Burlington Telecom head: Broadband infrastructure a natural monopoly that should be publicly owned

Here's a guy who really understands the economic big picture when it comes to broadband infrastructure: Tim Nulty, director of Burlington Telecom, which built a publicly owned broadband system serving the city of Burlington, Vermont.

Nulty sets out crystal clear guidance for public policymakers on broadband infrastructure: it's a natural monopoly that by its very nature can't foster robust market competition to ensure the needs of the public are met. Hence, Nulty says, it should be in the public rather than private sector like roads and highways. Nulty's observation has enormous implications for the current misguided notion being embraced by some states at the behest of AT&T that state regulation preempting local governments will lead to a competitive market for advanced services. AT&T's approach creates a duopoly of telcos and cable companies and a duopoly does not a competitive market make.

Here's an excerpt from a recent profile of Nulty appearing in Vermont's Business People magazine:

He likens his fiber-optic superhighway to a more commonly understood network. "Nobody thinks twice about the roads being in the hands of the public," Nulty says. "The thought that a private company could own the roads and charge whatever they pleased to anybody who goes on them is ludicrous anywhere in the world. That's what this is: the public roads."

FCC finally abandons useless 1996 broadband measurement standard, will require more detailed reports by providers

The Federal Communications Commission, which for years has been the target of justified criticism for failing to update how it measures broadband adoption as required by the Telecommunications Act of 1996, is finally getting up to speed with more than a decade of changing technology.

Instead of the much derided standard of measuring by ZIP Code and deeming the entire ZIP Code as having broadband service if it has just one subscriber with a data connection of 200kbs in just one direction, the FCC announced today it adopted an order expanding the number of broadband reporting speed tiers to capture more precise information about upload and download broadband speeds.

The next semi-annual report on broadband deploying covering the second half of 2007 and subsequent reports will also require broadband providers to report the number of broadband subscribers by census tract, broken down by speed tier and technology type, the FCC announced.

FCC broadband data for first half of 2007 show nation plagued by persistent telco broadband black holes

The Federal Communications Commission's semi-annual report on broadband deployment as required by the Telecommunications Act of 1996 covering the first half of 2007 is out and the numbers aren't good. (See Table 14) They show virtually no improvement in the percentage of residences that can get high speed Internet from their telcos during the first half of 2007 compared to all of 2006.

On average, nearly 20 percent of Americans still are unable to get broadband from their incumbent telephone companies. In some states -- notably Vermont, Virginia, New Hampshire and Maine -- the number is even worse, with fully one third of state households cut off from the modern era of telecommunications. No state exceeds the 91 percent availability rate of Georgia, though Nevada and California come close with 90 percent and 89 percent, respectively.

Kentucky's figure of 87 percent also casts doubt on the claim of Connect Kentucky in an Aug. 9, 2007 news release that 94 percent of households in the Blue Grass State can get broadband and no households will be left in digital darkness by the end of 2007. The organization was the subject of a January expose by Public Knowledge's Art Brodsky, who debunked its overblown broadband access claims.

Seattle gets serious about building municipal fiber infrastructure

The Puget Sound Business Journal reports Seattle city officials, growing increasingly frustrated with the metal wire-based broadband offerings of incumbent telco/cable duopolists Qwest and Comcast, are preparing to issue a request for proposals to build a fiber optic telecommunications infrastructure.

According to the newspaper, in 2005 a city-commissioned task force recommended a fiber-to-the-premise (FTTP) system as the best way to provide Seattle's populace with high-bandwidth voice, video and data options.

Support building for California legislation allowing local governments to construct broadband infrastructure

Political support appears to be building for legislation that would authorize community service districts, a form of California local government, to construct broadband infrastructure.

Humboldt County Supervisor Supervisor Roger Rodoni is asking the county's supes to write a legislative committee in support of the legislation, according to The Eureka Reporter.

