Reverse regulation and the race to the bottom

This excerpt from the Jackson, Tennessee Sun once again reveals the real competition between the telcos and cable companies isn't about who can get the most customers with upgraded infrastructure that's able to provide advanced telecommunications and video services. Instead, it's just the opposite in the perverse state of today's wire line telecommunications industry. It's a battle in which the telcos and cable companies compete to serve the narrowest geographical base of potential customers while devising rules to force the other guy to serve the broadest possible base. Call it reverse regulation. In most industries, businesses want regulation that allows them to reach more -- not fewer -- customers. Not in wire line telecommunications, in which the players are engaged in a race not to the top, but to the bottom. (Incidentially, Sen. Ketron is dreaming if he truly believes AT&T plans to roll out its fiber/copper hybrid project U-Verse infrastructure in rural areas. U-Verse is targeted exclusively to select urban/suburban areas.)

By using its existing infrastructure, AT&T could reach smaller rural communities that do not have, and may never have, cable service because of their size, said state Sen. Bill Ketron, R-Murfreesboro. Ketron is the main sponsor of the cable legislation. The bill does not ask for any state funding for AT&T.

"The faster we get broadband into our rural communities, the faster those communities can be connected to the world," Ketron said. "Not only from our children in education in being connected but in providing the economic link to industrial development to those communities."

(Tennessee Cable and Telecommunications Association Executive Director )Briggs argues otherwise.

"They have said they intend to serve 70 communities, and there are over 500 to 600 franchises," Briggs said, "so right there it tells you they do not intend to serve everyone."

Tennessee broadband build out bloodbath predicted for 2008 legislative session

Tennessee state Senator Tim Burchett of Knoxville is predicting there will be a “bloodbath” in the 2008 legislative session as lawmakers once again entertain AT&T's request to preempt local governments and put the state in charge of broadband franchises that include delivery of high bandwidth IPTV video service.

Local governments won out this year when they convinced lawmakers Ma Bell was trying to avoid local government demands that AT&T build out its infrastructure to serve all of their residents and businesses. AT&T doesn't want to make that investment and hopes legislation making the state government the sole regulator will allow it to avoid negotiating with local governments.

“We believe that [the AT&T legislation] weakens consumer protections because there are no build-out requirements,” Carole Graves, communications director for the Tennessee Municipal League, told the Knoxville News Sentinel in this article via Free Press.

Wisconsin lawmaker wants protections for rural areas in AT&T-backed state franchise legislation

The Capital Times (Madison, Wisconsin) notes in an editorial today:

As state Sen. Kathleen Vinehout, D-Alma, notes, Plale's proposal does not contain needed consumer protections and offers no assurances that rural areas -- including the western Wisconsin region that elected her last year -- will enjoy the same access to telecommunication services as the Milwaukee County communities that elect Plale.

In proposing to rewrite the cable franchise bill to require AT&T, cable and other companies to contribute up to $7.5 million to a new "digital divide" fund to protect rural areas from being left behind, Vinehout says, "I'm representing the people that weren't at the table."

Wisconsin lawmaker likes Illinois 90 percent build out standard

Wisconsin state Senator Kathleen Vinehout isn't about to roll over to Ma Bell's proposed advanced telecommunications services regulatory framework that would require a far lower build out standard for AT&T's Project U-Verse product.

Vinehout likes what Illinois has done in requiring the company to build out its hybrid fiber and copper cable U-Verse infrastructure to serve 90 percent of the state rather than the 50 percent build out requirement favored by AT&T that leaves large areas on the wrong side of the digital divide:

Not every state meekly surrendered to AT&T. Illinois passed a bill with real teeth, including very specific consumer protection standards: requirements to bring services to 90 percent of the state, standards for quality, and protection for community access television.

AT&T fined by California for poor telephone service restoration

The California Public Utilities Commission announced it has levied nearly $1 million in fines against AT&T for failing to restore phone service outages in a timely manner in 2006. The fines are in addition to $900,000 in fines imposed on the telco for failing to meet service standards the previous year.

At the root of the restoration problem is AT&T's aging copper cable infrastructure that took a beating during California's rainy season during the first three months of 2006.

The regulatory actions against AT&T raise major questions about the big telco's ability to deliver advanced telecommunications services including high speed Internet access when it has difficulty maintaining even plain old telephone service (POTS) and explain to a large degree why many California customers of AT&T are still not offered wireline broadband nearly two years later.

Time Warner Cable applies for California franchise

Nearly two months after the Southern California city of Carlsbad accused Time Warner Cable of operating in a regulatory no mans land because it lacked either a franchise from the city or a statewide franchise issued by the California Public Utilities Commission, Time Warner has applied for a statewide franchise. That will enable it to avoid build out requirements that Carlsbad or other local California governments might seek to impose on providers.

