Analysis & commentary on America's troubled transition from analog telephone service to digital advanced telecommunications and associated infrastructure deficits.
Thursday, May 17, 2007
Protecting the telco/cable duopoly
The telco/cable duopoly has pursued similar legislation in about a dozen states, claiming it would allow them to bypass local governments, bring greater market competition (pretty hard to do in a duopolistic market) and deploy broadband-based services more rapidly. However, at the slow pace at which the telcos and cable companies are expanding the availability of their broadband services, doing with local government regulation one area at a time certainly doesn't seem to be an impediment.
Rather than speed up deployment of broadband, the true objective of the state franchise measures, like a recently-promulgated Federal Communications Commission rule (which is being legally challenged by local governments), is to protect telcos and cable companies from local government demands they hasten the build out of their infrastructures in order to make broadband available to unserved areas.
Wednesday, May 16, 2007
Ma Bell pipe dream: $1 billion in ad revenue in 3 years
John Stankey, AT&T's president for operations support, told the Reuters Global Technology, Media and Telecoms Summit in New York that advertising could bring $1 billion to Ma Bell's top line in three years time. Stankey said AT&T can reach that revenue goal by virtue of being the biggest U.S. broadband provider, a wireless carrier and most recently, a purveyor of Internet Protocol Television Service (IPTV) via its nascent U-Verse video service.
Rather than the pipe providers getting into the advertising biz, the more likely scenario is the media giants like Rupert Murdoch's News Corp. and Web portals Yahoo! and Google getting into the pipes business, partnering with other companies to build their own broadband infrastructure after tiring of waiting on the telco/cable duopoly to expand their networks.
Monday, May 14, 2007
Vermont legislature approves $40 million bond measure to speed universal broadband access
The bill encourages both public and private provisioning of service. It includes authorization for up to $40 million in revenue bonds by the State to build infrastructure like radio towers and middle-mile fiber. The State is NOT authorized to become a retail ISP but the plan is to encourage private wireless ISPs (WISPs), wireline ISPs, and cellular operators – as well as municipalities – by making infrastructure broadly available at a reasonable cost even in areas where the short term economics are tough. The bonds need to be repaid out of revenues but this will be “patient” money.
The measure also authorizes local governments to engage in municipal broadband projects. As Evslin states in an earlier post on the legislation, implementation of it could prove more difficult than getting the bill into law. I would agree, considering that $40 million likely represents a small portion of the investment that will be needed to bring universal broadband access to Vermont in just three years.
Sunday, May 13, 2007
U.S. Dept. of Agriculture revamps rules for funding rural broadband projects
Dorr outlined several key elements of the proposed rules: Promoting deployment to rural areas with little or no service; Ensuring that residents in funded areas get broadband access more quickly; Limiting funding in urban areas and areas where a significant share of the market is served by incumbent providers; Clarifying and streamlining equity and marketing survey requirements; Increasing the transparency of the application process, including legal notice requirements, to make more informed lending/borrowing decisions; Promoting a better understanding of all application requirements, including market survey, competitive analysis, business plan, and system design requirements; and ensuring that projects funding are keeping pace with increasing demand for bandwidth.
Dorr noted that significant progress has been made in facilitating rural broadband deployment since the program began. Over 70 loans have been made totaling $1.2 billion for broadband deployment projects headquartered in 36 states. Through these loans, more than half a million households in more than 1,000 rural communities will receive broadband service. Over 60% of these communities had little or no broadband service at the time.
HD Net's Cuban calls for broadband infrastructure investment
"[T]he reality is that the consumer internet,…has matured, and its future, unless there is significant investment will constrain economic development in this country.”
Saturday, May 12, 2007
Colorado video franchise fight reveals true goal of provider "competition," Comcast's hypocrisy
Cable provider Comcast insists Denver-based telco Qwest be required to provide broadband video service to everyone in the Colorado municipalities it wants to serve, charging Qwest will leave some neighborhoods unserved if local governments don't require it to do so in exchange for granting Qwest a video franchise. (Note however, hypocritical Comcast does exactly what it accuses Qwest of doing, including in my own El Dorado County, California ZIP code where Comcast serves some neighborhoods but refuses to serve others).
If Colorado local governments force Qwest to serve their entire jurisdictions, the Rocky Mountain News reports Qwest may counter by invoking a recently promulgated Federal Communications Commission rule that Qwest sought prohibiting local governments from imposing "unreasonable" build out requirements on telephone companies seeking franchises to offer enhanced broadband-based video services. The rule also requires local governments to make a decision on a video franchise application within 90 days.
If Qwest presses ahead with this reported effort to accelerate local government video franchise applications, it will set the stage for litigation over the meaning of what constitutes an "unreasonable" build out requirement under the FCC rule. Local governments have already gone to federal court to challenge the rule, contending the FCC overstepped its authority.
Qwest's initiative also marks a quick reversal of a strategy announced earlier this month by CEO Richard Notebaert, who told Bloomberg Qwest planned to hold off offering video over phone lines, concentrating instead on accelerating residential broadband Internet access.
Friday, May 11, 2007
California's AB 2987: Market competition in a tightly limited market
The problem is that competition is geographically restricted, playing out in a limited market where both the telco and cable provider have a presence. Consumers not in these proscribed markets don't benefit from the increased competition envisioned by AB 2987.
In California and most states, there exists a de facto duopoly in which the big telcos and cable companies like AT&T and Comcast have the market all to themselves. There are few if any other competitors nipping at their heels and forcing them to provide more and improved services.
Exhibit A is the large number of broadband black holes that exist in California where hapless residents can't get broadband Internet access from their telco (who in AT&T's case tells them to "go suck a satellite") or from the cable provider (upon whose maps these would be customers simply don't exist). Here, AB 2987 fails to spur competition and better services and does nothing to expand broadband services to unserved areas of the Golden State since the legislation allows the telco/cable duopoly to offer services to just half of potential customers by 2012. That effectively locks the providers into the market they presently serve, creating two separate but unequal Californias -- one with broadband Internet access and the other without.