“With passage of this bill, Humboldt County would have opportunities to bring in multiple broadband services and help to prevent the gridlock we’ve had in the recent past because of our limited broadband service,” Rodoni was quoted as saying.

Lawmakers should broaden the scope of the legislation, SB 1191, to include all forms of local government in California considering a January 2008 report by report by Gov. Arnold Schwarzenegger's Broadband Task Force finding nearly 2,000 California communities lack high speed Internet access.

WISP gets $35 million low interest loan from USDA, plans major expansion

One month ago, I blogged about Wireless Internet Service Providers (WISPs) sweeping into America's heartland where wire line broadband providers refuse to go. One of the WISPs, Stelera Wireless, rolled out service in Floresville & Poth, Texas using recently auctioned advanced wireless service (AWS) spectrum offering average speeds of 1.5-2 Mbps down and 350-380 Kbps for uploads. According to Stelera's CEO Ed Evans, the company is the first in the nation to introduce this technology in support of a wireless network purely focused on broadband services.

Stelera announced today it has received $35 million in low interest loan funds from the US Department of Agriculture that will allow it to expand to 55 towns and cities that have 20,000 or fewer inhabitants.

The WISP plans to use the capital infusion to expand to serve locations in Texas, Kansas, New Mexico, Colorado, North Dakota, South Dakota, Washington, Oregon and Arizona. Larger markets will be included as growth continues, the company said.

A major potential roadblock to the company's growth plans could present itself in the form of expanded wireless options offered by cell phone providers that provide throughput speeds in the same range as Stelera's. Stelera and other WISPs will have to offer significantly higher average throughput speeds -- in the neighborhood of 5 to 10 Mbs -- and solid connections if they expect to have a competitive market advantage over these services.

Telco regulators should prohibit passive "soft" divestiture and require companies to upgrade or sell off assets

The two major telcos in the United States, AT&T and Verizon, have segmented their residential wire line markets into three groups.

The first segment is where the telcos are deploying their state-of-the-art infrastructure. For AT&T, it’s the company’s hybrid fiber-copper based VDSL “Project Lightspeed” rollout in support of its Internet/Video/Voice “triple play” U-Verse product bundle. For Verizon, it’s the telco’s FiOS fiber to the premises infrastructure that like U-Verse offers the triple play bundle but with far greater bandwidth and expansion capacity. This “prime” segment comprises only a small percentage of each company’s total residential lines.

The second residential wire line segment features “double play” offerings of broadband Internet and traditional analog POTS (plain old telephone service) delivered over copper cable infrastructure. Broadband is provided by legacy ADSL central office DSLAMs and remote terminals. This “preferred” segment comprises the bulk of the two telcos’ residential customer base.

Which brings us to the third and last market segment. Call it the “non preferred” orphan segment. It is in the words of one independent ISP being kept on life support, serviced only when necessary by makeshift “bubble gum and bailing wire” repairs. Traditional voice service can be spotty, particularly when it rains and afterwards when the sun expands and dries aging aerial cables. Broadband Internet access is nonexistent and residential customers are stuck using early 1990s era dial up technology. In many cases, DSL remote terminals have been installed but were never activated and are now considered obsolete, destined never to be “turned up” in telco parlance. While comprising about 20 percent of the telcos’ residential subscriber base, this third segment accounts for the bulk of repair costs and generates the most complaints to regulators.

This segment has been divested by the telcos, either actively or passively. An example of active divestiture is Verizon’s sale of large portions of its residential territory in several New England states including Maine and Vermont. AT&T, by contrast, has chosen the route of passive or "soft" divestiture. AT&T doesn’t want to service its tertiary residential market segment or upgrade the infrastructure within it in order to offer more services, but the company hasn’t made any efforts to spin off portions of it either. Consequently, the millions of unfortunate residents of this market segment are stuck in telecommunications limbo land where time stands still and the calendar still reads 1991.

