Wednesday, April 30, 2008

Fiber infrastructure can pay off in broadband black holes, muni fiber expert says

Tim Nulty, who until recently served as director of Burlington Telecom, a publicly owned broadband system serving the city of Burlington, Vermont and who now runs ValleyFiber, a nonprofit organization focused on bringing municipal fiber to Vermont towns, has to be one of the most honest and smartest guys out there. He tells it like it is and isn't afraid to question telecommunications industry mythology.

Earlier this year, Nulty dismissed the industry's oft-stated notion that there can be robust competition in America's privately owned and operated telecommunications infrastructure. Rather, Nulty correctly observed in my opinion, it's a natural monopoly that by its very nature cannot foster robust market competition to benefit subscribers. The costs to build telecom infrastructure are so high that only large telcos and cable companies have the capital to play. And once one has put infrastructure in place, it discourages other players from coming in and doing a "over build" with its own proprietary infrastructure since it becomes less certain the new entrant will be able to lure a sufficient number of customers away from the incumbent provider to earn a profit on the investment.

It is precisely in this vein that Nulty argues fiber to the premises can pencil out in broadband black holes. First, Nulty, told the Broadband Properties Summit this week, there is by definition a lack of competition in such locales, making a strong business case for a potential fiber-based provider since it would have the market to itself. Second, having the fiber market to itself in what was once a digital dead spot would translate into a higher take rate that would generate more revenues to cover the cost of installing fiber to the premises, also reducing uncertainty and building a stronger business case.

The folks out West in Utah who run that state's multi-muni fiber system UTOPIA and are currently reassessing their numbers after disappointing results would be well served to consult with Nulty.

Monday, April 28, 2008

For some mired in AT&T broadband black holes, U-Verse could bring long awaited high speed Internet

For some residential and small business customers currently outside the reach of AT&T's underpowered DSL service, there could be an unexpected benefit with the rollout of AT&T's triple play U-Verse advanced service offering. If they are served by central office switches where U-Verse is being deployed, the odds are likely higher they will finally get wireline-based broadband.

Last October, Ralph de la Vega, AT&T's group president, regional telecommunications and entertainment, told Investor's Business Daily the telco plans to phase out its its existing voice network and replace it with a VOIP (Voice Over Internet Protocol) system where U-Verse is being deployed. In other words, swapping out existing legacy voice-based telephone central office (CO) switching equipment with what are essentially souped up Internet servers capable of delivering multiple Internet Protocol-based advanced services including Voice Over Internet Protocol (VOIP), video, and of course high speed Internet access. That's U-Verse.

Since AT&T like other telcos is rapidly losing residential wireline subscribers who are migrating to wireless voice, it could opt to speed up U-Verse deployments since it would allow the company to sell more than just Plain Old Telephone Service (POTs). That would provide revenues to replace lost residential customers as well as gain additional revenues justifying a ramped up rollout. U-Verse not only gives AT&T the opportunity to replace lost residential voice lines, but also to finance upgrades to its copper cable plant so it can reliably provide U-Verse services, which are delivered by VDSL-based remote VRAD terminals fed with fiber optic connections.

An added incentive for AT&T in some of these areas would be the absence of existing competition from cable companies, which would invariably increase the take rate for U-Verse since these broadband-deprived prospective customers are likely to jump at the chance to get off dialup and satellite.

Thursday, April 24, 2008

Cable providers face increased local government demands to renegotiate franchises for universal access

As cable providers go head to head with telcos to be full service advanced telecommunications players offering video, Internet and VOIP they will increasingly come under pressure from local governments to renegotiate franchise agreements to provide universal coverage. Their constituents no longer see cable as a luxury entertainment service but rather as vital telecommunications infrastructure.

A case in point is detailed in this dispatch from the Shelburne Falls (Massachusetts) Independent.

Wednesday, April 23, 2008

White paper: Telework constrained by inadequate broadband access, slow speeds

To coincide with Earth Day 2008 as gasoline prices reach new highs on record oil prices, the American Electronics Association (AeA) issued a white paper April 22 encouraging greater adoption of telework, also known as telecommuting.

Notably, the white paper cites the lack of broadband Internet access as a key obstacle to allow information workers to work from their homes at least some of the time rather than commuting to an office.

For widespread adoption of telework,the United States needs ubiquitous broadband Internet access. Much of the potential for enlarging the workforce through telework is by attracting people from rural or isolated areas -- or those who would like to relocate to such places. Yet these are the areas least likely to have broadband access. Additionally, the speed of broadband in many parts of the country is woefully insufficient to support the collaborative applications needed for efficient telework.

