Uneven U.S. broadband deployment distorts market perceptions, drives digital downturn

The uneven, hodge podge deployment of last mile broadband infrastructure in the United States in the current decade has affected market demand by distorting perceptions about broadband availability. In areas that still don't have wireline-based broadband access in 2008, some inhabitants have apparently concluded that if they don't have service now they aren't likely to in the foreseeable. The practice of cable companies and telcos of not giving residents time frames as to when broadband will be offerred only reinforces that perception.

Commenting on the recently released Home Broadband Adoption report by the Pew Internet and American Life Project, the National Rural Telecommunications Cooperative (NRTC) observes in its July 2008 Update newsletter that the perception ironically persists even when broadband services are actually available. That naturally drives down demand, known as "take rate" among providers.

Cost and lack of availability were the main reasons rural consumer gave for not subscribing to broadband. Twenty-four percent of the rural dial-up users in the Pew survey said they would take broadband if it were available. This might indicate that rural consumer perceptions in some areas do not match the actual amount of service available from rural broadband providers. For years, NTCA broadband surveys have shown that rural providers have been building out broadband services, but that there have been very low take rates.

This market phenomenom isn't confined to rural areas since broadband black holes can be found in all areas of the U.S.: urban, surburban, quasi-rural and rural.

Low take rates understandably make providers reluctant to invest in broadband infrastructure, particularly in higher cost areas. The end result of this depressed dynamic is self perpetuating and highly persistent broadband black holes in those areas where there are in fact no wireline-based broadband services. Providers in turn can justify the existence of these black holes, fearing low take rates. It's the equivalent of an economic downturn: a lack of confidence on the part of both sellers and buyers.

This is primarily a supply side problem given that the supply of broadband services in these areas has been nonexistent over a period of many years. The way out of this digital downturn is for providers to drive demand by both aggressively deploying services and advertising their availabilty. The latter element is key to overcoming entrenched market perceptions in long-established broadband black holes that broadband isn't available and isn't coming any time soon.

On Sept. 8, 2008, the Broadband Stakeholder Group (BSG), the British government’s advisory group on broadband, issued what it termed "the most comprehensive analysis produced to date on the costs of deploying fibre in the UK."

This report supports the notion that ISPs must proactively drive up demand for advanced services in order to support the business case for fiber-based broadband infrastructure deployment in costlier, less densely populated areas instead of passively writing them off as unservicable as all too many are wont to do. “If operators could achieve a higher than expected level of take-up in rural areas, then the business case for deployment in those areas could improve significantly”, said the BSG's CEO, Antony Walker.

U.S. at "critical juncture," in danger of becoming second class broadband state

Yet another organization is sounding the alarm over the pathetic state of U.S. broadband telecommunications infrastructure. This time it's the National Association of Telecommunications Officers & Advisors (NATOA), which today adopted and released formal Broadband Principles encouraging the immediate development of a national broadband strategy.

"Today, the United States is at a critical juncture," the organization states. "Economic and social development increasingly depend on advanced communications infrastructure. However, there is no strategy in place for widespread deployment of next-generation broadband networks. Our failure to take immediate action threatens to relegate our country to second-class status in the broadband age."

Forget about studies, broadband demand aggregation surveys and pretty maps of broadband black holes and other delaying tactics, well meaning or otherwise. The situation is so dire, NATOA asserts, it requires urgent action rather than contemplation: the immediate deployment of advanced broadband infrastructure -- preferably over open access fiber optic cable systems -- providing synchronous connections.

The NATOA's statement also shuns a search for magic bullets to speed broadband deployment. "Different methods may be preferable in different communities," it reads. "For example, networks may be financed by private investment, by government investment, by public-private partnerships, by tax incentives, or by other means. None of these approaches should be prohibited by law or burdened by special restrictions (such as laws that forbid cross-subsidy by governments but allow it for private entities)."

Aside from the need for immediate action, another theme strongly emerges from the NATOA's statement: that local government play a key role and the current model of that concentrates ownership of telecommunications infrastructure in the hands of just a few private owners is part of the problem.

