Geographic market failure, inconsistent regulatory policy stymie U.S. broadband access

The existing large telecommunications providers invest their money where there is maximum return on investment, which results in a patchwork of coverage throughout the U.S. Telecom providers maximize profits and spend millions of dollars lobbying to create laws that decrease competitive challenges, while having little incentive to provide new services to less population-dense areas of the country, or to increase speed and lower costs for those who already do have service. This state of affairs stands in marked contrast to the situation in those nations that are truly broadband leaders.

In the absence of widespread government initiatives and incentives to roll out broadband services in rural areas, telecom providers have made the decision to maximize profits by rolling out service in those areas that have the highest population density and lowest cost of build-out per customer. The free market wins in the short term, quarterly profits are maximized, but the customers in less-profitable geographic areas lose, and the nation as a whole loses out over the long term, falling behind other nations with more farsighted policies.

More "get ready, it's coming" talk on Project Lightspeed

Can Project Lightspeed escape the gravitational inertia of AT&T's many massive broadband black holes? Engine room, get me maximum warp (spin) drive. Here's the latest "get ready, it's coming" promise from AT&T via CEO Edward E. Whitacre Jr.:

Regarding AT&T's Project Lightspeed, which will extend fiber-optic cable into neighborhoods and add video services to telephone and high-speed Internet options, Whitacre said the company plans "a big time ramp up" in the next couple of months. He did not elaborate on the plans for the project, which he acknowledged has been a "little bit behind" in its rollout.

FTC to look into ISP broadband speed claims

About two weeks ago, I predicted that an Australian regulator's concerns over Internet Service Provider claims of providing throughput speeds of "up to" X mbs" when actual connection speeds are far lower would spread to the U.S.

Sure enough, it has. The Federal Trade Commission will be look into the issue in a workshop this week, ars technica reports.

Verizon policy exec calls for federal grants, loans to extend broadband access

Tom Tauke, Verizon's executive vice president for public affairs, policy and communications wants the feds to emulate Kentucky's nonprofit program to expand broadband access to nearly everyone in the state. Tauke also called for federal grants and loans to speed deployment of broadband access and reform the Universal Service Fund to better support high speed Internet service in high cost areas. The U.S. needs to look at broadband incentive programs "sooner rather than later," he said.

Tauke also said the nation needs to come up with a better way to determine exactly where broadband is available and where it's not, suggesting like consumer advocates the FCC's current methodology of using ZIP Codes as measurement units is flawed.

Cooperative research project proposed to study "acute and growing problems facing the Internet" in U.S.

Internet access in the U.S. is at crisis point and researchers say they need more complete and reliable data to point the way forward. The goal of the the COMMONS Project is to gather "substantial real-world data on Internet traffic at the national level ....to raise the intellectual merit of the entire field of Internet science through increased standards of data collection, curating, and sharing in the research community."

On December 12-13, 2006, the Cooperative Association for Internet Data Analysis (CAIDA) held a workshop to discuss and ultimately propose a collaboration among researchers and networks to simultaneously solve three acute and growing problems facing the Internet: a self-reported financial crisis in the Internet infrastructure provider industry that poses a severe threat to broadband growth and U.S. competitiveness; a data acquisition crisis which has deeply stunted the field of network science; and a dilemma within emerging community, municipal, regional, and state networks, who need (additional) broadband connectivity but face severely limited provider, service level, and usage options.

Project Lightspeed appears headed on failed course of Project Pronto

Near the start of the current decade, AT&T (then SBC Communications) announced an initiative called Project Pronto. The goal was to speed up the deployment of high speed Internet services — Digital Subscriber Line (DSL) over copper cable and twisted pair — to 80 percent of the phone company’s service area by 2002 and throughout its entire service area by last year. Both deadlines were missed, with about one in five customers still unable to obtain any broadband services from the telco.

AT&T’s latest initiative is dubbed Project Lightspeed. Unlike the failed Project Pronto, Project Lightspeed — AT&T’s scheme to offer a so-called triple play menu of services including telephone, broadband and IPTV (Internet Protocol TV over phone lines) contains no self imposed deadlines. That’s a good thing because it’s moving well below the speed of light, BusinessWeek reports this week.

AT&T wants to make all three digital services run over its existing copper cable, and industry analysts are questioning whether copper — designed to carry low bandwidth analog voice services — can provide enough bandwidth to accommodate the huge bandwidth needs of high definition IPTV. AT&T "competitor" Verizon doesn’t think copper is up to the job and is instead committed to doing triple play over fiber optic cable to the doorstep. By contrast, AT&T finds itself caught between its desire to keep up with Verizon and the cable companies in the market for triple play services and its reluctance to let go of its legacy copper cable plant, a reluctance that ensures an early death for Project Lightspeed and make AT&T an also ran in the triple play game.

In a competitive market — the kind of competitive market envisioned by the federal telecommunications reform legislation enacted in 1996 — the stage would appear to be set for Verizon to eat Ma Bell’s lunch. The problem is there is no true competitive market for residential telecommunications services. Verizon refuses to compete in AT&T’s service area and vice versa. So there’s little pressure on AT&T to upgrade its aging copper cable-based system to fiber. Meanwhile, AT&T residential customers suffer, with large numbers unable to obtain even a “double play” of voice and broadband service promised years ago by the not-so-pronto Project Pronto let alone the triple play of Project Lightspeed.

More than 20 percent of local phone company customers can't get DSL

Local telephone companies didn’t offer DSL in more than 20 percent of their service areas last year, according to recently released data compiled by the Federal Communications Commission. The data are contained in Table 14 of the report, High Speed Services for Internet Access as of June 30, 2006.

States with the highest DSL penetration among incumbent local exchange carriers (ILECs) include Florida (88 percent), California (86 percent) and surprisingly, Louisiana with 87 percent. Even less densely populated states such as Nevada and North Dakota exceeded the national average of 79 percent, with 85 percent and 86 percent respectively.

The states with the lowest DSL availability offered by ILECs were New Hampshire with 59 percent; Vermont with 60 percent; Virginia, Arkansas and Michigan with 66 percent; and Maine, 67 percent.

The ILEC measurement provides a more accurate picture of broadband availability than cable modem since telephone service, unlike cable, is available to nearly all U.S. households and businesses. The FCC data also show satellite Internet connections, offered as a last resort option in areas where neither phone nor cable companies provide broadband, remain unpopular with just 495,365 subscribers nationwide.

Finally some common sense on broadband -- courtesy of Nebraska Rep. Lee Terry

Finally, a public policymaker displays some practical common sense and fairness when it comes to filling in America’s many broadband black holes: allow broadband providers to charge customers in areas that cost more to serve higher rates for service.

In addition to ending a federal requirement that high-speed Internet rates be equal regardless of population density, Nebraska Republican Congressman Lee Terry’s draft bill would also require the Universal Service Fund, created to subsidize voice telephone service in higher cost areas, be updated to include broadband, according to this ars technica report.

Terry, a member of the Congressional Rural Caucus, is on the right track policy-wise. Broadband Internet access should be universal and allowing USF funding to help make it so is sound policy. It’s also equitable to allow higher costs to deploy wire line-based broadband to be recovered in the form of higher prices.

Achieving universal broadband access is a high cost proposition and will require multiple funding sources. Terry’s bill strikes a reasonable middle ground that’s vitally needed in finding a way to make broadband universally accessible. Otherwise, everyone living outside of densely populated urban areas will remain stuck in the early 1990s with cheap but impractical dial up Internet access or the costly and undesirable option of satellite, which is best left to television programming.