Since these companies typically hold monopolistic positions in their third and least desired segments, regulators should prohibit the neglectful passive divestiture practiced most prominently by AT&T and give the telcos a choice: bring your services up to modern standards or sell and get out and make way for other providers who can offer better services.

Mapmaking a diversion on the road to full broadband deployment

One of the biggest diversions to filling in America’s many persistent broadband black holes is the idea of geographically mapping broadband availability. It’s been a prominent activity of telco industry backed nonprofits and broadband task forces and working groups established by state governments with the goal of increasing broadband access. Those mapmaking efforts have in turn influenced some in Congress to propose mapping the entire nation.

Unfortunately, too many well intended policymakers and broadband advocates have fallen into the misguided notion that in order increase broadband access, it must first be known where the broadband black holes are.

But rather than speeding broadband deployment, the mapping proposals have slowed it by creating an unnecessary way station on the road to full broadband deployment. They’ve produced disputes among telcos and cable companies who believe the maps will reveal their deployment strategies to competitors. (Not true, but that’s beside the point) Then there are debates among the providers and the mapmakers over the degree of granularity. Should the maps be drawn based on five-digit ZIP Codes, ZIP plus 4 or census tracts?

These mapping exercises are essentially busy work that distracts from the real task at hand: the need to deploy broadband infrastructure to eliminate those areas lacking it as rapidly as possible. Plus they give the telcos and cable companies an excuse to avoid further deployments until the scope of the maps is agreed upon and the maps are drawn up. When they’re completed, we end up with some nice pretty maps to look at but new no actual broadband deployment. Cynics might understandably suggest that’s a stall tactic on the part of the providers.

The maps also create a platform from which the providers can mount more empty promises of broadband deployment like AT&T's bogus Project Pronto. I recall attending a community meeting with AT&T’s predecessor entity SBC Communications in 2002 at which the telco displayed a large wall map showing a goal of broadband deployment to nearly 100 percent of its service areas by 2006. Here it is 2008 and Project Pronto turned out to be Project Punt.

The telcos and cable companies know where they've deployed broadband infrastructure. Public policymakers typically do not. Since local elected officials already represent a given geographical area, it’s very easy for them to poll their constituents on their Web sites, by mail and town hall meetings to ask them if they have broadband. Those living in broadband black holes will give them an earful. No mapping required.

Australians pull plug on BPL

Broadband Over Power Lines has short circuited in the land down under, ZDNet.com reports. The problem is the same that afflicts DSL only on a larger scale: rapid signal degradation over distance, necessitating signal boosters:

The case for BPL wasn't helped, either, by rollout costs that would have quickly spiralled due to the need for a repeater station to be installed every kilometre along Australia's tens of thousands of kilometres of transmission lines.

Throw in the need for utilities to manage the telecoms infrastructure and enlist a carrier partner -- one that would also want a cut of the pie -- and it's clear that BPL, despite its promise and technical feasibility, is no longer compelling enough to be attractive for Australian utilities.

U.S. broadband forecasts sweep pathetic state of access under the rug

A couple of reports are out this week that would lead their readers to believe that U.S. broadband access and speeds are “exploding” as one tech press account put it. Or about to.

Don’t believe it. It’s essentially telco/cable duopoly propaganda designed to make the number of people who have access to advanced services appear to be large and growing fast. The apparent goal is to sweep under the rug the ugly reality that very large numbers of Americans are still accessing the Internet the same way they did when a young former Arkansas governor named Bill Clinton was assuming the presidency and are likely to do so for some time. Only now, some have option of using satellite, a crippled and costly alternative that’s not much better than dialup and doesn’t provide true broadband connectivity.