That makes sense given that the U.S. broadband crisis is really a local crisis over the so-called last mile connection. Consider roads and highways to which the telecommunications system has often been compared. The big telecom players may own and operate the interstates and major highways. Local governments have traditionally had responsibilty for providing roads and streets and NATOA argues they should also play a critical role in upgrading the nation's inadequate broadband infrastructure.

Vexed in Vermont over slow progress on broadband access

Considering that broadband has been likened to an information interstate highway, Vermont is settling for just a two lane blacktop, laments Lawrence Keyes in a op-ed in the Rutland, Vermont Herald.

Keyes, who chairs Vermont's Software Developer's Alliance outreach committee, says Vermont's E-State initiative "is largely an exercise to convince ourselves that 'something is being done, and 'we've got it covered' as broadband black holes remain numerous.

What worries me is that with E-State we're going to get people barely off dialup. By going with wireless Internet connections, we believe that we have a state-of-the-art high-tech infrastructure superior to other states. That is how it is being sold. But, we're really just paving the dirt roads.

Keyes suggests investment in broadband infrastructure should be given the highest priority by all candidates for governor.

Schwarzenegger signs legislation allowing some California local governments to construct broadband infrastructure

Gov. Arnold Schwarzenegger has implemented one of the several recommendations issued by his Broadband Task Force earlier this year by approving legislation that would allow California's 320 community services districts (CSDs) to construct and operate telecommunications infrastructure to deliver broadband within their jurisdictions. CSDs are part of a category of limited purpose local governments known as special districts.

Under Senate Bill 1191, CSDs would serve as stopgap providers until a private sector provider opts to serve their areas with services of comparable cost and quality. CSDs would then have to sell or lease the plant to the private provider at fair market value under the legislation.

Notably, the measure was not opposed by telephone or cable companies, which suggests lawmakers might come back in 2009 with new legislation expanding the concept to other types of local government.

Here's a link to the text of SB 1191 and a news release issued by Schwarzenegger's Press Office.

EE Times: European firms engaged in R&D consortium to drive down cost of fiber optic infrastructure

LONDON — Optical components specialist Ignis Photonyx AS (Birkeröd, Denmark) is leading a European R&D project dubbed GigaWaM, that will tackle one of the biggest barriers to the uptake of next-generation broadband access technology Wavelength Division Multiplexing (WDM) PON -– the current high cost of the components needed to deliver a wavelength to each customer's home.

One of the major partners in the project — which is being funded by the European Commission by approximately $4.7 million — is Ericsson AB.

The GigaWaM (Gigabit access passive optical network using wavelength division multiplexing) team also includes two German firms, component manufacturer FiconTEC GmbH and laser diode vendor VertiLas GmbH , and focuses on developing "application specific optical components... with a high level of integration in addition to new manufacturing processes" with a view to enabling a WDM-PON system cost per subscriber tha is lower than current GPON systems can manage.

Palo Alto fiber project represents important test of open access concept

Here's an update from the Palo Alto Daily News on Palo Alto, California's efforts to put in place an open access fiber optic network. If the city council gives the OK to this project -- which doesn't require the municipality to fund or operate the system -- it will be a renewed test case of the open access network concept .

The open access model is emerging as a public/private initiative to build out broadband faster than the proprietary infrastructure owned and operated by telcos and cable companies which are unable and/or unwilling to invest in upgrading their plants. The latter have resisted open access initiatives by local governments, arguing they represent unfair competition and in some cases have gone to the courts to seek to halt the projects.

That's a poor strategy because the telcos and cable companies would benefit from open access fiber projects since they could sell customers improved IP-based services faster than they might otherwise could since it would take far longer for them to build their own proprietary fiber infrastructures. By going to court to block or slow these projects, the telcos and cable companies are shooting themselves in the foot. They also risk provoking local governments to counter with eminent domain actions to take over aging and increasingly obsolete metal-wire based systems in the name of economic development.

Vint Cerf: Single purpose phone, cable systems and legacy regulation impede broadband expansion

Some observations from World Wide Web creator Vint Cerf. They show that we're in a transition period between yesterday's single purpose, proprietary analog-based telco and cable systems and an evolving digital Internet Protocol-based platform that can deliver the Web, voice and video. Cerf's observations suggest this transition explains why many broadband black holes persist in the U.S. since the nation's current infrastructure was not designed and built to deliver universally accessible IP-based services. Nor is the current regulatory scheme that treats the Internet as an afterthought -- an optional "information sevice" -- rather than an essential telecommunications service.

