Public policy collides with business interests of telco/cable duopoly

According to Oakland, Calif.-based consultant Craig Settles, the Obama administration's stated policy goal of broadband access for all Americans is colliding with the narrower economic interest of the legacy telephone and cable companies. That conflict is playing out within the context of the administration's economic stimulus legislation that was signed into law almost one year ago.

Settles points to an estimated 9,000 challenges and protests the incumbents brought against proposed projects seeking more than $4 billion in infrastructure subsidies set aside in the American Recovery and Reinvestment Act of 2009. The challenges are being raised under a broadband black hole preservation clause in rules two federal agencies wrote to govern allocation of the subsidies that allows incumbents to protest proposed projects on the grounds they already provide advanced telecommunications services in the area proposed to be served.

The telcos and cable companies want to preserve what they regard as their exclusive franchises for a given "service territory" even though their business models don't allow them to construct the infrastructure necessary to bring advanced telecommunications services to all homes and businesses that need (and try to order) them.

This is the crux of the clash between the business interests of the telco/cable duopoly and public policy that will clearly have to be expeditiously resolved by the Obama administration and Congress if the subsidies are to function as intended. As Settles put it in an article appearing earlier this week in USA Today: "We're at a point where it's the general public's interest vs. the entrenched incumbents."

A broadband farce in the UK countryside

Here's an appalling story from the British countryside that has some parallels in America where folks stuck on dial up or forced to suck a satellite have been given similar stratospheric broadband price quotes (and no stock or options) from incumbent telcos and cable providers. This story also illustrates the need for the UK to ditch its outmoded, copper cable plant that relies on highly constrained "little broadband" DSL.

Looks like the village of Dufton is a representative outpost deep in the UK "broadband desert" recently lamented by Prince Charles.

Last mile fiber project lands broadband stimulus award, sparks strong interest from other rural electric coops

Telecommunications equipment manufacturer Pulse is reportedly getting deluged with inquiries from rural electric cooperatives after it successfully partnered with a rural electric cooperative in Northeast Missouri to score $19 million in last mile broadband stimulus funding from the USDA's Rural Utilities Service (RUS) Broadband Initiatives Program (BIP).

What's sparking (pun intended) interest in the Ralls County Electric Cooperative project is its fiber to the premises design that utilizes "distributed tap architecture" for easy deployment of drops that's cost effective at population densities of as few as four homes per mile, reports Light Reading's Cable Digital News.

The take away from this story isn't about the technology alone. It shows there is tremendous interest in the cooperative business model to bring advanced telecommunications services to unserved and underserved areas of the United States just as coops did a century ago when rural electric and other utility cooperatives were first formed.

U-Verse won't bail AT&T out of its residential wireline woes

Here's a notable report by Todd Spangler of Multichannel News on AT&T's revenues from its hybrid fiber/copper VDSL triple play U-Verse service that suggests while posting increases in customers and revenue, they may be too little and too late to offset a dramatic decline in AT&T's residential wireline market segment. In a Dec. 21, 2009 filing with the U.S. Federal Communications Commission, AT&T in unusually blunt language called the downward trend a "death spiral."

Spangler reports that while AT&T's U-verse revenue nearly tripled over 2009 (despite a sharp economic downturn) and is approaching an annualized rate of $3 billion, it nevertheless represents less than five percent of total wireline segment revenue. Spangler notes even that strong growth isn't sufficient to offset flagging wireline segment revenues, which fell six percent in 2009 to $65.7 billion.

Meanwhile, AT&T disclosed this week it would spend $2 billion on its wireless infrastructure -- money that won't be going into wireline CAPEX to build out the U-Verse footprint. Doing that is a costly proposition given U-Verse involves expensive field distribution equipment that can deliver service only 3,000 feet over existing copper cable plant -- plant that often requires even more money to bring it up to technical standards to reliably carry VDSL signals. That's not an issue in new neighborhoods, where U-Verse is delivered over fiber to the premises. But few such locales are being developed with new home construction at its lowest level in decades.

In sum, U-Verse isn't likely going to bail AT&T out of its troubles in residential wireline and may ultimately lead to the big telco pulling out of the market segment to concentrate on wireless in the retail market as I predicted in September 2008.

App-Rising: As U.S. copper telecom infrastructure ages, no national consensus on next step

Check out this dreary assessment of the state of U.S. telecommunications infrastructure from App-Rising:

In particular, look at Kentucky. They showed a 40% decrease in measured connection speeds just in the last quarter. Numbers like this have me worried that perhaps the century-old copper telephone wire is rapidly deteriorating and impacting DSL performance, or perhaps the cable providers' shared networks are overwhelmed with demand, or maybe wireless broadband is constrained by insufficient backhaul.