One of these reports was issued this week by research firm Parks Associates. It projects by 2012, close to 33 million U.S. households will have broadband services with speeds of 10 Mbps or higher, capable of streaming high-definition video. The U.S. Census Bureau projects there will be about 177 million households by 2012, meaning many folks won’t. “If high-bandwidth broadband services fail to reach mass-market consumers, the United States may lose its competitive edge in the next round of technology innovation,” the report warns. "Such a scenario would be unpleasant.” Based on these numbers, it appears the U.S. is in for a lot of broadband unpleasantness.

Also this week, another research outfit projected that by 2011, of those who can get service at this speed, more than 9 million U.S. households will subscribe to telco-provided Internet Protocol TV service. The Yankee Group’s report, From Gorillas to Guerrillas, IPTV Changes Everything, sharply departs from reality in suggesting that IPTV technology will change the stodgy, accounting and lobbying driven Bell System culture that still rules telcos.

“IPTV will also forever transform how telcos operate,” Yankee Group declares in a bout of apparent wishful thinking. “It will take the service providers from being highly centralized, giant corporations to become decentralized, flexible entities that can respond much more rapidly to the specific needs of the communities they serve. The phone company of the past—the 800-pound gorilla—is dead. IPTV will transform telcos from the market-dominating gorillas they once were, to street fighting guerrillas."

That assessment is so out of touch it’s laughable. The telcos and especially the dominant player, AT&T, behave like arrogant, aloof government bureaucracies, not unlike the old Soviet phone company where customers had to wait five years just to get phone service. Consider the many folks who are stuck with POTS-based dial up that AT&T has been telling for years "We'll get to you when we get to you" and "Maybe and that's final" when they've asked (and often begged) for advanced services. They don't even have DSL let alone IPTV and aren't likely to see the latter for many more years — all the while relegated to early 1990s era dialup and satellite. And forget about the myth this problem is confined to rural areas; there are plenty of folks within metro areas who are still on dialup.

To suggest the entrenched, centralized, top-down telco culture can change in just two years' time to a "guerrilla marketing" culture simply defies common sense. It will likely take at least a decade and likely far longer. Only a major external event like another government ordered divestiture would likely alter that timetable.

Fed up with dial up, 20 Vermont towns give green light to fiber infrastructure

Residents of 20 Vermont towns have had it with dial up Internet access that was state of the art when Bill Clinton was starting his first term as president and are sick and tired of waiting for an alternative from an unresponsive telco/cable duopoly.

In nearly unanimous voting Tuesday, March 4, the townspeople approved nonbinding resolutions to create a subscriber-funded fiber optic infrastructure provding Internet, telephone and cable television opportunities in central and southern Vermont.

Qwest bullish on residential broadband, plans $1.8B FTTN deployment

Dow Jones reports today that Denver-based telco Qwest Communications International plans to spend $1.8 billion to build fiber to the node (FTTN) infrastructure serving 1.5 million homes in its top 23 markets.

Qwest joins AT&T in adopting the lower cost FTTN fiber/copper hybrid architecture, which AT&T is deploying as Project Lightspeed in selected areas to support its triple play IPTV video/Internet/voice bundle marketed under the brand name U-Verse.

By contrast, the nation's second largest telco, Verizon, has opted for a costlier Fiber To the Home (FTTN) architecture that offers residential customers higher throughput speeds, greater potential for expanded service offerings, and reduced risk of technological obsolescence.

Qwest estimates the FTTN deployment will run about $175 per home -- far less than FTTH. Qwest says about 60 percent of its upgraded homes will have speeds up to 7 Mbs.

Broadband black holes in Brooklyn?

Surprisingly so, according to this item on the New York City Broadband Advisory Committee appearing today in the Queens Chronicle:

The committee working to bring high speed public Internet access to New York City will be holding a hearing in Queens on Monday, March 3 at 1 p.m. The New York City Broadband Advisory Committee will convene at LaGuardia Community College in Long Island City. The public is invited to attend and testify.

The committee, headed by Councilwoman Gale Brewer from Manhattan and including Councilman James Sanders from Springfield Gardens, will hear testimony from local officials and Queens residents about the accessibility and affordability of high speed Internet in Queens.