Cerf also pays homage to the notion that IP-based infrastructure is a natural monopoly like publicly owned roads and highways that by its nature does not lend itself to market competition:

You don't have multiple roads going to your house for example. Instead, it is a common resource. I said something like "maybe we should treat the Internet more like the road system."

Cerf correctly notes that competition to deliver IP-based services isn't likely to develop among the legacy telco and cable providers since the old regulatory framework isn't designed to foster competition for them. He posits that like the early telephone system, subsidies will be needed to ensure universal access.

If broadband service is essential to the national economy and to citizens, given the present means by which it is implemented, and given that it appears unlikely that the usual competitive pressures will lead to discipline among the competitors, perhaps we need new national rules to assure that the service is openly and equally accessible to any application provider and to all users. Equal does not mean that everyone pays the same amount. In particular, higher capacity might be priced at a higher rate. Provision needs to be made, however, to deal with high cost (to the provider) areas using a new form of Universal Service or some other subsidy.

Palo Alto moves forward with open access fiber

After more starts and stops than a dial-up connection, ultra-high-speed broadband Internet may soon be feasible in Palo Alto.

In a new business plan recently submitted to city staff, a group of companies proposed funding and constructing an open network capable of delivering cutting-edge communications, including voice, data and video services.

The city council will review the plan at a study session on Monday and will direct staff later this month whether to move forward with the project.

The new network would have the capability of delivering Internet to residents at a speed of 100 megabits per second. In contrast, a regular broadband service sends out information at a speed of two-tenths of a megabit per second, said Palo Alto resident Bob Harrington, one of three council-appointed citizens advising on the project.

This is the kind of thing I like to see: solid steps toward actually building broadband infrastructure in a public private partnership instead of useless projects by telco-funded nonprofits to study broadband black holes and aggregate demand, as if the latter activity is going to have any influence whatsoever on telcos' broadband depolyment plans. It doesn't as shown by numerous petition drives directed at telcos and cable companies over the past several years by folks who are still waiting in vain for high speed Internet.

Funding these nonprofits are merely cynical PR efforts by the telcos to paper over their sprawling broadband black holes and give the impression they are "concerned" about the lack of broadband access, costing them very little money relative to the real dollars they would have to invest to bring their infrastructures into the modern digital age.

Louisiana city to mount legal challenge of state video franchise law

The Alexandria, Louisiana city council has authorized its city attorney to bring an action challenging the constitutionality of state legislation putting the state in charge of most video franchises. Alexandria says the law is bad for consumers and has placed it at a disadvantage in its negotiations with its video franchisee.

At least a dozen states have preempted local governments by enacting video franchise legislation. The legislation was sought by telcos wanting to compete with traditional cable companies but fearful local officials would require them to provide access to all residents and not engage in digital redlining.

Read the story here.

Costly oil will fuel public policy push for universal broadband access

The Los Angeles Times is out with a look ahead at how Americans' lives will change with $200 a barrel oil and $7 a gallon gasoline if it reaches those price points -- which would represent an exponential increase considering oil was going for just $20 a barrel at the beginning of 2002.

I predict that if this unpleasant circumstance comes about, it will provide a big boost to telecommuting and other forms of using telecommunications technology to bridge distances rather than fuel consuming transportation. That in turn will create a major public policy push for rapidly upgrading the nation's incomplete telecommunications infrastructure to ensure every American has access to high speed Internet -- possibly on the scale of the Federal Aid Highway Act of 1956 -- only this time involving fiber optic cable instead of concrete and blacktop.

On July 16, 2008, Virginia Gov. Timothy M. Kaine citing rising fuel prices and the escalating cost of commuting to work, announced a telework initiative for gubernatorial appointees, which includes about 120 employees in the Cabinet and Governor's Office. Kaine also announced an improved State Telework Policy directing all state agencies to consider ways to improve and expand agency telework and alternate work schedule programs.