Broadband cooperative forming in northern Michigan

A broadband cooperative is forming in northern Michigan to provide residents and businesses in 12 counties with more and better options than dialup and satellite access.

According to the Peteskoy (Mich.) News-Review, organizers including the Northern Lakes Economic Alliance and Northeast Michigan Council of Governments are looking into rural development loans from the U.S. Department of Agriculture to fund broadband infrastructure.

History is repeating itself. A century ago, telephone co-ops were created to provide service to areas without it. Provided they can raise sufficient funding, these modern day telecommunications co-ops like the Northern Michigan Broadband Cooperative may prove successful because they cover large geographical areas and thus can leverage economies of scale to their advantage.

More typical and problematic are the numerous scattered broadband black holes that characterize America's incomplete telecommunications infrastructure. They encompass much smaller geographical areas and make it difficult for residents and businesses to take collective action like in northern Michigan. The Communications Workers of America has aptly termed this swiss cheese, crazy quilt telecom infrastructure a "hodge podge" that can result in some folks having state of the art advanced telecommunications services while others just down the road or on the next street are stuck in 1992 and limited to dialup access.

Monday, April 21, 2008

Qwest questions future growth path of wireless broadband

Wireless broadband is seen as a much needed "third pipe" to deliver broadband in areas where wireline-based broadband is scarce or nonexistent. For example, in the vast western U.S. service area of Denver-based telco Qwest.

However, Qwest Chief Technology Officer Pieter Poll doesn't believe wireless can deliver sufficient capacity in the future as bandwidth demand grows. Instead, he suggests its role is that of an interim technology. Here's what he had to say on the topic in an interview with Telephony Online:

If you look at the calculation of what wireless networks can provide in terms of bandwidth, it’s a bit-per-second-per-hertz argument, first of all--the efficiency of how you use spectrum. But ultimately [it’s] finite spectrum. With a number of users. As you build networks, there’s a natural density of cells or reuse that you can get to. I don’t see wireless networks replacing wired broadband networks the way people are thinking about future wired broadband networks. Don’t get me wrong; I’m very excited about what wireless broadband offers today and will offer in the future. But I think it has its appropriate place for the reuse and speed offered. When we start thinking about things we can do in the home with extreme speeds, those are things you will not be able to realistically do over wireless networks, at least at any cost point that an operator would consider feasible.

AT&T claims Internet to reach maximum capacity by 2010; skeptics see ploy to get federal aid

AT&T warns in rapidly growing bandwidth demand will max out Internet capacity in just two year's time -- by 2010. The story on CNET News drew several skeptical comments from readers who see the warning as paving the way for the big telco to ask the U.S. government to help shoulder the cost of expanding capacity.

One commenter wonders what happpened to billions in tax incentives provided under the federal Telecommunicaitons Act of 1996 that were to ensure all Americans had broadband Internet access by 2006. (Millions still don't in 2008 and continue to use the same dial up access they had when the bill was enacted more than a decade ago.) "They just took the dough and put it against their bottom line, screwing the US taxpayer yet again. NOW THEY WANT MORE?????," he wrote.

Another points out only a small fraction of the capacity of the of fiber optic cable installed during the late 1990s dot com boom is being used. "To start running out of bandwidth, this soon, is hard to believe. More likely these companies are creating FUD as an excuse to raise rates and/or cut back on service," the writer says.

Muni fiber growth pains: Utah's UTOPIA, iProvo reconnoiter

Here's a comprehensive account by the Provo, Utah Daily Herald of the challenges that can arise in public-private fiber optic projects designed to bring state of the art telecommunications services to residents and businesses.

Both the Utah Telecommunication Open Infrastructure Agency (UTOPIA), a fiber venture begun in 2003 underwritten by 18 Utah municipalities and iProvo, Provo's muni fiber project, are experiencing cash flow problems due to take rates falling short of projections and a low cost federal loan coming in later and with far less money than requested. The finances of both projects are under review as are a number of options to improve the numbers.

The lessons that can be drawn here for such ventures are 1) Making sure there is a committed base of business and institutional subscribers who are hungry for "big pipe" data-intensive services and making connections affordable for small businesses and 2) Getting good estimates of projected demand in residential areas to help prioritize build out to those where demand is highest.

"The initial model was build it and they will come," Paul Recanzone, UTOPIA's project manager, told the newspaper. "The new model is to let the market tell you where the demand is before building out."