The committee has held hearings in Manhattan, the Bronx and Brooklyn already and was surprised to learn that some areas of Brooklyn have no cable or Internet access, according to Brewer. Sanders speculates that the same situation probably exists in parts of Queens.

Somerset County PA commissioner warns of broadband access crisis

From the Somerset County (PA) Daily American:

Somerset County has a way to go in its quest to connect every resident and business using broadband as the tool.

County commissioners are not daunted by the task, making it a priority for 2008. Last fall, while running for a third term of office, Commissioner James Marker made the first campaign promise in his eight-year career as a commissioner, stating he would do everything possible to achieve a high-speed Internet connection in the county.

His mind has not changed since he took office in January. If anything, it has intensified, he said. If the county does not meet the challenge soon, “we will have to face a real crisis,” Marker said.

Vermont towns strive to enter modern era of telecommunications

Their residents understandably sick and tired of sluggish "dialug" Internet connectivity that was state of the art technology in the early 1990s, the Associated Press reports more than 20 Vermont towns are forming a community owned, subscriber funded nonprofit to deploy fiber optic telecommunications infrastructure.

According to the AP, a financial institution would finance the system and lease it back to the nonprofit, which would cover the lease with subscriber fees that would run around $120 a month for a "triple play" bundle of TV programming, voice and Internet service.

Firm claims to give new lease on life to DSL--at "up to" 400 Mbs

A Canadian firm claims it has developed proprietary DSL transmission technology that would allow DSL to run over copper pair at speeds "up to" 400 Mbs, easily lapping cable. Moreover, boasts Calgary, Alberta -based Genesis Technical Systems Corp, its Bonded DSL Rings(tm) Technology (BDR), is so economical to deploy that telcos could get back their investment in one year, even in rural areas.

The company elaborates in a press release issued today:

High quality television over copper telephone lines can be a reality for Telcos using Bonded DSL Rings(TM). Bandwidths of up to 400 megabits per second - at a cost much lower than fiber - are achievable using BDR. This will allow Telcos to compete head-to-head with cable companies at a price point that is attractive to consumers and very profitable for Telcos.

The company claims it demonstrated BDR's viability in proof of concept demonstrations at trade shows in 2007. The real proof of concept as this company likely well knows is whether telcos buy its claimed breakthrough that provides extended life to DSL, an interim wireline broadband technology on the road to fiber.

There have been a number of companies claiming breakthroughs such as this in DSL technology. Given the fact that copper is a poor transmission medium for broadband due to the tendency for signals to degrade quickly over short distances, such claims should be met with a healthy degree of skepticism.

In addition, a diagram of the technology's components at the Genesis Web site shows it requires remote field equipment. The telcos have long had remote DSL terminals. The issue isn't lack of technology but rather an unwillingness on the part of the telcos to invest in infrastructure and equipment to deliver broadband.

Local government units could build own broadband infrastructure under proposed California legislation

Following the January release of a report by Gov. Arnold Schwarzenegger's Broadband Task Force finding nearly 2,000 California communities lacking high speed Internet access, legislation has been introduced that would authorize community service districts (CSDs) to offer broadband service within their jurisdictions.

SB 1191 would allow allow CSDs to "acquire, own, improve, maintain, and operate broadband facilities and to provide broadband services, until a private person or entity is ready, willing, and able to acquire, construct, improve, maintain, and operate broadband facilities and to provide broadband services, and to sell those services at a comparable cost and quality of service to the district and its property owners, residents, and visitors." If and when a qualified private broadband provider steps up and shows an interest in serving the community, the legislation requires the CSD to sell or lease its broadband infrastructure to the provider at fair market value.

In 2007, a California Court of Appeal ruling cleared the way for public utility districts to provide advanced telecommunications services, rejecting a legal challenge by a cable TV company.