More than 20 percent of U.S. local phone company customers still couldn't get broadband in last half of 2006

In September, your blogger speculated the Federal Communications Commission was delaying the release of a semi-annual report on the number of high speed telco and cable connections to the Internet covering the last six months of 2006 at the behest of telcos because it would show little or no improvement in the percentage of residential customers able to subscribe to high speed Internet from their incumbent local telephone exchange carriers.

This week the FCC finally released the long delayed report and it's clearly unflattering to the telcos. It reveals more than 20 percent of American residences could not get broadband from their telephone companies in the latter half of 2006. That represents no change whatsoever in the national average from the first six months of that year and illustrates that rather than making an effort to extend broadband to these unserved customers, telcos are hanging them out to dry, permanently stranding them on the dark side of the digital divide.

States with the highest levels of telco broadband access in the last six months of 2006 include Florida (89% ); Georgia (90% ) Colorado (86%) and surprisingly, Nebraska (89%).

States with the lowest levels of telco broadband access in the period were Maine (67% ); Arkansas (66% ); Michigan (64% ); New Hampshire (61% ); Vermont (64% ) and Virginia (66% ).

Author of California legislation benefitting telcos solicited charitable contributions from Verizon

The Sacramento Bee is reporting California Assembly Speaker Fabian Núñez solicited $120,000 in contributions to his designated charities from Verizon three months after Gov. Arnold Schwarzenegger signed Núñez's Digital Infrastructure and Video Competition Act of 2006 into law.

In addition, the newspaper reports AT&T made three grants of $5,000 apiece last year at Núñez's behest.

The law permits telcos like Verizon and AT&T to offer advanced broadband-based telecommunications services including Internet Protocol TV (IPTV) with a statewide franchise granted by the California Public Utilities Commission. The legislation authored by Núñez, AB 2987, shafted areas outside of urban centers such as Núñez's Los Angeles district because it does not require providers to build out their infrastructures, sanctioning digital redlining and leaving gaping broadband black holes in these areas intact.

A spokesman for Núñez issued the perfunctory denial of any link between the solicitation of Verizon and the legislation.

Trend: Rural telcos move to fiber

Two years ago, only about 12 percent of rural telcos were utilizing fiber to the home (FTTH) and/or fiber to the curb (FTTC) to offer broadband to customers. Last year, that number had grown to 28 percent. It now stands at 32 percent, according to surveys of members of the National Telecommunications Cooperative Association, and the vast majority of survey respondents (84 percent) already utilize fiber fed nodes to extend the reach of their digital subscriber line service.

Virginia local governments endeavor to get broadband infrastructure in place

“People are tired of us saying it’s coming, it’s coming - they want results,” said Corum, the director of economic development and tourism in Nelson, on whose lap the responsibility for coming up with a solution to the county’s broadband problem has fallen.

Broadband for far too many in Virginia and other states is merely an unfulfilled promise. Kudos to Nelson County Virginia Economic Development Director Maureen Corum and other Virginia economic development directors who are working to bring broadband to their counties. They like and their counterparts like El Dorado County, California Economic Development Director Sam Driggers wisely see the issue as vital infrastructure linked to the economic health of their counties.

Spread broadband, not asphalt

Some words of wisdom for our time from Washington Post syndicated columnist Neil R. Peirce. Policymakers, read closely:

Put your ear to the ground, and you can hear other voices, especially in new technologies, suggesting a less frenetic lifestyle in a nation clearly confounded by congestion, obesity, energy consumption, global warming and air quality issues.

Enter then the broadband-transportation link. Fast, reliable Internet connection makes telecommuting far more feasible –– to transfer files, worksheets and video clips, access company databases, create videoconferences and more. But "telework" can't function well when employees don't have broadband access. Simple equation: Universal broadband equals increased telecommuting, which in turn means less roadway demand, fewer greenhouse gas emissions and less pollution. Even if a worker telecommutes a day or two a week, it can make a real difference.

Local governments play critical role in ending digital divide

Illinois IT consultant Jim Carlini reports representatives of communities outside urban regions throughout the US who attended this month's Rural Telecon Conference in Springfield, Illinois are developing an increasing sense urgency as they continue to remain mired on the wrong side of the digital divide by the telco/cable duopoly. They realize they cannot count on the telcos and cable companies to build out their infrastructures to provide advanced telecommunications services like broadband and need alternatives.

Carlini suggests they turn to their local elected officials. "If your municipality isn’t looking at creative ways to develop new strategies that include having a state-of-the-art network infrastructure to support economic growth and development, they will be stagnating your property value and quality of life in your area," Carlini writes at MidwestBusiness.com.

"Simply put, the three most important words in real estate (“location, location, location”) have turned into “location, location, connectivity” in urban, suburban and rural America. Corporate site selection committees have included broadband connectivity as one of the top three criteria they are looking for when researching locations for corporate facilities. If your community does not have a good platform for broadband connectivity, it will simply be passed over in favor for one that does."

El Dorado County, California, while located in the Sacramento metro area, is like many other areas of the country, plagued by spotty and inferior broadband access. County Economic Development Director Sam Driggers conveyed Carlini's point recently to the El Dorado County Board of Supervisors.