In order for telework initiatives like Kaine's to work, Virginia and other states will have to ensure that their telecommunications infrastructures provide broadband access to all state residents. That means policies and incentives to rapidly deploy infrastructure to make telework possible and not simply engaging in studies and mapping broadband black holes that don't result in wider broadband access. Rising pump prices will likely add the necessary extra incentive to show real and timely progress.

U.S. Court of Appeals upholds FCC rule legitimizing broadband black holes

The Wall Street Journal reports today the U.S. Court of Appeals has upheld a Federal Communications Authority rule adopted in the spring of 2007 prohibiting local governments from imposing "unreasonable" requirements on telephone companies seeking franchises to offer enhanced broadband-based video services.

The rule is designed to stop local governments from using their FCC cable franchise granting authority to impose build out requirements on franchise applicants, preserving broadband black holes in these communities.

Here are the relevant excerpts from a previous post on the FCC rule.

U.S. suffers from "Neanderthal" broadband policy, critic charges

Stanford University law prof Larry Lessig suggested at today's announcement of the InternetforEveryone.org universal broadband access initiative at the Personal Democracy Forum in New York that the current U.S. policy treating broadband Internet access like a competitive consumer commodity isn't working and is keeping the nation stuck in the dial up digital dark ages.

"That Neanderthal philosophy has governed for about eight years, and it has allowed us to slide from a leader in this field to an abysmal position," Lessig said in a clear attack on the Bush administration's stance.

Internetnews.com reports the coalition, which includes Google and eBay, wants Congress and the next administration to take up the issue of broadband availability.

Vint Cerf, Google's chief technology evangelist and one of the architects of the Internet, implied that one of the key reasons for the lack of universal broadband access in the U.S. is that that the Internet, which carries multiple and unlimited forms of digital communications, is delivered by telcos and cable companies interested less in providing Internet access and more in selling particular services such as video and voice telephone connections.

Supreme Court to hear AT&T DSL anti-trust case

More than two decades ago, a federal judge ordered the breakup of AT&T after concluding Ma Bell's monopolistic control of local and long distance voice telephone service violated federal anti-trust law.

Now AT&T as the successor to SBC Communications faces another anti-trust suit that the U.S. Supreme Court decided to take up this week. The high court will review a Sept. 11, 2007 decision by the 9th U.S. Circuit Court of Appeal in which the appellate court affirmed a U.S. district court ruling allowing an anti-trust action brought against SBC/AT&T by several Internet service providers to proceed.

The ISPs allege SBC/AT&T maintained unreasonably high wholesale access charges to ISPs to deliberately thwart them from competing with SBC/AT&T for Digital Subscriber Line (DSL) customers as permitted under the line sharing provisions of the federal Telecommunications Reform Act of 1996. Ma Bell then lowballed prices on her own DSL offerings, making it impossible for the ISPs to compete on price, the ISP plaintiffs complain.

The case, Linkline Communications et. al. v. SBC California, et. al. represents an important test of federal policy under the 1996 law intended to foster robust market competition and speed timely deployment of high speed Internet access to all Americans.

However the suit suggests SBC/AT&T's actions in response to the law have had just the opposite effect. By cutting its DSL prices to the bone in order to deter competing ISPs -- SBC/AT&T was promoting residential DSL for as little as $13 a month in late 2006-- it lacked adequate revenue to finance the expansion of DSL within its service territory. That led to the formation of monstrous broadband black holes filled with frustrated customers unable to order wireline broadband from AT&T at any price.

From Wilson, North Carolina to Washington: Broadband access a growing issue

Here's an exhausive, well written feature article by Fiona Morgan at INDYWeek.com replete with photos on the issue of broadband Internet access and how the North Carolina municipality of Wilson concluded broadband is an essential public utility and took matters into its own hands and built its own fiber optic based infratructure.

The story explains the reasons for America's incomplete telecommunications infrastructure and how policymakers are addressing the issue from Wilson city hall to Congress. Speaking of the latter, the story notes that lack of broadband is the top constitutent complaint for North Carolina Rep. Bill Faison, a House Democrat representing Orange and Caswell counties.

