Governor: "We ought to consider what Tennesseans want"

Tennessee Gov. Phil Bredesen made it clear earlier this year his policy priority as AT&T seeks legislation allowing it to offer advanced broadband services under a state charter is ensuring the company build out a complete infrastructure rather than the partial one that presently leaves many state residents on the wrong side of the digital divide.

Bredesen underscored that point in remarks reported by the Associated Press Feb. 4 that suggest he's putting the interests of his constituents first:

"Last year and so far this year, it's shaping up into what AT&T wants versus what the cable TV companies want," Bredesen said. "Maybe at some point, we ought to consider what Tennesseans want. It's something I am taking a look at how I might have an influence on."

AT&T hikes DSL prices, newspaper reports

The Chicago Tribune is reporting AT&T is raising prices across the board for its DSL service by $5 a month. The exception, a company spokeswoman told the newspaper, is residential customers who pay $35 for the Elite plan and customers with long term contracts.

AT&T said the increase is needed to upgrade infrastructure to support more bandwidth intensive applications such as video and music files.

I'm doubtful of the company's stated rationale for the increase because it has effectively pulled the plug on upgrading its legacy first generation DSL plant and is instead directing funding to its hybrid fiber/copper Project Lightspeed deployment in selected metro areas. This deployment is in support of the telco's U-Verse all digital triple play bundle of voice, high speed Internet and Internet Protocol TV (IPTV).

The DSL price boost is an effort to merely extract greater incremental income out of existing services. That's in line with AT&T's highly risk adverse cash flow and depreciation based management strategy that shuns significant physical plant upgrades that would eliminate large swaths of its 22-state service area where AT&T offers no wireline-based broadband services.

2008 a pivotal year for wireless broadband

The year 2008 will be a pivotal one that could mark the beginning of the end of the duopolistic hold the telcos and cable companies have over broadband Internet access marked by widespread market failure and lack of competition.

The Federal Communications Commission is set to make key decisions this year that determine whether broadband will be delivered over the air and provide the much needed wireless "third pipe" for broadband delivery starting in 2009.

The FCC is currently auctioning off portions of the 700mhz spectrum that could carry both mobile and fixed broadband services. The agency is also testing revamped prototype devices
developed by a consortium including Microsoft, Google, Dell, HP, Intel, Earthlink and Phillips that would transmit broadband signals at speeds reaching as high as 80Mps that would blow nearly all existing U.S. wireline broadband providers out of the water.

The White Spaces Coalition's prototypes failed the first round of testing last year. The coalition hopes to prove the prototypes, which transmit on unused portions of digital TV broadcast frequencies, won't interfere with TV signals.

The road to America's transportation infrastructure future should be paved with fiber as well as asphalt

Rebuilding America's aging roads and highways should not involve only concrete and asphalt. Instead, the U.S. needs to install fiber optic cable to upgrade its weak broadband distribution system. Doing so takes more vehicles off roadways would allow more to work from home, which the Heritage Foundation's Ronald Utt suggested in an interview broadcast today on NPR's Marketplace:

RONALD UTT: We've been providing the public sector with all this tax revenue and what-not for roads, but we have not been getting new roads in return for it.

Utt says part of the long-term solution is to get a significant amount of commuters off the roads -- by allowing people to work from home or at least closer to home.

NTIA report on US broadband access blasted

The feds are once again drawing well justified criticism for papering over America's sprawling broadband black holes by relying on an outdated, 12-year-old formula for measuring broadband access. The formula, promulgated by the Federal Communications Commission and adopted in a report on U.S. broadband access released this week by the National Telecommunications and Information Administration (NTIA), simply measures whether anyone -- even just one address -- in a given ZIP Code can obtain broadband, defined in the circa 1996 standard of at least 200kbs in one direction.

One only needs to take a look at two states, California and Tennessee, where large areas are mapped as having no wireline broadband services to see how far off base this federal government report truly is.

One of the FCC's commissioners even took issue with his own agency's data that was used in the NTIA report. "This report relies on widely-discredited data in a strained effort that only distracts us from the real work ahead," Commissioner Jonathan S. Adelstein said in a statement.

Gigi B. Sohn, president and co-founder of Public Knowledge, blasted the NTIA report:

“The NTIA report presents a distorted view of the state of broadband in the U.S. The Administration should not be boasting about our success at a time when consumers here pay more money for slower service with have fewer choices than do consumers in other parts of the world.