Your blogger agrees with Carlini that local governments must take a proactive role in ensuring their telecommunications infrastructures can support the current and future needs of their residents and businesses. In that spirit, I've drafted petitions to El Dorado County Board of Supervisors and the El Dorado Irrigation District urging those local government entities to partner with private fiber optic telecommunications providers to lay fiber in their rights of way to build a fiber to the neighborhood network as the foundation for a badly needed upgrade to the county's telecommunications infrastructure.

Municipal WiFi struggles for viable business model

Municipal WiFi continues to struggle to find a viable business model in Sacramento and other U.S urban centers, Sacramento Bee business writer Clint Swett reports today.

Why competition suffers in the broadband market

One of the biggest debates is over how much broadband telecommunications should be regulated. That debate is in turn fueled by another over the fundamental nature of the market. Is it a competitive market and will competitive pressures force the market to provide broadband to those who want it at reasonable prices? Or is it an uncompetitive market as Robert Atkinson, president of the Information Technology and Innovation Foundation, described it at a conference today in San Francisco.

Atkinson like your blogger and many other observers tend to see it as a monopoly or duopoly with broadband provided by just a telco, a cable company or in all too many cases, neither, leading to the formation of broadband black holes stretching across the landscape. The reason, Atkinson explains, is the high cost of becoming broadband provider and deploying the necessary infrastructure.

Atkinson's right. By way of illustration, if another high cost infrastructure such as roads and highways was left to private market providers who would charge tolls for access, there would only be a small number of road builders and plenty of places where roads -- like broadband -- don't go. That's why roads in the vast majority of places are provided by the public sector.

Despite the substantial financial heft of the big telcos and cable companies and their ability to raise money on Wall Street, they simply can't put up the money themselves to build out their infrastructures to provide broadband to nearly every one who wants it. They'd have to take on billions more of bond debt and sacrifice near term earnings --something their investors wouldn't tolerate.

Increasingly, it appears only a partnership of both the private and public sectors can eliminate America's numerous broadband black holes and close the digital divide.

Connecticut should tell AT&T to hit the road

AT&T is at loggerheads with Connecticut regulators that want it build out its infrastructure to serve more residents and businesses as a condition of getting approval to deploy its triple play (voice telephone, Internet access, Internet protocol TV) "U-Verse" offering in the state.

AT&T contends it can't do so profitably and is threatening to pull the plug on U-Verse in Connecticut. Good riddance; this technologically challenged turkey probably won't fly anyway. Connecticut should stick to its guns and tell AT&T in clear terms that building a swiss cheese telecommunications infrastructure filled with broadband black holes is not acceptable.

This is a prime illustration of the need for the locals to take charge and create public-private partnerships with locally owned and operated telecommunications providers and tell the big, out of state corporations who would create broadband winners and losers to hit the road.

Connecticut AG, AT&T clash in court over broadband build out

As this blog reported in early August, Connecticut Attorney General Richard Blumenthal wants to ensure the "connect" in Connecticut means the entire state and not just selected local jurisdictions when it comes to broadband access.

Blumenthal therefore is moving to force AT&T to deploy its triple play U-Verse service under state rather than local regulatory jurisdiction. AT&T is fighting back, taking Blumenthal to court to challenge his order.

This is a high profile legal showdown worth watching as a state AG with a strong consumerist reputation is basically telling the telco/cable duopoly that with market domination comes the responsibility to serve everyone as is current regulatory policy for basic telephone service.

WISP pulls out of Northern California, El Dorado County

In June 2006, NuTel Broadband Corporation, a Cranbury, NJ-based broadband wireless managed services provider announced plans to deploy wireless "mesh" broadband networks in Sacramento, Chico, San Jose and El Dorado County as part of a 14-state rollout. The company is now pulling out of Northern California.

The WISP had plans to begin rolling out service in Folsom and El Dorado Hills and then head east up US 50 into the foothills. NuTel CEO Joe Fiero confirmed the withdrawal in an email today. Fiero said the decision to pull the plug on the region was prompted by concerns from would be business partners that Fiero says feared potential competition from municipal Wi-Fi networks that would provide free or very low cost access to users. NuTel's business model involves partnering with existing ISPs and WISPs as well as residential telecommunications wiring contractors, with NuTel providing back office management as well as a VOIP (Voice Over Internet Protocol) offering via NuTel's proprietary backbone and switch.

"From a demographics point of view, we would love to be in the region," Fiero wrote. "It’s finding willing partners to build and operate the system that has been the issue. We have done exhaustive research and spent hundreds of hours to locate economic sources for bandwidth and proper antenna locations. Someday we hope to put all that to good use."

El Dorado County's locally owned and operated WISPs including Remotely Located and Sierra Advantage likely welcome Nutel's retreat, although from this blogger's perspective it appeared doubtful NuTel like Clearwire and other big multi-state WISPs would have ever served areas east of El Dorado Hills. Nor would they likely face competition there from free or cheap public Wi-Fi.