Telcos need to revamp one size fits all broadband pricing

The conventional wisdom is telcos drag their feet on expanding land line broadband access because they cannot make money offering the service. The problem is their one size fits all broadband pricing scheme that fails to differentiate between areas where deployment costs are higher. Where broadband might be profitable in an urban area, it may not be outside urban areas that require additional equipment and infrastructure.

Clearly, telcos need to take a hard look at revising pricing for broadband instead of leaving gaping broadband black holes in much of their service areas. I suspect many folks would be willing to pay $50 a month for a fast, reliable high speed Internet service rather than be stuck with sluggish and impractical dial up service.

NY governor to map broadband black holes in push for wider broadband access

Newly inaugurated New York Gov. Eliot Spitzer wants to make broadband accessible to all Empire State residents, starting by mapping out existing infrastructure and broadband black holes. Currently, less than half of the state's homes have broadband Internet connections, according to this Rochester Democrat & Chronicle article.

Questionable future for AT&T's residential market

The old AT&T as it existed before it was acquired by SBC one year ago abandoned the residential telephone market. It may not be long before the new AT&T does the same, starting in less populated portions of its 22-state service area including California.

Like other telcos, the company is hemorrhaging land lines as residential customers — particularly in more urban areas — give up their land lines and use cell phones as replacements. Last week after it closed its acquisition of BellSouth, AT&T signaled a possible shift away from its traditional residential land line business by indicating that wireless phone services along with revenue from wireless phone ads would be an important future revenue source. "We're about to become a company with wireless at its heart,'' AT&T Chairman and CEO Ed Whitacre told The Wall Street Journal after the deal was approved by the FCC. The purchase gives AT&T full control of its Cingular wireless unit.

Apparently hoping to stem some of its land line losses, AT&T is now offering what’s termed “naked DSL” service that allows residential customers to sign up for DSL broadband service as a single product without having to pair it with a traditional land line. However, it remains to be seen if AT&T can profitably provide the service, which it’s reportedly planning to offer for as low as $12 a month for the slowest speed plan.

For so-called “naked DSL,” it’s doubly doubtful AT&T can recover its costs outside of urban areas where the cost of providing service is greater. Nor is AT&T likely spend billions to upgrade its aging infrastructure outside urban areas to support its IPTV (Internet Protocol TV) service currently being rolled in a few metro areas. Taken as a whole, these circumstances point to a questionable future for AT&T’s residential segment, particularly in non-urban regions of its service area. Unless AT&T is able to substantially raise its broadband prices to bring them more in line with delivery costs, it’s quite plausible that AT&T will pull out of the residential market in these locations, deeming them underperforming assets.

San Jose Mercury News calls for national broadband strategy

Decrying the United States' slow progress in attaining universal broadband service, the San Jose Mercury News writes the time for mere talk on deploying more broadband infrastructure is over. "Let's roll," the newspaper editorialized this week. "The faster, the better."

The newspaper urges Silicon Valley business leaders to lead the charge. "Not only is universal broadband good for society, it's good for the technology business. Intel will sell more chips, Hewlett-Packard more computers, Cisco Systems more routers, Google more ads. Telephone and cable companies see huge profits in delivering TV, Internet and phone service over fast land lines," the editorial states.

The editorial calls for a "cohesive national strategy" to achieve the goal of universal broadband access in the next three years including revamping the Universal Service Fund to subsidize broadband in rural areas and auctioning off television frequencies that won't be needed when TV broadcasters go to full digital transmission in 2009 to help underwrite the cost of making broadband service ubiquitous.

The editorial is part of a growing chorus of doubt that the telco/cable duopoly has the ambition and/or the capital to speed broadband availability on its own.

Wireless can pencil out where wireline fails, Rescue resident says

Rescue resident Tim McFadden doesn’t foresee any wireline based deployment of broadband penciling out for AT&T in much of El Dorado County. The future according to McFadden, president of a company called Comsites that provides real estate services to cellular phone companies, is wireless. The simple reason, he explains, is that it’s far less costly to deploy. He points to wireless providers like Sprint and Verizon which he says are offering a “double play” of voice and data at speeds approaching 400 Kbps. McFadden also notes Craig McCaw's Clearwire is moving into the Sacramento market could be in the eastern portion of the El Dorado County before long.

While McFadden is likely correct that terrestrial wireless systems are cheaper to build out than wireline-based systems, such deployments are very technologically challenging in El Dorado County’s topography featuring high ridges, deep canyons and tall trees. That fact has made it difficult for cellular phone service providers to offer reliable service in parts of the county. That’s likely why wireless broadband players have concentrated on the low hanging fruit in the less hilly and vegetated terrain of Folsom and El Dorado Hills.

In addition, if wireless is to be a viable broadband alternative in El Dorado County or anywhere else, it will have to offer higher connection speed. While 400kbs may be considered adequate for some users of portable devices, it barely qualifies as a broadband connection.

WSJ columnist calls on federal government to speed broadband deployment

The Wall Street Journal is America’s flagship newspaper of free markets and free enterprise. It’s not known for advocating regulation and government involvement in business. When it comes to the business of deploying broadband Internet connections, however, a WSJ columnist suggests the business model has failed and can’t be left to its own devices. The federal government should launch an effort to hasten the build out the nation’s telecom system to accommodate more and faster broadband connections on a par with the Eisenhower-era program to build the interstate highway system, WSJ technology columnist Kara Swisher said at a recent Silicon Valley forum. “The government has got to get behind this, like it did with the public highways,” Swisher was quoted as saying.

Another panelist, the WSJ’s Walter Mossberg, a product reviewer and technology columnist, lamented the relatively slow speeds available to U.S. broadband users. “We need real broadband,” Mossberg told the panel, calling American broadband “pathetic” compared to what’s available in other countries.

Tech exec calls for federal universal broadband policy

With regular phone service service nearly universal, the federal government should develop policies to make broadband as accessible as telephones, argues Charles H. Giancarlo, senior vice president and chief development officer of Cisco Systems, in a recent San Francisco Chronicle op-ed piece. Giancarlo is a member of Gov. Arnold Schwarzenegger's Broadband Task Force.

655 Tahoe residents petition AT&T for broadband

The Lake Tahoe basin is one of the most massive broadband black holes in El Dorado County. As this blog reported back in the fall, the residents there aren’t happy about it and are petitioning the incumbent local exchange carrier, AT&T, to get moving on a solution and enlisted Fifth District Supervisor Norma Santiago to help press their case with company officials.

A couple of weeks ago, Tahoe activist Patti Handal, who led the door-to-door petition drive, sent off 655 signatures representing 364 households to Ma Bell’s headquarters in San Antonio. That should send a clear message for AT&T to get off the dime in the Tahoe region, where www has been an acronym for wait, wait and wait some more.