"I can't go to a public meeting anywhere in Orange or Caswell without someone coming up to me and saying, 'We've got a problem with Internet and here's what it is,'" Faison is quoted as saying. "No one comes up and says, 'We've got a problem with Medicaid,' or 'We've got a problem with the wildlife commission.' No one complains about the Department of Transportation not fixing a road in front of their house. They all show up and want high-speed Internet.'"

The harsh reality of surburban broadband

I recently pointed out the U.S. digital dividing line doesn't necessarily run between urban and rural areas as it's often less than accurately described in the media and by public policymakers. Rather than a hard "digital divide," the nation instead suffers from a shamefully incomplete last mile telecommunications infrastructure with more broadband service holes than a Swiss cheese. Anyone is vulnerable to winding up in a void -- even folks living in densely populated suburbs.

Here's a piece in ZD Net by Jason Perlow titled The harsh reality of suburban broadband that aptly illustrates the point. Perlow is fortunate that he at least even has broadband access via his cable provider. There are some suburban residents and people living in metro areas who aren't able to obtain any wireline broadband service at all short of ordering up a costly T-1 circuit from their telco.

California Broadband Task Force availability maps leave much to be desired

Drew Clark of BroadbandCensus.com blogged about last week's Broadband Policy Summit IV sponsored by Pike & Fischer. He quoted Jeff Campbell, senior director of technology and communications policy at Cisco Systems, as praising the report issued in January of this year by the California Broadband Task Force for producing "address-level" data about both broadband availablity and throughput speeds.

While the underlying data may be based on a given address, it did not produce maps of similar granularity. The wireline broadband availabilty maps produced by the task force cover such large geographical areas as to be practically useless. There are no reference points such as identification of major highways and towns, nor can a viewer zoom in to view what's available in his or her own neighborhood.

Instead of making useless maps our public policy should incentivize rapid broadband deployment given that much of the nation is years behind where it should be when it comes to broadband services.

AT&T's Web site engages prospective broadband customers in circular shell game

I recently ran a drill I've been running for the past four years to check wireline broadband availability on AT&T's Web site. The availability search engine would predictably come back with the news that DSL was "unfortunately" not available at my location. Unfortunate indeed since I was ready to order it in early 2003. I was then invited to register to be notified "if" DSL became available. In the meantime, the message suggested, I may qualify for satellite Internet. Newsflash to AT&T: In case you hadn't noticed, I don't live in the Arctic Circle; there's fiber just 1.5 miles from my location. I'll pass.

Then earlier this year, the DSL availability check produced a new message, sans the dubious invitation to go suck a satellite:

You may qualify for AT&T U-verse High Speed Internet and TV. AT&T U-verse is a bundled service of 100% digital high-speed Internet with TV that provides you the ultimate home entertainment experience.

If DSL becomes available at my location, Contact Me

I inquired with AT&T's U-Verse folks to see if I qualified for U-Verse. It should be available in 1-2 months, I was advised in an email. When I noticed no VRADs were being installed to deliver U-Verse's VDSL-based service, I asked about the 1 to 2 month timeframe.

That resulted in another email from Ma Bell:

Although service was estimated back in April to be available 1-2 months, it was just an estimation. Unfortunately, we are not provided with enough accurate information to be “positive” on the feedback we provide.

In the meantime, the latest from AT&T's Web site is I "may" qualify for U-Verse. Bottom line, no DSL and no U-Verse. As usual, the ever equivocal Ma Bell says maybe and that's final. She's all dressed up with nothing tangible to sell.

Update 6/30/08: Ma Bell has changed her mind -- again. Now I no longer "may qualify" for U-Verse as an alternative since DSL isn't offered. It's back to "Go suck a satellite." No wonder some wags have aptly dubbed U-Verse "Re-Verse:"

AT&T High Speed Internet

	Our system indicates that our DSL service, AT&T High Speed Internet, is not available at your location. However let's see if we have another solution for you: You qualify for Satellite Broadband from AT&T Learn More

Among the benefits AT&T touts of satellite is "Wide Footprint" because it can reach people even in remote locations. In my case, remote means two miles from a major U.S. highway with buried fiber cable plant along a frontage road 1.5 miles from my location. Gee, and here I thought I must be residing somewhere in the Arctic Circle.