What makes Kentucky even more troubling is that they're supposed to be a leader in encouraging the deployment and adoption of broadband. What does that say about the health of the country if a state that's been seen as a leader is falling off this badly.

It makes me start to wonder if we might have a national emergency on our hands in states like Kentucky and others where broadband speeds are dropping. It leads me to think that perhaps we need a national commission to study these issues in depth and get to the bottom of what's happening as no state should be slowing down ten years into the 21st century.

California PUC approves $7.9 million supplemental broadband stimulus funding for 9,000 square mile Central Valley wireless project

The California Public Utilities Commission today conditionally approved a resolution providing $7.9 million in supplemental funding for a major wireless broadband project requesting federal funding via broadband infrastructure subsidies allocated in the American Recovery and Reinvestment Act of 2009. The supplemental funding allocated from California PUCs' California Advanced Services Fund covers half of a 20 percent recipient match required under the National Telecommunications and Information Administration's (NTIA) Broadband Technology Opportunities Program and is contingent on federal funding approval.

The California Valley Broadband (CVB) project, proposed by a the consortium of Moreno Trenching Ltd, Mika Telecom Group and MT2 Telecom, LP, plans to build wireless infrastructure that will serve about 77,195 households in Fresno, Madera, Merced, Sacramento, San Joaquin, Solano, and Stanislaus counties. The consortium claims it will deliver Internet connectivity and VoIP over nearly 9,000 square miles at speeds of up to 20 Mbs on the download side and up to 6 Mbs uploads using two unregulated (WiFi) frequencies and one licensed (WiMAX) frequency "to accommodate range, terrain, tree and other interference issues."

The CVB project faced multiple challenges from incumbent telco and cable companies who claimed they already serve census block groups in the proposed CVB footprint. But PUC staff rejected the bulk of the challenged census block groups finding the incumbents didn't offer broadband as the California PUC defines it: at least 3 Mbs for downloads and 1 Mbs on the upload side.

It remains to be seen however how the NTIA will respond to protests the incumbents lodged against CVB's proposed project that is pending approval for the 80 percent BTOP subsidy.

In allowing incumbents to contest proposed broadband infrastructure projects in the first round of stimulus funding that closed last summer, both the NTIA and the Rural Utilities Services of the U.S. Department of Agriculture -- which is also distributing a portion of the broadband stimulus funds -- set the stage for an adversarial process that by implication would require the agencies to adjudicate contested applications. However, it's likely they are less able than the California PUC to carry out that function since the PUC can reference the state's broadband availability maps and has dedicated staff evaluating comparatively far fewer proposed projects.

Since putting in place a process to resolve applications contested by the incumbents and make findings of fact regarding whether the area of a proposed infrastructure project is underserved or unserved requires substantial time and resources, my guess is the two federal agencies simply put contested applications into a "hold" file while trying to figure out how to square the applications with incumbent telco/cable objections. That would explain why so many now impatient applicants haven't heard anything whatsoever after rushing to get their applications in by the first round funding deadline in mid-August of 2009 after having been initially led to believe they'd know by the year end holidays at the latest whether their projects were approved for funding.

This sets the stage for political blow back from federal and state representatives in areas where broadband stimulus projects in their districts are stuck in limbo after hearing from frustrated constituents asking them to expedite approval of their applications. The incumbents couldn't stop the broadband stimulus provisions from becoming law in the rush to enact ARRA one year ago. So they may instead opted to fend off threats to their territorial hegemony (remember, an incumbent telco/cable "service territory" doesn't mean everyone is served) in a "death by a thousand cuts" strategy to vector and shoot down stimulus applications one by one.

Yet another flawed analysis of forthcoming U.S. broadband plan

Here's another in an ongoing series of flawed analyses in the mainstream media lately on the U.S. Federal Communications Commission's statutorily mandated task to develop a plan to ensure build out of advanced telecommunications infrastructure accessible to all Americans.

The problem with them is they incorrectly conflate lack of competition with market failure to suggest why this infrastructure isn't fully built out. It's the latter and not the former that's the cause. There isn't robust competition in a failed market because the business economics and externalities keep vendors out, leading to the formation of broadband black holes. The lack of competition is the symptom, not the underlying disease. Why is it that no one seems to get this simple, basic reality in the current coverage of the FCC's forthcoming broadband plan?