“Almost 97 percent of U.S. consumers have a choice only between their cable company and their telephone company. The Administration wiped out the policies that once upon a time allowed competition to flourish here and which now sustain the competition in other countries that consumers enjoy.

“The short-sighted policies cited by the NTIA have put our economic future at risk. The rosy picture the NTIA portrayed should have recognized that reality.”

Nate Anderson of arstechnica.com had this to say:

As broadband continues to be a key driver of economic opportunity and growth, falling behind the rest of the world will have real consequences for US high-tech leadership. Instead of addressing that crucial question, though, the report is an unabashed celebration of free-market, deregulatory policies. So enamored with their own economic theories are the authors that they resort to dogmatic lecturing throughout the paper.

Semiconductor firms hope for better broadband over copper

One might think with the price of copper on the rise, telcos would be better off selling their aged copper cables for scrap metal and using the proceeds to defray the cost of installing "future proof" fiber optic cable allowing them to offer more advanced services over the so-called "last mile" to the customer.

On the other hand, they may be hoping that R&D efforts to increase the ability of copper cable -- which was designed to handle analog voice signals and not far more delicate, digital broadband traffic -- to carry DSL and IPTV signals farther and faster with fewer errors, permitting copper lines to stave off obsolescence.

Xtendwave announced today it received patents for technology that improves broadband and HDTV service by increasing the speed, capacity and distance of signals traveling over existing copper phone lines. The company claims the technology enables broadband providers "to far surpass the limits of their existing DSL services without re-engineering, replacing or upgrading their existing network infrastructure."

Separately, Portland, Oregon-based Rim Semiconductor Company announced this week that it has developed an Internet Protocol Subscriber Line™ specification that it claims provides fiber-like speeds over the existing copper telephone lines. According to the company, its proprietary Cupria™ processor is able to crunch data traffic at 40 megabits per second (Mpbs) over 5,500 feet (1.67km) on 26AWG (0.40mm) telephone wire. Existing technologies are able to achieve just 15 mbps at this distance on this wire type, the company claims.

Cash flow, depreciation trump infrastructure investment at AT&T

If you're in AT&T's 22-state service area and wondering why your phone service is poor or you can't get broadband from the big telco, DSL Prime's Dave Burstein has done some digging into AT&T's financials that may offer an explanation.

Burstein finds company suffers from a myopic fixation on cash flow at the expense of investing in the future of its infrastructure. A good indication, Burstein writes, is comparing depreciation to capital expenditures:

Most significant, AT&T's capital spending since 2002 has been cut in half to 20 to 30 percent less than their depreciation. Over five years, their depreciation was $42B and their capex $31B. Unless they have a major discrepancy in their balance sheet, that implies they are not maintaining their network. This has raised their cash flow and stock price significantly, but presumably will bite them eventually.

Burstein's take on the recent decline in AT&T's stock price -- which the company lamely suggested was due to residential wire line customers not paying their bills -- suggests Ma Bell's derriere is exposed and already being bitten.

U.S. Supreme Court asks for government brief in anti-trust suit against AT&T

The Associated Press reports the U.S. Supreme Court has asked Solicitor General Paul Clement for his opinion on whether the high court should review a Sept. 11 ruling by Ninth Circuit U.S. Court of Appeals allowing an anti-trust suit against AT&T by four California Internet Service Providers (ISPs) to go forward.

The ISPs contend AT&T jacked up wholesale prices it charged ISPs for access to its lines in order to subject the ISPs to a "pricing squeeze" as part of a scheme to drive consumers to SBC's proprietary retail DSL services.

According to the AP, the court's request for Clement's opinion shows at least some of the justices are interested in taking up the case, Linkline Communications et. al. v. SBC California, et. al.

From a market perspective, the suit spotlights a major roadblock in the implementation of federal law enacted in 1996 designed to speed the deployment of advanced telecommunications services including broadband Internet access. If the allegations of the ISPs are correct, they explain to a large extent why AT&T has not fully built out its broadband infrastructure because it set its DSL prices too low to cover the cost of doing so in much of its service area, leaving sprawling broadband black holes.

Watch for AT&T to continue to mount a scorched earth legal strategy to prevent this lawsuit from proceeding on the merits since it could effectively turn the clock back to 1984 when the break up of AT&T was ordered by a federal court. Tellingly, another big telco that could also find itself facing anti-trust litigation, Verizon, has filed in brief in the case in support of AT&T.