolete for the deployment of advanced telecommunications services and requires billions of dollars of investment to bring it up to date.

Here are links to the decision implementing the program and related proceeding documents.

Qwest abandons IPTV in Colorado

Qwest, the former Baby Bell US West spun off from AT&T two decades ago, has abandoned plans to deploy Internet Protocol TV in Colorado next year. At the same time, the Denver Post reports, Qwest has shelved lobbying efforts like those pursued by AT&T in its 22-state operating territory to get a statewide video franchise bill enacted preempting local governments and their irksome demands that telcos deploying advanced telecommunications services including video service to compete with cable be available to everyone and not just selected neighborhoods.

The build out issue apparently figured into Qwest's decision:

Ken Fellman, former mayor of Arvada and a local communications lawyer, said he respects the company's decision to back off of its video plans. Fellman has asked that Qwest be required to offer video services to all members of a city or town, not certain select neighborhoods.

"It was a concern that Qwest didn't have the financial resources to widely deploy service," said Fellman, who also represents the Greater Metro Telecommunications Consortium. "We would have ended up with pockets of competition. Perhaps in some ways, (Qwest CEO Ed) Mueller came to a similar conclusion."

Back to the future: Could AT&T be facing major federal regulatory action two decades after divestiture order?

Could AT&T once again find itself facing sweeping federal government regulatory action on the scale of the 1984 federal court ruling ordering the big publicly traded telecommunications company be divested on anti-trust grounds?

It’s possible because in the more than two decades following the break up order, AT&T through a combination of mergers and acquisitions including its purchase of BellSouth one year ago has regained much of its territorial hegemony and is now the dominant telecommunications provider in 22 states.

If it happens in the next several years, this time around federal policymakers will be motivated by a different set of circumstances: Not just the company’s dominant market position, but growing alarm over the insufficiency of AT&T's aging copper wire-based local distribution infrastructure to meet the burgeoning demand for advanced telecommunications services based on broadband Internet access.

The realization that broadband Internet access is vital to the health of the nation’s economy and concern the U.S. will end up uncompetitive relative to other industrialized nations measured on broadband Internet access will fan the unease.

Public policymakers could ultimately require AT&T to sell off regions within its service area where it does not commit to deploy infrastructure ensuring near universal broadband access by a future date. Congress is already laying the groundwork for such a move with legislation that would map out America’s broadband black holes.

Skeptics might argue such strong regulatory action is improbable because unlike in 1984, AT&T competes with cable companies and other telcos to offer broadband-based services. Not necessarily. Cable companies often aren’t anywhere to be found in AT&T broadband black holes. Moreover, there’s a lack of competition among telcos since their market practice is to avoid competing in each other’s territories with wire line-based services.

From dialup to 100mbs by 2015

There are some numbers in the broadband initiative announced last week by New York Gov. Eliot Spitzer that starkly illustrate the gulf between the current state of broadband throughput speeds and the where Spitzer wants the Empire State to be in 2015.

At present, much of upstate New York and surprisingly even parts of New York City are relegated to dial up, a sluggish connection that was state of the art Internet connectivity technology when Bill Clinton was beginning his first term as president nearly 15 years ago. That's around 24kbs -- higher or lower depending on the distance to the central office switch and the condition of the lines.

By 2015, Spitzer wants all parts of the state to have access to at least 20mbs in each direction, and 100mbs in major metropolitan areas.

Will state broadband build out incentives be enough?

As states gear up public-private partnerships to provide incentives to broadband telecommunications providers to build out their incomplete infrastructures, the question of whether these programs will be sufficient arises.

In allocating $5 million in seed funding for competitive grants to research, design and implement accessible Internet for unserved and underserved areas of rural and urban New York, Gov. Eliot Spitzer made clear the funds would not be used to build needed digital infrastructure. "Instead, state money will be used to leverage matching funds from the private and not-for-profit sectors," Spitzer noted. "In the end, it is New York's vibrant telecommunications sector—together with their tireless and invaluable workers—who will implement this vision in partnership with government."

But will telecom providers respond to the state incentives and will relatively paltry sums such as New York's $5 million begin to make a dent in the billions that are needed to bring a metal wire-based telecom infrastructure built decades ago for an analog, pre-Internet era technologically up to date? Especially considering that America's existing telecom infrastructure is already at least a decade behind where it should be to meet current needs and becomes increasingly obsolete as demand for high speed Internet access at greater bandwidth grows.

As this reality is confronted, a number of public policy options emerge. Should the states float multi-billion dollar bond issues – perhaps combined with tax breaks -- to provide low interest loans to telecommunications providers in order to provide more patient capital that the providers themselves cannot access given their short-term earnings horizons?

Or might these state-level efforts prove inadequate, providing too little money over too long a period to fund the massive investment that should have been made a decade or more ago in order to bring America's telecommunications system to the point where it should be today? It certainly seems likely, which would lead to calls for the federal government to step into the gap.